Taper tranquility not tantrum greets Fed bond-reduction plan - Investors have reacted to the Federal Reserve's plan to shrink the balance sheet so far in exactly the opposite way that policymakers had feared. News about the U.S. central bank's strategy to start reducing its bond holdings, which began taking shape over the past week, has actually led to easier financial conditions via lower interest rates. That contrasts with the surge in Treasury yields that occurred during the so-called taper tantrum of 2013, when then-Fed Chairman Ben Bernanke hinted the central bank would reduce its purchases of Treasuries and mortgage-backed securities that were designed to bring down long-term interest rates. This time around, New York Fed President William Dudley may have succeeded in convincing investors that the central bank would avoid any excessive financial tightening, according to Ben Emons, the Los-Angeles based chief economist and head of credit portfolio management at Intellectus Partners. Dudley told Bloomberg Television last week that policy makers might "take a little pause" in raising the federal funds rate when they start to shrink the balance sheet, as the reduction would "substitute for short-term rate hikes." That remark "indicates that they don't want to have financial conditions tighten too quickly, if they hike and normalize the balance sheet" at the same time, according to Emons. Minutes of the Federal Open Market Committee's March 14-15 meeting published on Wednesday didn't contradict Dudley, and signaled that participants wanted to gradually shrink the balance sheet to prevent a sharp rise in borrowing costs. That led investors to mark down the expected amount of Fed tightening in 2018, from roughly two rate hikes to about one and a half. Answering questions Friday after a speech in New York, Dudley said "some people misconstrued" his comments a week earlier. "A pause is pretty short already, and I think a little pause is even shorter than that," he said. The idea is "just to make sure that the balance-sheet decision doesn't turn out to be a bigger decision than you thought you were making," he added.
The Fed's Balance Sheet and the Stance of Monetary Policy - U.S. monetary policy is tightening, as everyone who pays even the slightest attention to the financial news knows. But when and how? Here, the discussion is focused on two complementary aspects of Federal Reserve policy: interest rates and the balance sheet. The first of these concerns policy of the old-style conventional type. The second is about the consequences of quantitative easing. At $4.23 trillion, more than 5 times the 2007 level, the size of securities holdings raises a series of questions: When will the Federal Reserve’s Open Market Committee (FOMC) start to shrink its balance sheet? How will they do it? How far will they go? And, most importantly, what will be the consequences for the stance of monetary policy? On the first two―when and how―the minutes of the March 14-15, 2017 FOMC meeting provide the answers: later this year, the FOMC expects to instruct the open market operations staff at the New York Fed to stop reinvesting the proceeds from maturing securities. Consistent with the policy normalization principles published in September 2014, there is no hint that they will actively sell securities.The key uncertainty is how far they will go. At this stage, there is little indication of a consensus on how big or small the balance sheet should be at the end of the process. More on this shortly.Even if this uncertainty is clarified, however, any additional impact from balance sheet policy on the stance of policy probably will be limited. As with much of economic policy, it is the announcement that matters. Insofar as changes in the size and composition of the Fed’s balance sheet influence financial conditions, altering the future supply or demand for securities of various types, we have probably seen the key impact. Not only that, but when the minutes from the March 2017 FOMC meeting were published on April 5, neither interest rates nor the equity market moved. In other words, the impact of the policy on financial markets—to the extent that there is any impact at all—has been present in yields and asset prices for some time. To put it as clearly as we can—in the absence of outright bond sales—the balance sheet policy clarifications yet to come are unlikely to tighten financial conditions further, and will not substitute for a conventional interest rate increase. Instead, when the FOMC chooses to tighten over the course of the remainder of this year, they will do so by continuing to raise the target range for the federal funds rate (as we describe here).
Where would you prefer your balance sheet: Banks, or the Federal Reserve? - Academics are scared of making the Federal Reserve too political. But central-bank officials’ decisions affect the fundamental allocation of power in a country. One of the most important decisions they make is this: Who gets to create money?Depending on your political leanings, you might think there’s not much discretion to be used: Either banks create private money by lending/taking deposits and the government decides whether that money is legit, or the government creates money, and banks just add various forms of leverage. (Morgan Ricks of Vanderbilt addresses the public/private framework thoroughly in The Money Problem.) In the United States, the answer is both. Money is created in kind of a public-private partnership, as Ricks points out, since banks and states don’t issue their own notes anymore, but they do create money by lending. This is all fractional-reserve banking 101, of course. What’s most interesting is that the balance of power and responsibility in this US public-private partnership is still in flux. In fact, the future of the Fed’s balance sheet could help determine whether money creation becomes more public or more private from here on out. A (somewhat ironic) reason for this is the structure of post-crisis financial regulations. […] Now, I don’t feel terribly comfortable making value judgements about whether it’s better to sacrifice global investors’ access to dollar funding in order to contribute to guaranteed returns earned by government-employee pensions. But broadly, the Fed seems to be doing pretty darn well with the model of public money creation and intermediation, with the possible exception of three-month Libor being largely made up. (Take as an example money-market fund reform, where about $800bn of cash left prime funds and went into government funds.)And it’s important to keep in mind that we’re not just talking about opaque and arcane stuff here, though it is both opaque and arcane. When we talk about money markets, repo and regulation, we’re really talking about the control of the global market for dollars. And as long as the lever’s getting pulled, it doesn’t matter whether it’s fiscal or monetary, as Pozsar tells us: The difference between key cross-currency bases trading at -100 or -25 bps is an extra $400 billion of reserves in the system. Whether reserves are drained by Treasury boosting its cash balances, or by a runoff of the SOMA portfolio is the same thing. They both mean fewer reserves.
Fed Watch: Solid Employment Report: Labor markets were generally solid in March, with nothing by itself to dissuade the Fed from its current path. We should be watching for the Fed reaction to the decline in the unemployment rate, assuming it persists in the coming months. Could be dovish if the Fed lowers its estimate of the natural rate. Could be hawkish if they see a higher risk of undershooting the natural rate. Nonfarm payroll growth slowed to 98k: While this was below expectations, it wasn't a surprise. My interpretation is that most analysts expected downside risk to the estimates based on cold weather in March. No reason to think the basic underlying trend of solid but slowing declining job growth. The unemployment rate dipped to a cycle low of 4.5% and stands below the Federal Reserve's longer run unemployment projection: This will raise some eyebrows at the Federal Reserve. The median FOMC participant forecast 4.5% for December. So we are a little ahead of schedule on that. Does this mean the economy is poised to overheat? The wage numbers do not support that hypothesis: Wage growth flattened out in recent months, suggesting the economy is not yet in danger of overheating. Policymakers will be closely watching this dynamic and, more importantly, the path of inflation, between now and the next meeting. If inflation looks to be overshooting the forecast, the Fed may conclude that weak wage growth reflects low productivity rather than slack in the economy. That would be hawkish. Keep an eye on this space. While the headline jobs growth numbers disappointed, note that the forward looking indicator temporary help payrolls remains on an uptrend:As of the last JOLTS report, the dynamics in retail trade employment are not driven by layoffs, but by a hiring slowdown: Looks like both quits and hirings rolled over in recent months. What is interesting is that the due to the labor churn in the sector, a slowdown in hiring alone can have significant impact on the net job growth without relying on mass layoffs - at least not yet. Notice that discharges and layoffs in the sector are down from 2015. Still, the decline in the level of quits reflects employee worries about the state of the industry - they don't see it quite as easy to find a new job as they did in 2015.One data point that doesn't seem to fit with the story of an industry in decline is the level of job openings:
Don’t Politicize the Federal Reserve -- Robert Rubin - I was in the room when President Bill Clinton decided to reappoint Alan Greenspan, a lifelong Republican originally appointed by Ronald Reagan, as chairman of the Federal Reserve Board. A political adviser urged Mr. Clinton to choose an administration ally, but that was never seriously considered. The president’s choice was not determined by party, or politics or ideology.That’s how it has been for decades: Federal Reserve chairmen and governors have been selected based on their ability to serve the country. President Barack Obama reappointed George W. Bush’s nominee, Ben Bernanke, as chairman. President Reagan reappointed Jimmy Carter’s nominee, Paul Volcker.The Federal Reserve System was created by statute in 1913, but the independence of its monetary policy from congressional or presidential influence is not codified by law — and it wasn’t always inviolable. In recent years, so-called reforms have been proposed to subject Fed monetary policy to congressional review, but its independence has so far been preserved. For good reason: An independent Federal Reserve led by governors who are committed to pursuing its dual mandate of price stability and full employment, as well as effective regulation — and who make decisions based on facts and analysis — is critically important to our economy, the well-being of the people and the market credibility of Fed policy making. But that independence is about to be severely tested. Daniel K. Tarullo stepped down from the Federal Reserve Board last week, adding to the board’s two existing vacancies. Instead of remaining as governors, Chairwoman Janet Yellen and Stanley Fischer, the vice chairman, could step down when their terms expire next year. President Trump has already said that he will not reappoint Ms. Yellen as chairwoman because she’s not a Republican. Mr. Trump could therefore fill as many as five of the board’s seven seats within the next year. I fear that he may appoint governors who lack a commitment to the Fed’s dual mandate and will instead seek to please the White House.
Donald Trump says Janet Yellen ‘not toast’ after her term expires -- President Donald Trump signalled he could be moving closer to the mainstream on monetary policy, saying he had not ruled out reappointment of Janet Yellen to a new four-year term as Fed chair as he considers his choices for the central bank.In an interview with the Wall Street Journal, Trump was asked if Yellen was "toast" when her term expires in February, a question that reflected a widespread assumption that he would put his own stamp on the monetary authority rather than rely on former President Barack Obama's choice to run the Fed.Trump replied with his most explicit comments about the Fed since taking office, saying that Yellen was "not toast", that he had "respect" for her, and that he would prefer the Fed to keep interests rates low.Though rates are rising under Yellen they remain low by historic standards. Yellen and other policymakers have emphasised that rates will rise only gradually in the months ahead, and that monetary policy would remain loose for perhaps years to come.The Fed said it would not comment on Trump's remarks. Yellen, who like Trump turned 70 last summer, has said little about the subject other than that she intended to serve out her current term.
Key Measures Show Inflation close to 2% in March --The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning: According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (1.8% annualized rate) in March. The 16% trimmed-mean Consumer Price Index was unchanged (0.3% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report. Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers fell 0.3% (-3.4% annualized rate) in March. The CPI less food and energy fell 0.1% (-1.5% annualized rate) on a seasonally adjusted basis. Note: The Cleveland Fed released the median CPI details for March here. Motor fuel was down 53% annualized in March.This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.5%, the trimmed-mean CPI rose 2.1%, and the CPI less food and energy rose 2.0%. Core PCE is for February and increased 1.75% year-over-year.On a monthly basis, median CPI was at 1.8% annualized, trimmed-mean CPI was at 0.3% annualized, and core CPI was at -1.5% annualized. Using these measures, inflation was soft in March - but has generally been moving up, and most of these measures are at or above the Fed's 2% target (Core PCE is still below).
Mixed Q1 GDP Estimates Cloud Economic Outlook - Projections for US economic growth in the first quarter continue to present a varied outlook, ranging from a sharp slowdown to a modest improvement. But if this is a reason for the central bank to delay interest rate hikes, there was no sign of concern in Fed Chair Janet Yellen’s comments on Monday. “Looking forward, I think the economy is going to continue to grow at a moderate pace,” Yellen said at the University of Michigan’s Ford School of Public Policy. “We think a gradual path of increases in short-term interest rates can get us to where we need to be, but we don’t want to wait too long to have that happen,” she advised.No change in rates is expected for next month’s policy announcement, but the Fed funds futures market is currently pricing in a roughly 67% probability of lifting the target range at the June FOMC meeting, based on CME data as of Apr. 10.One factor that may influence the Fed’s outlook for monetary policy in the near term is the government’s first Q1 GDP report that’s scheduled for release on Apr. 28. Current projections are still wide ranging. On the low end is last Friday’s revision of the Atlanta Fed’s GDPNow model, which is anticipating that output will decelerate to a weak 0.6% quarterly increase – well below the 2.1% rise in the previous quarter. By contrast, the New York Fed’s model is projecting a moderately firmer advance of 2.8%.Why such a big difference in the two Fed-bank estimates? “They use very different models,” Thomas Byrne of Wealth Strategies & Management said recently via Barron’s. “The NY Fed tends to have a more optimistic forecast, versus the Atlanta Fed.” He added that the average of the two projections tends to track the outlook via Wall Street economists.Byrne’s rule of thumb resonates at the moment. CNBC’s Apr. 7 median survey of Wall Street’s expectations for Q1 growth is 1.4%, slightly below the 1.7% average of the two Fed bank estimates.Meanwhile, the Fed-bank average matches the implied forecast via M arkit’s latest survey data. “The March PMI numbers add to the picture of a relatively modest opening quarter to 2017 for the US economy,” Chris Williamson, chief business economist at IHS Markit, said last week. “The surveys of manufacturing and services are running at levels consistent with GDP expanding by 1.7% in the first quarter.”
"Hard" Economic Data Slides To One Year Lows --- With 2017 EPS expectations at 2017 lows, 2017 GDP expectations at 2017 lows... And real bond yields at 2017 lows, it should hardly be surprising that 'hard' economic data has collapsed to its lowest level in over a year. What should be surprising is the equity market's desperate clinging to 'soft' survey data's high hope levels... Asa Citi's Amir Amin notes, much of the repricing across asset markets post November’s election was as a function of faith-based "animal spirits" as opposed to economic fundamentals. Price action momentum in a number of markets seems to have now stalled, however. What does potentially concern us is the gap between hard and soft data surprises in the US. For some time now we have been tracking this disparity in data, however more worryingly the hard-data surprise index has turned into negative territory. But the hard vs. soft surprise index isn’t the only place we are seeing divergences. The Atlanta Fed Nowcast languishes at 1.2%, not far from the 2016 lows. Meanwhile, the macro data index is at cyclical highs (right had chart above). We saw divergences like this (macro index making higher highs, Nowcast making lower lows), notably in 2012 but also to some extent in 2013. For equity markets, in 2012 a ~10% correction ensued, whilst in 2013, 2 smaller corrections of ~5% followed. Similarly, 2012 saw 10y UST yields fall ~90bps and ~50bps twice in 2013. Both occasions the Nowcast acted as a leading indicator. Our fear now of course is despite rampant optimism in the US, the data just hasn’t delivered. Unless we start seeing hard data momentum increase, our view on risk assets may not be as sanguine.
Q1 GDP Forecasts Downgraded Again -- From the Altanta Fed: GDPNow The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.5 percent on April 14, down from 0.6 percent on April 7. The forecast for first-quarter real consumer spending growth fell from 0.6 percent to 0.3 percent after this morning's retail sales report from the U.S. Census Bureau and the Consumer Price Index release from the U.S. Bureau of Labor Statistics. From the NY Fed Nowcasting ReportThe FRBNY Staff Nowcast stands at 2.6% for 2017:Q1 and 2.1% for 2017:Q2.Incoming data during the week lead to a reduction of the nowcast by 0.2 and 0.5 percentage point for 2017:Q1 and 2017:Q2, respectively. The changes in the nowcast were mainly driven by a negative surprise from retail sales.
Atlanta Fed Slashes Q1 GDP Forecast To Just 0.5%, Lowest In Three Years -- Just over two months ago, the Atlanta Fed "calculated" that Q1 GDP was going to be a pleasant 3.4%, confirming that the Fed had made the correct decision by hiking not only in December, but also last month. Since then, the Fed's own GDP estimate has crashed in almost linear fashion, and as of this morning - after the latest disappointing retail sales report - it had plunged to just 0.5%, which if accurate would make Q1 the weakest quarter going back three years to Q1 2014. From the regional Fed: The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.5 percent on April 14, down from 0.6 percent on April 7. The forecast for first-quarter real consumer spending growth fell from 0.6 percent to 0.3 percent after this morning's retail sales report from the U.S. Census Bureau and the Consumer Price Index release from the U.S. Bureau of Labor Statistics. Putting the Atlanta Fed's forecast in context, a 0.5% GDP would mark the weakest quarter in three decades, or going back to 1987, in which the Fed hiked rates. Then again, considering today's abysmal CPI and retail sales data, the narrative to focus on next is not so much hiking, or balance sheet normalization, but when the Fed will cut and/or launch QE4.
Larry Summers, of all people, misses China’s role in “secular stagnation” -- Jared Bernstein -- My old Obama admin econ team colleague Larry Summers gets some important aspects of the China story wrong in this oped today. Weirdly so, given his exposure as a top (and very effective) policymaker the last time the downsides of financial imbalances whacked the globe. Larry argues, and I agree, that none of the stuff team Trump is worrying about re China’s economy and international accounts makes sense. The problem, he argues, is China’s grab for “soft” power, filling an international gap while making an international power-grab, as the US goes insular. That may well be true. I don’t like when economists, myself included, get all policy sci on us, but it happens, and Larry may be onto something important. He’s also clearly right that China is not intervening in currency markets to depreciate their currency. The Trump team is about 20 years late on that one. But Larry is surprisingly blasé about a China problem: excess savings (really, an East Asia problem, as Brad Setser points out). I associate this problem with Summers’ own work on “secular stagnation”—persistent demand shortfalls even in recovery. Another way to view sec stag is one of excess savings: the globe is awash in more savings that we have good, productive uses for. That, in turn, can lead to depressed interest rates, credit bubbles, large trade surpluses in savings glut countries, which in turn force large trade deficits elsewhere, and high unemployment, depending on what offsets are in play in trade deficit countries. Larry himself has recognized this problem (as has Ben Bernanke since the mid-2000s in his seminal savings glut speech) and wisely called for public infrastructure investment to help offset it. Our trade deficit with China is 1.6 percent of GDP; that’s a significant drag on demand. In terms of offsets, the Fed is pushing in the other direction (tightening) and the fiscal authorities…um…Congress…can’t find the light switch. We’re of course doing better than most other advanced economies, but here we are in year eight of an expansion and (slight) output gaps still persist.
US budget deficit hits $176.2 billion in March: The federal government ran a budget deficit in March that was sharply higher than a year ago because of special factors. Through the first half of this budget year, the deficit is running 14.7 percent higher than the same period a year ago. The Treasury Department says the deficit in March totaled $176.2 billion, compared to $108 billion in March of last year. A big part of that increase reflected $42 billion in April benefit payments that were shifted into March because April 1 fell on a Saturday this year. Through the first six months of this budget year, the deficit totals $526.9 billion, up 14.7 percent from last year's six-month total of $459.4 billion.
Congress Heads Out For Vacation As Government Shutdown Looms - Members of Congress have headed back to their districts for a two-week recess after one of the most bitterly divided sessions in history that culminated with Republicans launching the 'nuclear option' to confirm Supreme Court Justice Neil Gorsuch. Unfortunately, upon their return to Washington DC, they will have just 5 days to unveil, debate and pass a spending bill, or trigger a government shutdown on April 28.And while government shut downs have happened before with little economic consequence, as Goldman warns, failure to pass a budget this time around could have broader implications regarding the Trump administration's ability to implement some of his key policy initiatives like tax reform and healthcare...issues which have clearly helped boost equity markets to all-time highs.Congressional appropriations expire April 28. If Congress does not pass an extension, the federal government will partially shut down. The economic consequences of a short shutdown are minor, since lost federal pay is usually made up retroactively and government procurement and private sector activity would be largely unaffected.However, a shutdown would send another signal to markets that Republicans may not be able to enact their agenda, lowering expectations for tax reform and an infrastructure program.We believe Congress is more likely to meet the deadline, but see a one in three chance of a shutdown.The “freedom caucus” in the House may be unwilling to vote for a spending bill, denying Republicans a majority without Democratic votes. However, Democrats might be unwilling to provide those votes as they often have in the past, in light of the decision to change Senate rules to confirm Neil Gorsuch to the Supreme Court over Democratic opposition.That said, there is not yet a clear issue Democrats are likely to point to in defense of a shutdown, as Republicans did in the 2013 shutdown when they demanded that Obamacare be defunded. If such an issue emerges—Republican leaders have already indicated they plan to keep funding for the border wall out of the bill to avoid such an issue—then the odds of a shutdown would rise considerably. While the media will undoubtedly go berserk if a Government shut down actually happens, they're hardly unprecedented. Per the chart below from Goldman, there have been 11 such shutdowns since 1977, varying in duration up to 21 days.
Government Shutdown Odds Are Rising, Goldman Warns -- Having been quite confident that Trump would be able to pass some form of Tax reform as recently as two weeks ago, Goldman's Washington analyst, Alec Phillips, is turning increasingly more pessimistic on the prospects that Trump's economic agenda will gain traction in Congress, especially now that attention has seemingly shifted to Trump's bombing policies in Syria (and perhaps North Korea in the not too distant future).In a note over the weekend, the Goldman strategist writes that "following the failure to pass the American Health Care Act (AHCA), which would repeal the Medicaid expansion and tax hikes enacted in the Affordable Care Act (ACA) and reduce the tax subsidies for health insurance under that law, Republican leaders in the House have struggled to develop an alternative health proposal that might find enough support to pass. At this point, it still appears possible that the House could pass a revised version of the bill at some point in May. However, the compromises that might be made in the House to gain support are apt to reduce support in the Senate, and the process in that chamber would take much longer than even the drawn out House process, in our view."He also observes that lawmakers and market participants have refocused their attention on tax reform, "though a number of other issues are likely to delay activity on tax legislation for another several weeks." This includes another potential attempt to pass health legislation, the possibility of a government shutdown, a debt limit deadline later this year, and geopolitical developments.Which brings us to the key topc: the prospect of a government shutdown in less than three weeks. This is what Phillips says when discussing the risks of a government shutdown on April 29.Congressional appropriations expire April 28. If Congress does not pass an extension, the federal government will partially shut down. The economic consequences of a short shutdown are minor, since lost federal pay is usually made up retroactively and government procurement and private sector activity would be largely unaffected.However, a shutdown would send another signal to markets that Republicans may not be able to enact their agenda, lowering expectations for tax reform and an infrastructure program.We believe Congress is more likely to meet the deadline, but see a one in three chance of a shutdown.
Congress Sinks Into Partisan Morass as Shutdown Threat Looms - Members of Congress are back home for a two-week recess after one of the most bitterly divided and least productive starts in recent history. A new, urgent challenge is waiting for them when they return: finding a way to set aside their anger and mistrust long enough to keep the federal government open. Government funding expires on April 28, which will give Congress five days to unveil, debate and pass an enormous spending bill, or trigger a government shutdown. “What a mess,” said Paul Brace, a congressional expert at Rice University in Houston, offering his own pessimistic view of the unified Republican control of the House and Senate so far under President Donald Trump. “It was so much easier when all you had to do was oppose Obama.” Republicans control both chambers of Congress and the White House, yet their sole legislative accomplishments are a few measures reversing obscure regulations implemented in the closing months of Barack Obama’s presidency. The health-care debate has been particularly painful and embarrassing for Republicans. After passing dozens of repeal bills that were never going to be enacted under Obama, they couldn’t quite unify on a plan that could actually become law under Trump. House Republicans “have differences of opinion. And they aren’t just political differences, they are policy differences,” said Republican Senator Rob Portman of Ohio. “They’re going to have a tough time coming together without some Democratic votes, and I think that’s the acknowledgment." Republicans and Trump have yet to try to engage Democrats on health care, or other significant legislative priorities. Confirmation of Trump’s Supreme Court nominee came only after Republicans changed Senate rules to overcome Democratic opposition.
2017 Debt Crisis Looms: Congress Will Have 4 Days To Avoid A Government Shutdown On April 29 -- April 2017 could turn out to be one of the most important months in U.S. history that we have seen in a very long time. On April 6th, Donald Trump attacked Syria on the 100th anniversary of the day that the U.S. officially entered World War I, and now at the end of this month we could be facing an unprecedented political crisis in Washington. On Friday, members of Congress left town for their two week “Easter vacation”, and they won’t resume work until April 25th. What this means is that Congress will have precisely four days when they get back to pass a bill to fund government operations or there will be a government shutdown starting on April 29th.Up to this point, there has been very little urgency by either party to move a spending bill forward. It is almost as if everyone is already resigned to the fact that a government shutdown will happen. The Democrats will greatly benefit from a government shutdown because they can just blame the entire mess on the Republicans. But for the GOP, this is essentially the equivalent of political malpractice.To me, there is simply no way that Congress is going to be able to agree on a bill that funds the entire government in just four days. And it turns out that this upcoming deadline comes exactly on the 100th day of Trump’s presidency…The U.S. government is poised to shut down on Day 100 of Donald Trump’s presidency, unless Congress can pass a new spending bill or a continuing resolution before the current one expires on April 28.Since Congress is currently on a two-week recess, there will be a sense of urgency to get a new bill passed once they reconvene on April 25. Leaders in both chambers would have four days to craft a new proposal that each side can agree on and get it on the president’s desk for Trump to sign.If the Republicans control the White House, the Senate and the House of Representatives, why will it be so difficult to get an agreement on a spending bill?Well, first of all, look at how difficult it was for the Republicans to agree on a bill to repeal and replace Obamacare. At this point, it doesn’t look like that is going to happen at all. More importantly, any bill to fund the government is going to require 60 votes in the Senate. The “nuclear option” that the Republicans just used to push the Gorsuch Supreme Court nomination through is not available in this case under current Senate rules because a spending bill of this nature would not qualify. So the Democrats have leverage, and they plan to use it to the maximum. Senate Minority Leader Chuck Schumer is already promising to block any spending bill that includes funds for a border wall or that defunds Planned Parenthood…
Mick Mulvaney Seems Complacent About a Government Shutdown - President Trump’s budget director Mick Mulvaney is displaying a pre-Katrina level of complacency about whether his boss’s hundredth day in office will coincide with a shutdown of the government due to lack of congressionally-approved funding.Lawmakers are on recess for Easter, set to return four days before current funding runs out at the end of the month.Despite the short timeline and the disparate positions of the White House and Congress, Mulvaney does not anticipate a shutdown, recently telling CNBC’s John Harwood that chances of a shutdown are “very low” and that he has not yet instructed federal agencies to make preparations for one. “I don’t see the need to, to be honest with you,” he said. “So we’ve gone to the appropriators and said, ‘Look, if you all can figure out a way to do this, let’s do it together.’ Shutdown is never a desired end.”Even if lawmakers don’t reach a deal in time, Mulvaney said he does not foresee significant problems in the event of a temporary lapse. “It’s happened 17 times between 1976 and 1994. Those lapses in funding used to be fairly typical,” he said. “I think the government, if you measure it in terms of the dollars out the door, about 83 percent of the government stays open in a government shutdown. Social Security checks go out, military still exists. The FBI still chases bad guys. I think the consequences have been blown out of proportion.” Let’s all save those quotes and see how they pan out. If there is a government shutdown on President Trump’s 100th Day anniversary, Mulvaney is going to look pretty stupid. Earlier in this same article, it’s reported that “Mulvaney has…told lawmakers the White House wants to see the must-pass spending bill restrict funding to cities that have sanctuary policies limiting cooperation with federal officials on immigration enforcement.” If that’s true, the Democrats won’t vote for it. They won’t vote for any funding of a border wall either. Congressional Republicans are now habitually inclined to use must-pass bills to force through provisions (free riders) that cannot pass through Congress under ordinary circumstances. The Democrats aren’t going to supply votes to abolish Planned Parenthood or fulfill some of the other fever dream desires of the hard right, so unless the Republican leadership can keep these riders out, they’ll need to find their own votes to keep the government open. But many conservatives are not inclined to vote for bills that will increase the deficit or even fund the government in a neutral way if the funding doesn’t include some of these spoils. They thought they could pass their health care reform bill with only Republican votes, too, and look how that worked out.
Budget director to tell federal agencies to plan for major cuts: report | TheHill: White House budget chief Mick Mulvaney will this week send a memo to federal agencies instructing them to prepare for future cuts to funding and staff, according to a new report. The guidance letter, Axios reported on Sunday, was set forth by the executive order President Trump signed last month for “reorganizing the executive branch.” The order calls to “improve the efficiency, effectiveness, and accountability of the executive branch by directing the Director of the Office of Management and Budget to propose a plan to reorganize governmental functions and eliminate unnecessary agencies, components of agencies and agency programs.” The federal agencies will likely plan to lay off staff, eliminate programs and sell real estate, according to the report — some agencies could shutter or consolidate. Axios reported a final proposal of the federal-agency cuts could take until next year.
White House to lift federal hiring freeze -- The White House will lift President Trump’s federal hiring freeze on Wednesday, following fire from critics who said it hampered the government from carrying out core functions. The end of the freeze is part of guidance ordering federal departments and agencies to submit restructuring plans to the Office of Management and Budget (OMB) by the fall. “It does not mean the agencies will be free to hire willy-nilly,” OMB Director Mick Mulvaney told reporters Tuesday. “What we’re doing tomorrow is replacing the across-the-board hiring freeze that was put in place on day one and replacing it with a smarter plan, a more strategic plan, a more surgical plan.” Trump signed an executive order on his first full work day in the White House that temporarily halted all non-military federal hiring, an attempt to fulfill his campaign promise to “drain the swamp” and reduce the size of government. But the freeze resulted in an increased backlog of benefits claims at the Veterans Affairs (VA) department, which Trump pledged to strengthen during the campaign. It also created delays in the processing of Social Security checks, staff shortages at federal prisons, the closure of childcare facilities at military bases and fewer workers at the Food and Drug Administration to work on drug approvals. Mulvaney did not say how many vacancies in the federal government would be filled after the freeze is lifted.
A Fiscal Reality Test for US Republicans - Nouriel Roubini - US President Donald Trump’s first major legislative goal – to “repeal and replace” the 2010 Affordable Care Act (“Obamacare”) – has already imploded, owing to Trump and congressional Republicans’ naiveté about the complexities of health-care reform. Their attempt to replace an imperfect but popular law with a pseudo-reform that would deprive more than 24 million Americans of basic health care was bound to fail – or sink Republican members of Congress in the 2018 mid-term elections if it had passed. Now, Trump and congressional Republicans are pursuing tax reform – starting with corporate taxes and then moving on to personal income taxes – as if this will be any easier. It won’t be, not least because the Republicans’ initial proposals would add trillions of dollars to budget deficits, and funnel over 99% of the benefits to the top 1% of the income distribution. A plan offered by Republicans in the US House of Representatives to reduce the corporate-tax rate from 35% to 15%, and to make up for the lost revenues with a border adjustment tax, is dead on arrival. The BAT does not have enough support even among Republicans, and it would violate World Trade Organization rules. The Republicans’ proposed tax cuts would create a $2 trillion revenue shortfall over the next decade, and they cannot plug that hole with revenue savings from their health-care reform plan or with the $1.2 trillion that could have been expected from a BAT. The Republicans must now choose between passing their tax cuts (and adding $2 trillion to the public debt) and pursuing a much more modest reform. The first scenario is unlikely for three reasons. First, fiscally conservative congressional Republicans will object to a reckless increase in the public debt. Second, congressional budget rules require any tax cut that is not fully financed by other revenues or spending cuts to expire within ten years, so the Republicans’ plan would have only a limited positive impact on the economy. And, third, if tax cuts and increased military and infrastructure spending push up deficits and the public debt, interest rates will have to rise. This would hinder interest-sensitive spending, such as on housing, and lead to a surge in the US dollar, which could destroy millions of jobs, hitting Trump’s key constituency – white working-class voters – the hardest.
White House ends hiring freeze, mandates workforce, mission restructuring The White House’s plan for reforming government and reducing the federal workforce is one of the most ambitious undertakings over the last 20 years. The 14-page memo issued to agency leaders by Office of Management and Budget Director Mick Mulvaney on April 12 outlines a series of long- and short-term actions agencies need to take around reducing the number of employees, improving how they measure employee performance and restructure their mission areas.“The government hiring freeze will end with the release of this guidance. That doesn’t mean, and I made it very clear to all of the agency heads and the deputy chiefs over the last couple of days, the agencies will be free to hire willy-nilly. What we are doing is replacing the across-board hiring freeze that we put in place day one, and replacing it with a smarter plan, a more strategic plan, a more surgical plan,” Mulvaney said during a press briefing April 11. “To the larger issue, the government reorg is probably the biggest story no one is talking about. Yes, we talk about health care. Yes, we talk about taxes. And yes we talk about infrastructure. All of those are extraordinary critical to rebuilding the country. This is something that goes much deeper and to the very structure of government. This is trying to do something that never has been done before. The executive branch of government has never been rebuilt. It has grown organically over the course of the last 240 years. The President of the United State has asked all of us in the executive branch to start from scratch. A literal blank piece of paper, and say, ‘If you were going to rebuild the executive branch, what would it look like?’” Mulvaney said in the end, the goal of this two-year effort will be to make the government “dramatically more accountable, more efficient and more effective.” This memo is the implementation guidance required under President Donald Trump’s executive order in March to reorganize the government.In that order, OMB gave agencies 180 days to submit a reorganization strategy and this memo details how agencies should go about that.
Trump Lays Groundwork for Federal Government Reorganization President Donald Trump is issuing a presidential memorandum that will call for a rethinking of the entire structure of the federal government, a move that could eventually lead to a downsizing of the overall workforce and changes to the basic functions and responsibilities of many agencies.The order, which will go into effect Thursday, also will lift a blanket federal hiring freeze that has been in place since Trump’s first day in office almost three months ago and replace it with hiring targets in line with the spending priorities the administration laid out in March, said Mick Mulvaney, director of the Office of Management and Budget. The move is a part of Trump’s campaign pledge to "drain the swamp" and get rid of what the administration views as inefficiencies in the federal government, Mulvaney said. It comes as the White House also is trying to curb the size of many government agencies through a proposed budget that calls for historically deep spending cuts to everything from medical research to clean-energy programs.The push to reshape the government as well as the budget cuts are almost certain to draw opposition from Congress."We think at the end of the day this leads to a government that is dramatically more accountable, dramatically more efficient, and dramatically more effective, following through on the very promises the president made during the campaign and that he put into place on day one," Mulvaney said. He said the administration is starting with a "blank sheet of paper" as to how the government should operate and has set up a website to solicit ideas.One solution may be to organize it by function, like putting all areas that deal with trade under one department, or to break up large departments into a number of smaller agencies. As an example, Mulvaney said there are 43 different workforce-training programs across at least 13 agencies -- without a single point person in charge of them -- that could be brought under one roof.“We’re now transitioning into the smarter, more surgical plans of running the government,” Mulvaney said in an interview on MSNBC Wednesday morning. The adjustments will then be included in the fiscal 2019 budget, which the administration will start putting together this September.
Trump’s Idea of Running Government Like a Business is Bad for Citizens - naked capitalism - Yves here. Let us not forget that George Bush also made much of the fact that he was going to run the Administration like a corporation, with a bunch of supposedly very disciplined MBAs. We have an update on this dodgy Republican pitch via the Real News Network. Michael Hudson gives a high level debunking of a pet Republican canard: that government should operate like a business.
Trump sends dollar down with warning it is 'too strong' -- President Donald Trump triggered a slide in the US dollar on Wednesday after he complained the currency has risen too high — in part because of what he said was confidence in his own presidency. Commenting just days before gatherings of finance ministers from around the world in Washington, Mr Trump also revealed a major policy U-turn as he said that the US government would not label China a currency manipulator. In an interview with the Wall Street Journal, Mr Trump declined to shut down the possibility of re-nominating Janet Yellen as chair of the Federal Reserve despite campaign pledges not to offer her a second term. The US currency stabilised in morning London trading, but the dollar index, which compares the greenback to its major rivals, fell as much as 0.8 per cent in the wake of Mr Trump’s remarks and set its low during Asia trading on Thursday. It was still well below levels before Mr Trump’s comments. Sterling was a shade under its highest point of the day at $1.2555, while the euro was also edging lower at $1.0655.Alan Ruskin, strategist at Deutsche Bank said efforts to talk down the dollar were constrained by a Federal Reserve looking to tighten policy this year. “If the Fed is more hawkish than the market expects, jawboning will very quickly become less effective.’’ Mr Trump has previously expressed concern about the level of the dollar as he discusses measures aimed at tackling the US trade deficit and bolstering manufacturing within the US. His blunt words on the currency have clashed with America’s traditional “strong dollar” policy and triggered concerns that the US could pursue a more aggressive approach to foreign exchange diplomacy.
Trump Abandons Economic Reforms to Embrace War Spending - In February, David Stockman pointed out that the Trump administration appears none too interested in addressing many of the economic issues that Trump claimed would be at the center of his administration. Instead, Stockman noted, Trump spent all his time obsessing over his travel ban — which he still can't get beyond the courts — and other non-economic issues. Stockman noted: It's the economy, stupid. ... Trump was elected because flyover America is hurting economically. The voters of Racine, Wisconsin and Johnstown, Pennsylvania are imperiled not because of some refugees, they're imperiled because their jobs have all been disappearing for decades. The problem is far more the Federal Reserve, Janet Yellen, the bubbles they're creating on Wall Street...And that was even before Trump mishandled the Obamacare repeal. But now that it's April, it's all the more clear that Stockman was right. Trump and the GOP have already abandoned the Obamacare issue — and the Trump administration has now signaled there won't be any attempts at tax cuts anytime soon. In February, Trump was promising a corporate tax cut bill "in two or three weeks." Now, nothing's even on the horizon. Obamacare has also been relegated to the back burner. Nor should we expect anything on monetary policy. Trump has already hired a Treasury Secretary who praises Janet Yellen, and if Trump is as "anti-establishment" on monetary policy as he is on foreign policy, then we can expect Trump to offer simply more of the same. And, given Trump's big spending plans, Trump will certainly need the Fed with its ability to further monetize the deficit spending Trump is more than happy to keep going full speed ahead. Moreover, when the economy enters recession, we can expect Trump to call for both massive monetary and fiscal stimulus, just as his Republican predecessor George W. Bush did in the face of recession in 2001 and again in 2008. In response to the administration's obvious disinterest in economic issues, the Trump fanboys will surely cry "give him some time!" But, if Trump actually cared about these issues, he'd be talking about the need for tax cuts and relief from Obamacare. He'd be making speeches. He'd be meeting with Congress about it. He'd be telling voters to call their members of Congress and demand reform. He'd be giving press conferences on how we need to get the government off the backs of the people. None of that is happening. What's worse, what few changes Trump has made on regulatory reform have all been made through executive order. This means they will be immediately reversible when another administration comes in — probably four years from now.
The media loved Trump’s show of military might. Are we really doing this again? -- The cruise missiles struck, and many in the mainstream media fawned. “I think Donald Trump became president of the United States last night,” Fareed Zakaria declared on CNN, after the firing of 59 missiles at a Syrian military airfield late Thursday night. (His words sounded familiar, since CNN’s Van Jones made a nearly identical pronouncement after Trump’s first address to Congress.) “On Syria attack, Trump’s heart came first,” read a New York Times headline. “President Trump has done the right thing and I salute him for it,” wrote the Wall Street Journal’s Bret Stephens — a frequent Trump critic and Pulitzer Prize-winning conservative columnist. He added: “Now destroy the Assad regime for good.” Brian Williams, on MSNBC, seemed mesmerized by the images of the strikes provided by the Pentagon. He used the word “beautiful” three times and alluded to a Leonard Cohen lyric — “I am guided by the beauty of our weapons” — without apparent irony. Quite the pivot, for some. Assessing Trump’s presidency a few weeks ago, Zakaria wrote that while the Romans recommended keeping people happy with bread and circuses, “so far, all we have gotten is the circus.” And the Times has been so tough on Trump that the president rarely refers to the paper without “failing” or “fake” as a descriptor. (Department of Defense) But after the strikes, praise flowed like wedding champagne — especially on cable news. “Guest after guest is gushing. From MSNBC to CNN, Trump is receiving his best night of press so far,” wrote Sam Sacks, a Washington podcaster and journalist. “And all he had to do was start a war.”
The Spoils of War: Trump Lavished With Media and Bipartisan Praise For Bombing Syria -- In every type of government, nothing unites people behind the leader more quickly, reflexively or reliably than war. Donald Trump now sees how true that is, as the same establishment leaders in U.S. politics and media who have spent months denouncing him as a mentally unstable and inept authoritarian and unprecedented threat to democracy are standing and applauding him as he launches bombs at Syrian government targets.Trump, on Thursday night, ordered an attack that the Pentagon said included the launching of 59 Tomahawk missiles which “targeted aircraft, hardened aircraft shelters, petroleum and logistical storage, ammunition supply bunkers, air defense systems, and radars.” The governor of Homs, the Syrian province where the attack occurred, said early this morning that the bombs killed seven civilians and wounded nine.The Pentagon’s statement said the attack was “in retaliation for the regime of Bashar Assad using nerve agents to attack his own people.” Both Syria and Russia vehemently deny that the Syrian military used chemical weapons.When asked about this yesterday by the Globe and Mail’s Joanna Slater, Canadian Prime Minister Justin Trudeau urged an investigation to determine what actually happened before any action was contemplated, citing what he called “continuing questions about who is responsible”: But U.S. war fever waits for nothing. Once the tidal wave of American war frenzy is unleashed, questioning the casus belli is impermissible. Wanting conclusive evidence before bombing commences is vilified as sympathy with and support for the foreign villain (the same way that asking for evidence of claims against Russia instantly converts one into a “Kremlin agent” or “stooge”).
D.C.’s war madness - From the start of the 2016 Republican primaries on down through Donald Trump's surprise electoral college victory, the transition, and the opening months of his administration, members of this foreign policy establishment and these leading politicians and pundits have been united in expressing dismay and alarm about Trump's lack of temperamental and intellectual fitness to serve as commander-in-chief. Yet the moment Trump gave the order to launch 59 Tomahawk missiles at a Syrian airbase used in a chemical weapons attack a few days earlier, all was forgotten and forgiven. Finally Trump became president! Finally he put Syrian President Bashar al-Assad in his place! Finally the U.S. showed it had moved beyond former President Barack Obama's reluctance to use military force! It's hard to know where to begin in formulating a response to this outpouring of delight at the thought of Trump giving the order to launch a barrage of deadly weapons at a sovereign nation over 5,000 miles from American shores. But let's start with absolute basics: Launching even one missile at another country is not, as we euphemistically like to presume, a "military action," a "military operation," or even a "humanitarian intervention." It is an act of war. Full stop. That many countries in the world, including Syria, are far too weak to consider launching a retaliatory counter-attack against the United States for such a bombardment is utterly irrelevant. How would a more powerful country — China, for example — respond if we fired even one cruise missile at its territory? How, for that matter, would we respond if China fired just one at us? The answer is patently obvious: We would respond furiously, and with complete justification, because it would be an act of war. How people who spend their lives thinking about international affairs can write about America's actions in the world without placing this fact at the center of their analysis is nothing short of astonishing — and a confession that their thinking is really a form of ideological propaganda that places the United States in a different category from every other country in the world. (American exceptionalism might be a relatively salutary civic myth, but it is a myth all the same. It has no business playing a role in the policy recommendations of informed analysts.)
Michael Savage Turns on Trump, Says Syrian Gas Attack Was False Flag Operation --Conservative talk show host, Michael Savage, who fervently supported Trump during the Presidential campaign, soured on him today. Savage, using his background in science, having a PhD in epidemiology, said the alleged gas attack in the ISIS controlled city of Idlib was most likely phosgene and not sarin. Backing up his claim that the attack did not contain sarin, Savage made referenced to photos showing first responders attending to bodies without gloves or protective gear. Had sarin been used in the attack, all of those men in white helmets would be dead. In nearly a 15 minute soliloquy over the attack, Savage lamented that the neocon 'military tweet' by Trump was a ploy of increase his popularity, in light of falling poll numbers. Verbosely, Savage hem and hawed over his disappointment, dispirited that he spent over a year advocating for Trump, who said he eschewed the interventionist policies of people like McCain, Graham, and Schumer, only to cave in shortly after winning the Presidency. Savage also questioned the timing of Trump's son in law's trip to Iraq and Bannon's demotion from the NSC as highly suspicious."This whole thing stinks to high heaven,' said Savage" Furthering his criticism of the President, Savage proclaimed: "It looks like Hillary, deep state won, and Trump is doing her bidding," .As it pertained to who was responsible for the attack, Savage reminded his audience that just last week Putin was considered to be the smartest and most diabolical man on earth. If so, why on earth would he permit Assad to launch a chemical weapons attack, when they had already defeated the rebels, which was sure to turn public opinion against them? "Why would he do it, you morons you?", said Savage.
Trump to Congress: Syria strike was in 'vital national security interest' of US | TheHill: President Trump on Saturday delivered his justification to Congress for ordering a missile strike on Syria this week, saying in a letter to congressional leaders that the U.S. was prepared to take further military action if necessary. "I acted in the vital national security and foreign policy interests of the United States, pursuant to my constitutional authority to conduct foreign relations and as Commander in Chief and Chief Executive," Trump wrote. "The United States will take additional action, as necessary and appropriate, to further its important national interests," he added.Under the War Powers Resolution, the president is required to submit an explanation for the use of force within 48 hours after military action is taken. The deadline for Trump to do so would be Saturday night. Trump's letter echoed his comments delivered roughly an hour after the strikes on Thursday night, when he characterized the strikes as in the "vital national security interest" of the U.S. “It is in this vital national security interest of the United States to prevent and deter the spread and use of deadly chemical weapons,” Trump said at his Mar-a-Lago resort in Florida, where he was hosting Chinese President Xi Jinping. A number of world leaders rallied around the U.S. strikes on Friday, applauding the action as a necessary and proportional response to Syrian President Bashar Assad’s alleged use of chemical weapons in the country’s Idlib Province.
General McMaster Ties Himself into a Pretzel Trying to Explain Syrian Strategy --The one thing the good General was clear on, however, was the fact that Russia needed to figure out what they're doing in the middle east. Clearly, the United States knows exactly what to do, which entails wars that never end costing trillions of dollars -- leading to the deaths of millions.“What we’re saying is, other countries have to ask themselves some hard questions,” McMaster said in an interview on "Fox News Sunday." “Russia should ask themselves, ‘What are we doing here?’ Why are we supporting this murderous regime that is committing mass murder of its own population and using the most heinous weapons available?’”“I think, as you saw with the strike, that there has to be a degree of simultaneous activity as well as sequencing of the defeat of ISIS first,” McMaster said. “What you have in Syria is a very destructive cycle of violence, perpetuated by ISIS, obviously, but also by this regime and their Iranian and Russian sponsors.” U.S. goals in the region, McMaster said, are “the defeat of ISIS” and “a significant change in the nature of the Assad regime and its behavior in particular.”What?! Watch the entire interview here. It's amazing to see the General try to twist his way out of illogical narratives into clear, concise, policy decisions. He was resolute on his options for N. Korea, towards the end of the interview, which, basically, entailed risking nuclear war in order to 'de-nuclearize' the N. Korea regime. I am sure the good folks living in Seoul and Tokyo are thrilled with U.S. meddling into Asian affairs.
Trump’s Confusing Strike on Syria - The New Yorker: Last Thursday, his seventy-seventh day in office, President Donald Trump pressed the cruise-missile button, sending fifty-nine Tomahawks to strike an airbase in Syria. He did so after concluding from intelligence reports that President Bashar al-Assad’s Air Force had, on April 4th, killed or sickened hundreds of people in a chemical attack on Khan Sheikhoun, a town held by rebels seeking Assad’s overthrow. Trump said that his strike was aimed at ending “the slaughter and bloodshed in Syria.”The President’s decision was familiar for being both spontaneous and confusing. As has happened before, he was apparently inspired to act by what he saw on TV—in this case, distressing images of stricken women and children. Yet, despite having previously seen similarly horrifying pictures, Trump had been skeptical of military action in Syria. In 2013, Assad’s forces attacked civilians and rebels near Damascus with sarin, a banned nerve agent, killing more than a thousand people. Trump advised President Obama, via Twitter, “Do not attack Syria. There is no upside and tremendous downside.” (Obama had called Assad’s use of chemical arms crossing a “red line,” which might lead the U.S. to take military action, but he did not strike. Instead, Russia helped broker an agreement by which Assad gave up many—but evidently not all—of his chemical arms.) Trump has said, “I’m very capable of changing to anything I want to change to.” In the case of Syria, however, he seems to have acted without a clear plan in place. During the campaign, he promised to “bomb the shit out of” ISIS, which holds territory in Syria, but he also said that it was foolish to become mired in the civil war, or to target Assad, who has opposed ISIS—at least, rhetorically. As recently as March 30th, Secretary of State Rex Tillerson said that Assad’s future would be “decided by the Syrian people,” words that signalled a sharp departure from Obama’s insistence that Assad must leave office. Then, last Thursday, Tillerson seemed to shift direction, saying that “it would seem there would be no role” for Assad in Syria’s political future. But he later said, “I would not in any way attempt to extrapolate that to a change in our policy or our posture relative to our military activities in Syria today.”
Is US Policy to Prolong the Syrian War?: Many are claiming that Trump is being inconsistent in illegally attacking the Syrian regime with cruise missiles.After all, he had been saying the U.S. should focus on defeating ISIS, and now he seems to be going after Assad. But contradictions from Trump are a dime a dozen.A closer examination shows a deeper pattern of remarkable consistency in U.S. policy toward Syria that is far more critical than the perennial contradictions of politicians like Trump.To summarize U.S. actions and non-actions in terms of direct publicly announced U.S. air attacks targeting the Syrian regime: In 2013, when Assad was losing the war, Obama refrained from strikes that may well have ended his regime. Now, four years later, when Assad seems close to winning the war, Trump with a revamped NSC does a 180 on his previous pronouncements and attacks Assad.Push away the personalities. Just follow the policy. The evidence is that the underlying U.S. policy — whether the president is Obama or Trump — is to prolong the Syrian war as much as possible. Let Assad off the hook when he’s cornered, hit him when he’s about to win.
"They're Terrified Peace Was Going To Break Out" Ron Paul Slams Necocons' Warmongery --It's "a victory for neo-conservatives" - that’s how former member of the US House of Representatives and three-time presidential candidate Ron Paul described the US strike on Syria, adding that he does not expect peace talks to resume any time soon. Speaking to RT, Ron Paul said that there is no proof of Damascus’ guilt that could trigger such a rash and violent response from the US.“I don't think the evidence is there, at least it hasn’t been presented, and they need a so-called excuse, they worked real hard, our government and their coalition.”This is not the first time something like this has happened in Syria or elsewhere, Paul said, but now it is convenient to pay attention and react immediately.“If any of this was true, I don’t know why they couldn’t wait and take a look at it.In 2013, there were similar stories that didn’t go anywhere, because with a little bit of a pause, there was a resistance to it built in our Congress and in the American people. They thought that it was a fraud and nothing like that was happening, and right now, I just can’t think of how it could conceivably be what they claim, because it’s helping ISIS, because it’s helping Al-Qaeda.”“From my point of view, there was no need to rush. There was no threat to national security. They have to give a reason to do these things,” Paul added.A factor that contributed to the speedy reaction was of course the US president, the politician told RT.“I have no idea what his purpose was. Maybe he just didn’t want to hear the debate, because the last time they debated it, they lost. And this time, it was necessary for them to jump onto this, before people came to know what was really going on.”The Syrian situation now is “a victory for neo-conservatives, who’ve been looking for Assad to go,” Paul said.
Wag The Dog — How Al Qaeda Played Donald Trump And The American Media -- No one disputes the fact that a Syrian air force SU-22 fighter-bomber conducted a bombing mission against a target in Khan Sheikhoun on the morning of April 4, 2017. The anti-regime activists in Khan Sheikhoun, however, have painted a narrative that has the Syrian air force dropping chemical bombs on a sleeping civilian population. A critical piece of information that has largely escaped the reporting in the mainstream media is that Khan Sheikhoun is ground zero for the Islamic jihadists who have been at the center of the anti-Assad movement in Syria since 2011. Up until February 2017, Khan Sheikhoun was occupied by a pro-ISIS group known as Liwa al-Aqsa that was engaged in an oftentimes-violent struggle with its competitor organization, Al Nusra Front (which later morphed into Tahrir al-Sham, but under any name functioning as Al Qaeda’s arm in Syria) for resources and political influence among the local population. The Russian Ministry of Defense has claimed that Liwa al-Aqsa was using facilities in and around Khan Sheikhoun to manufacture crude chemical shells and landmines intended for ISIS forces fighting in Iraq. According to the Russians the Khan Sheikhoun chemical weapons facility was mirrored on similar sites uncovered by Russian and Syrian forces following the reoccupation of rebel-controlled areas of Aleppo. Al Nusra has a long history of manufacturing and employing crude chemical weapons; the 2013 chemical attack on Ghouta made use of low-grade Sarin nerve agent locally synthesized, while attacks in and around Aleppo in 2016 made use of a chlorine/white phosphorous blend. If the Russians are correct, and the building bombed in Khan Sheikhoun on the morning of April 4, 2017 was producing and/or storing chemical weapons, the probability that viable agent and other toxic contaminants were dispersed into the surrounding neighborhood, and further disseminated by the prevailing wind, is high. The counter-narrative offered by the Russians and Syrians, however, has been minimized, mocked and ignored by both the American media and the Trump administration. So, too, has the very illogic of the premise being put forward to answer the question of why President Assad would risk everything by using chemical weapons against a target of zero military value, at a time when the strategic balance of power had shifted strongly in his favor. Likewise, why would Russia, which had invested considerable political capital in the disarmament of Syria’s chemical weapons capability after 2013, stand by idly while the Syrian air force carried out such an attack, especially when their was such a heavy Russian military presence at the base in question at the time of the attack?
A multi-level analysis of the US cruise missile attack on Syria and its consequences -- The latest US cruise missile attack on the Syrian airbase is an extremely important event in so many ways that it is important to examine it in some detail. I will try to do this today with the hope to be able to shed some light on a rather bizarre attack which will nevertheless have profound consequences. But first, let’s begin by looking at what actually happened. I don’t think that anybody seriously believes that Assad or anybody else in the Syrian government really ordered a chemical weapons attack on anybody. To believe that it would require you to find the following sequence logical: first, Assad pretty much wins the war against Daesh which is in full retreat. Then, the US declares that overthrowing Assad is not a priority anymore (up to here this is all factual and true). Then, Assad decides to use weapons he does not have. He decides to bomb a location with no military value, but with lots of kids and cameras. Then, when the Russians demand a full investigation, the Americans strike as fast as they can before this idea gets any support. And now the Americans are probing a possible Russian role in this so-called attack. Frankly, if you believe any of that, you should immediately stop reading and go back to watching TV. For the rest of us, there are three options:
- a classical US-executed false flag
- a Syrian strike on a location which happened to be storing some kind of gas, possibly chlorine, but most definitely not sarin. This option requires you to believe in coincidences. I don’t. Unless,
- the US fed bad intelligence to the Syrians and got them to bomb a location where the US knew that toxic gas was stored.
What is evident is that the Syrians did not drop chemical weapons from their aircraft and that no chemical gas was ever stored at the al-Shayrat airbase. There is no footage showing any munitions or containers which would have delivered the toxic gas. As for US and other radar recordings, all they can show is that an aircraft was in the sky, its heading, altitude and speed. There is no way to distinguish a chemical munition or a chemical attack by means of radar. Whatever option you chose, the Syrian government is obviously and self-evidently innocent of the accusation of having used chemical weapons. This is most likely a false flag attack. Also, and just for the record, the US had been considering exactly such a false flag attack in the past. You can read everything about this plan here and here.
H. R. McMaster Manipulating Intelligence Reports to Trump, Wants 150,000 Ground Soldiers in Syria - Current National Security Adviser Herbert Raymond “H. R.” McMaster is manipulating intelligence reports given to President Donald Trump, Cernovich Media can now report. McMaster is plotting how to sell a massive ground war in Syria to President Trump with the help of disgraced former CIA director and convicted criminal David Petraeus, who mishandled classified information by sharing documents with his mistress. s NSA, McMaster’s job is to synthesize intellience reports from all other agencies. President Trump is being given an inaccurate picture of the situation in Syria, as McMaster is seeking to involve the U.S. in a full scale war in Syria. The McMaster-Petraeus plan calls for 150,000 American ground troops in Syria.Many special operations veterans including General Joseph Votel have raised serious concerns about McMaster’s plans for Syria.Sources also suggest that McMaster is sharing classified information with Petraeus, whose security clearance was revoked. McMaster was called Petraeus’ golden child by some commenters, noting the strong influence Petraeus had over McMaster. Petraeus was considered for the position of NSA, but withdrew his name from consideration once McMaster’s name was included on the short-list. McMaster’s appointment allowed Petraeus to maintain control over the NSC without bringing his considerable baggage to the position.
Neocons Have Trump on His Knees - After slapping Donald Trump around for several months to make him surrender his hopes for a more cooperative relationship with Russia, the neocons and their liberal-interventionist allies are now telling the battered President what he must do next: escalate war in the Middle East and ratchet up tensions with nuclear-armed Russia. Star neocon Robert Kagan spelled out Trump’s future assignments in a column on Sunday in The Washington Post, starting out by patting the chastened President on the head for his decision to launch 59 Tomahawk missiles at an airstrip in Syria supposedly in retaliation for a chemical weapons attack blamed on the Syrian government (although no serious investigation was even conducted).Trump earned widespread plaudits for his decisive action and his heart-on-the-sleeve humanitarianism as his voice filled with emotion citing the chemical-weapons deaths on April 4 of “small children and even beautiful little babies.” The U.S. media then helpfully played down reports from Syria that Trump’s April 6 retaliatory missile strike had killed about 15 people, including nine civilians, four of whom were children.However, for Kagan, the missile strike was only a good start. An advocate for “regime change” in Syria and a co-founder of the Project for the New American Century which pushed for the Iraq War, Kagan praised Trump “for doing what the Obama administration refused to do,” i.e. involve the U.S. military directly in attacks on the Syrian government.“But,” Kagan added, “Thursday’s action needs to be just the opening salvo in a broader campaign not only to protect the Syrian people from the brutality of the Bashar al-Assad regime but also to reverse the downward spiral of U.S. power and influence in the Middle East and throughout the world. A single missile strike unfortunately cannot undo the damage done by the Obama administration’s policies over the past six years.”
Syria and North Korea Are Not Impressed -- Yesterday I pointed out the shoddy thinking behind the notion that Trump’s airstrikes in Syria were an effective “message” to either Assad or other adversarial states. The airstrikes themselves were wildly ineffective. America’s options against the Syrian regime remain limited. A ground war would be stupid, air strikes alone accomplish very little, and there is no military solution to a brutal civil war with bad actors on all sides.But it’s not just Syria for whom Trump is posturing. He is also fronting against North Korea, sending carriers into the waters off the coast of the country. He is even considering placing nuclear weapons in South Korea for some reason. To hear pundits tell it, Trump’s actions are supposed to show resolve that intimidates North Korean dictator Kim Jong-Un into submission.In reality, the North Korean regime isn’t impressed, because it knows Trump’s military threats are empty. China has no intention of reigning in their buffer against an open and democratic society in South Korea. North Korea’s deterrent threat of strikes against Seoul remain in place no matter what military action the United States might take.There is a reason that the North Korea problem has plagued both Republican and Democratic administrations in an intractable way: it’s almost impossible to solve by military means or with military threats.Lobbing sixty missiles at an empty tarmac in Syria and sending aircraft carriers to stare down the North Korean coastline aren’t acts of firm resolve. They’re just more Trumpism: act aggressively, threaten everyone, and see what comes of the chaos. The problem? Kim Jong-Un and Bashar Al-Assad thrive on chaos, and they’ve been doing it a lot longer than Trump. There are words for Trump’s actions, but “presidential” isn’t one of them.
Russia and Iran warn US they will 'respond with force' if red lines crossed in Syria again - Russia and Iran have warned the US they will “respond with force” if their own “red lines” are crossed in Syria. Following Friday’s cruise missile strike on a Syrian airbase, in retaliation for the chemical attack on Khan Sheikhoun earlier in the week, the alliance supporting Syrian President Bashar al-Assad made a joint statement threatening action in response to “any breach of red lines from whoever it is”. “What America waged in an aggression on Syria is a crossing of red lines. From now on we will respond with force to any aggressor or any breach of red lines from whoever it is and America knows our ability to respond well,” the group’s joint command centre said. US President Donald Trump said the strike on al Shayrat airbase, near Homs, with some 60 Tomahawk missiles was “representing the world”. The base was allegedly used by Syrian forces to conduct the attack, which killed more than 70 people.On Sunday the UK’s Defence Secretary, Sir Michael Fallon, demanded Russia rein in Mr Assad, claiming that Moscow is “responsible for every civilian death” in Khan Sheikhoun. Britain, the US and France accused Mr Assad’s regime of gassing civilians in the opposition-held town, but Damascus claimed it destroyed its toxic stockpiles following an international agreement struck in 2013.The Russian defence ministry put out a competing version of events claiming legitimate Syrian air strikes against “terrorists” had struck a warehouse used to produce and store shells containing toxic gas, which were allegedly being sent to Iraq.
White House accuses Russia of Syria chemical attack 'cover up' | Reuters: President Donald Trump's administration accused Russia on Tuesday of trying to shield Syria's government from blame for a deadly gas attack, as Secretary of State Rex Tillerson brought a Western message to Moscow condemning its support for President Bashar al-Assad. Trump, who has faced criticism for lacking a broader strategy to deal with the Syria crisis, insisted he has no plans to "go into" the war-torn country. Senior White House officials, briefing reporters on condition of anonymity, said Assad's government carried out the April 4 sarin nerve gas attack on civilians in Syria's Idlib province that killed 87 people, including many children, to put pressure on rebels making advances in the area. Russia has defended the Syrian leader against U.S. allegations that his forces carried out the attack, saying there was no evidence. Russia has blamed Syrian rebels. "It's clear that the Russians are trying to cover up what happened there," one White House official said. White House spokesman Sean Spicer later told reporters that the facts backed up the U.S. version of events. "Russia is on an island when it comes to its support of Syria or its lack of, frankly, acknowledgment of what happened," he told reporters. However, at the same briefing, Spicer drew criticism after he sought to underscore the ghastliness of the gas attack by saying: "You had someone as despicable as Hitler who didn't even sink to using chemical weapons."
Russia accuses US of ‘unlawful attack’ on Syria - Russia’s top diplomat on Wednesday told Secretary of State Rex Tillerson that Moscow considers President Trump’s recent missile strike in Syria “an unlawful attack.” “We have seen very alarming actions recently with an unlawful attack against Syria,” Sergei Lavrov said, according to The Associated Press. "We consider it of the utmost importance to prevent the risks of replay of similar action in the future." Lavrov added Russia has no intention of revoking its support for Bashar Assad amid international outcry over the Syrian leader’s alleged chemical weapons use. “Our policy is consistent and it’s formulated exclusively on the basis of international law and not under the impact of current opportunistic motives of false choice: ‘You are with us or against us,’” he told Tillerson. Trump ordered a missile strike in Syria last week following reports forces loyal to Assad used a deadly gas, killing 80 civilians. The president on Tuesday criticized Russia’s support of Assad, calling the Syrian leader an “evil person” and “an animal.” The White House on Tuesday released an intelligence assessment saying it is “confident” Assad’s forces used sarin gas against his people last week. The analysis was aimed at dispelling what it claims are Russian attempts to spread “disinformation” about the attack in Syria’s Idlib province.
Former CIA Officer: "The Intelligence Confirms The Russian Account On Syria" -- President Trump earned neocon applause for his hasty decision to attack Syria and kill about a dozen Syrians, but his rash act has all the earmarks of a “wag the dog” moment.Just two days after news broke of an alleged poison-gas attack in northern Syria, President Trump brushed aside advice from some U.S. intelligence analysts doubting the Syrian regime’s guilt and launched a lethal retaliatory missile strike against a Syrian airfield. Trump immediately won plaudits from Official Washington, especially from neoconservatives who have been trying to wrestle control of his foreign policy away from his nationalist and personal advisers since the days after his surprise victory on Nov. 8.There is also an internal dispute over the intelligence. On Thursday night, Secretary of State Rex Tillerson said the U.S. intelligence community assessed with a “high degree of confidence” that the Syrian government had dropped a poison gas bomb on civilians in Idlib province.But a number of intelligence sources have made contradictory assessments, saying the preponderance of evidence suggests that Al Qaeda-affiliated rebels were at fault, either by orchestrating an intentional release of a chemical agent as a provocation or by possessing containers of poison gas that ruptured during a conventional bombing raid.One intelligence source told me that the most likely scenario was a staged event by the rebels intended to force Trump to reverse a policy, announced only days earlier, that the U.S. government would no longer seek “regime change” in Syria and would focus on attacking the common enemy, Islamic terror groups that represent the core of the rebel forces. The source said the Trump national security team split between the President’s close personal advisers, such as nationalist firebrand Steve Bannon and son-in-law Jared Kushner, on one side and old-line neocons who have regrouped under National Security Adviser H.R. McMaster, an Army general who was a protégé of neocon favorite Gen. David Petraeus.
White House “Intelligence Assessment” Is No-Such-Thing – Shows Support for Al-Qaeda - The Trump White House published three and a half pages of accusations against the governments of Syria and Russia. These are simple white pages with no header or footer, no date, no classification or declassification marks, no issuing agency and no signatures. It is indiscernible who has written them. U.S. media call this a Declassified U.S. Report on Chemical Weapons Attack. It is no such thing. It starts with "The United States is confident that the Syrian government conducted a chemical weapon attack, ..." The U.S. (who exactly is that?) "is confident", it does not "know", it does not have "proof" - it is just "confident". The whole paper contains only seven paragraphs that are allegedly a "Summary of the U.S. intelligence community assessment" on the issue. The seven paragraphs are followed by eight(!) paragraphs that try to refute the Russian and Syrian statements on the issue. Some political fluff makes up the sorry rest. That "intelligence community assessment" chapter title is likely already a false claim. Even a fast tracked, preliminary National Intelligence Assessment, for which all seventeen U.S. intelligence agencies must be heard, takes at least two to three weeks to create. A "long track" full assessment takes two month or more. These are official documents issued by the Director of National Intelligence. The summary assessment the White House releases has no such heritage. It is likely a well massaged fast write up of some flunky in the National Security Council. The release was backgrounded by dubious statements of an anonymous "Senior Administration Officials" (not by "Intelligence Officials" as has been the case on other such issues.) The claimed assessment starts with definitely wrong or at least very misleading point: "We assess that Damascus launched this chemical attack in response to an opposition offensive in Hama province that threatened key infrastructure." The Hama offensive had failed two weeks ago. Since then the Syrian army has regained all areas the al-Qaeda "opposition" had captured during the first few days. Key infrastructure had never been seriously threatened by it. Over 2,000 al-Qaeda fighters were killed in the endeavor.
Top Missile and Chemical Weapons Expert Debunks Trump’s Claims About Syrian Chemical Weapons --The Trump administration claims that it has proof that the Syrian government dropped chemical weapons from an airplane on April 4th.But a top missile and chemical weapons expert told Washington’s Blog today that the weapon was not delivered by an airplane at all …Specifically, we called Dr. Theodore Postol, professor of science, technology, and national security policy at MIT. Postol’s main expertise is in ballistic missiles. He has a substantial background in air dispersal, including how toxic plumes move in the air. Postol has taught courses on weapons of mass destruction – including chemical and biological threats – at MIT. Before joining MIT, Postol worked as an analyst at the Office of Technology Assessment, as a science and policy adviser to the chief of naval operations, and as a researcher at Argonne National Laboratory. He also helped build a program at Stanford University to train mid-career scientists to study weapons technology in relation to defense and arms control policy. Postol told Washington’s Blog that a chemical weapon dropped from a plane would have included an explosive on the inside of the tube containing the chemical agent. But the photograph the U.S. government released to show the weapon which released the chemicals on April 4th shows that the explosive was placed outside of the tube containing the chemical weapon. Postol illustrates this fact in a report he released today: (annotated pictures) Postol also notes that the weapon is simply a section of a 122 mm artillery rocket, rather than any type of weapon that would be released from a plane:
Erdogan and Putin back investigation into Syria chemical attack | Reuters: Turkish President Tayyip Erdogan and Russian President Vladimir Putin agreed on Thursday to support an investigation by the Organisation for the Prohibition of Chemical Weapons into the chemical weapons attack in Syria last week, Turkish presidential sources said. In a phone call, Erdogan stressed to his Russian counterpart that the use of chemical weapons was a crime against humanity, they said. The April 4 attack in the town of Khan Sheikhoun, blamed by many governments on the forces of Syrian President Bashar al-Assad, killed scores of people and prompted the United States to launch a missile strike on a Syrian air base in response.
Putin Will Not Meet Tillerson In Russia, As Confusion Grows Over US Policy Toward Syria --While the US ambassador to the UN, Nikki Haley, and US Secretary of State Rex Tillerson seem unable to agree on what the right policy is regarding Syria and specifically Assad, with the former saying a top priority of Trump is to oust Assad, while the latter claimed over the weekend that the Islamic State is the key concern while Assad's fate and that the people of Syria should decide Assad's fate, Russia is not waiting for clarification.On Monday morning, Kremlin spokesman Dmitry Peskov told reporters that U.S. Secretary of State Rex Tillerson was not due to meet Russian President Vladimir Putin when he visits Moscow later this week. He will meet Russian Foreign Minister Sergei Lavrov however, Peskov said.Commenting on U.S. missile strikes against Syria last week, Peskov said the action had shown Washington's total unwillingness to cooperate on Syria. He said renewed calls for Syrian President Bashar al-Assad to step down would not help to resolve the crisis."There is no other alternative," to peace talks in Geneva and Astana, Peskov said.Meanwhile Tillerson, who on Monday was in Italy for a meeting of G7 foreign ministers in Tuscany, said the United States will hold responsible anyone who commits crimes against humanity, just days after the U.S. military unexpectedly attacked Syria.While prior to the April 7 missile strikes President Donald Trump had indicated he would be less interventionist than his predecessors and willing to overlook human rights abuses if it was in U.S. interests, Tillerson said the United States would not let such crimes go unchallenged.
Here’s Why Russia’s Not Going To Dump Iran And Syria Anytime Soon - Tillerson hopes to get the Kremlin to distance itself from Iran, and to rein in Assad after his regime’s alleged chemical weapons attack last month, which triggered US airstrikes. Ahead of his trip to Russia — which had been scheduled well before the airstrikes — Tillerson said Russia had to choose between the US and Iran.“Russia has really aligned itself with the Assad regime, the Iranians, and Hezbollah,” he said. “Is that a long-term alliance that serves Russia’s interest, or would Russia prefer to realign with the United States, with other Western countries and Middle East countries who are seeking to resolve the Syrian crisis?” But Tillerson may be in for a rude awakening.“The one thing we’ve seen repeatedly over the last years, is Russia is not willing to back down,” said Andrey Baklitskiy, a Middle East expert at the PIR Center, a Moscow think tank. “It’s learned you get more if you act like a tough guy than if you just compromise and give in. During the last four years Russia pretty much did what it wanted and didn’t change course for a minute even. From the point of view of Russians, it was done in the right way, so why change that calculus?”US policymakers have for years wondered aloud about the prospect of convincing Russia to ditch Iran. The Trump administration has made similar noises. But White House officials have also articulated and carried out contradictory policies on Russia and Syria, though they have consistently said they sought to oppose Iran’s ambitions.Experts and former officials say Russia would likely demand an exorbitantly high price to jettison relations with Iran and their Syrian client. Moscow has spent decades building and cultivating intelligence and security ties with Tehran, which it won’t easily give up. Iran and Syria’s anti-American propaganda plays well into Russia’s strategic goals. The Syrian regime provides Moscow a way to maintain influence in the Middle East, and a front to stand up against the idea of Western-driven regime change, as well a warm-water port it has coveted for centuries. Iran, meanwhile, provides Russia with a market for energy deals, industrial goods, and potentially its weapons, once sanctions are removed in three years as part of the landmark 2015 nuclear deal negotiated by the Obama administration. And on the global diplomatic stage, Moscow provides Tehran with a defender at the UN Security Council.
Wonderland – Kunstler -- There are times in the course of events when a society cannot tell what the fuck is going on, or what to do about it, and this is one of those moments in history here in the USA. The quandaries of life on the home front — how to make a living, how to care for ourselves and loved ones — get shoved aside by misadventures in foreign lands with their own quandaries. One delusion leads to another until you enter a zero gravity of the mind. Case in point du jour: Syria. The persistent hyperRussomania of the US Dem-Prog alliance and its sob-sisters in the media seek to make a bad situation worse in Syria and probably for the worst reasons. How many Americans have even the dimmest idea what’s going on in Syria, who the cast of characters there represent, and where the USA fits into all of it? There is the head of government, one Bashar al Assad (son of the previous president, Hafez al Assad). The Assads had run Syria as a mostly secular Arab state until the civil war within Islam, Sunni against Shia, spilled out of Iraq. The Assads belonged to the tiny Alawite sect of the Shia. They comprise only 13 percent of the Syrian population, which has a Sunni majority. Under the Assads, Syria has tilted toward Iran, the Shia home state, and away from the Sunni Arabs elsewhere in the neighborhood. Russia has cultivated Iran and support its “friends,” the Assads. A mash-up of Sunni jihad armies fights the Assad government in Syria’s civil war. These are Isis, al Qaeda, and Jabhat al Nusra. The US government had made official noise about supporting the more “moderate rebels” in the Syrian conflict. Who are they exactly? Do you have a clue? Which army among those three rebel groups are “moderates?” And what is their moderate goal under jihad? To topple Assad. And then what? To set up a new theocratic government perhaps? How is it in America’s interests to promote Islamic jihadi theocracy? One hypothesis is that the struggle is over who gets to run gas and oil pipelines through Syria to get easier access to the Mediterranean Sea and the European energy market. Iran would very badly like to do that. But they are in competition with the Kingdom of Saudi Arabia and Qatar, the little giant emirate of natural gas. So, you have the Iran/Shia gang on one side and the KSA/Qatar/Sunni on the other side. Anybody who had scanned the news since 1979 can probably tell whose side the US is on. By the way, this hypothesis has had no airing among the mainstream media triumvirate: The New York Times, CNN, and The WashPo. These news orgs won’t even entertain that angle of the story… but as I said, it’s only a hypothesis.
The Suspense Is Over: Putin Meets With Rex Tillerson At The Kremlin --Despite numerous earlier reports that Russian President Vladimir Putin would not meet U.S. Secretary of State Rex Tillerson, moments ago the "breathless speculation" and suspense whether the Russian president would indeed skip the opportunity to meet with the top US diplomat - who has been repeatedly portrayed in the press as a friend of the Russian president - ended when Kremlin spokesman Dmitry Peskov said that Putin is currently meeting with Tillerson, together with Foreign Minister Sergei Lavrov in the Kremlin."Russian President Vladimir Putin is meeting with the US Secretary of State Tillerson and Russian Foreign Minister Lavrov in the Kremlin," Peskov told Sputnik. Peskov refrained from revealing what the President discussed with the diplomats. Earlier Tillerson met with Lavrov, when in a closed door meeting the Russian foreign minister warned Tillerson not to strike Syria again.
Tillerson holds firm on Russia sanctions during talks with Putin - US sanctions against Russia's energy sector will remain in place until Moscow takes steps to de-escalate violence in Ukraine, US Secretary of State Rex Tillerson said Wednesday after meeting with Russian President Vladimir Putin and Foreign Minister Sergei Lavrov. "Until full progress is made under the Minsk accords, the situation in Ukraine will remain an obstacle to improvement in relations between the US and Russia," Tillerson said during a webcast press conference with Lavrov. Tillerson said Russia must de-escalate violence and withdraw separatist armed forces and heavy weapons from Ukraine so international observers could patrol the conflict area. The sanctions imposed in 2014, after Russia annexed the Crimean Peninsula from Ukraine, froze several major upstream oil joint ventures between Russian and Western companies. ExxonMobil, where Tillerson was CEO before becoming secretary of state, took an estimated $1 billion hit. Tillerson and Lavrov addressed reporters in Moscow after they met with Putin for more than two hours. Tillerson and Lavrov met for several hours before that. The pair said the US and Russia must work closer together to resolve global concerns like terrorism, but the countries remain far apart on Syria, Ukraine and other key issues. Lavrov described the conversations as "substantial and very frank." He blamed the fractured relationship in part on "irritants, so to speak, that have piled up," under the Obama administration. "We are being realistic and we do understand that in order to overcome these obstacles we have to make efforts, and we seek to do that," Lavrov said through a translator.
Tillerson and Putin Find Little More Than Disagreement in Meeting - Secretary of State Rex W. Tillerson met with President Vladimir V. Putin of Russia for nearly two hours Wednesday, but the two men appeared unable to agree on the facts involving the deadly chemical weapons assault on Syrian civilians or Russian interference in the American election — much less move toward an improvement in basic relations.“There is a low level of trust between our countries,” Mr. Tillerson told reporters at a joint news conference with his Russian counterpart, Foreign Minister Sergey V. Lavrov, after the first face-to-face meetings between Russian leaders and a top emissary of the Trump administration.“The world’s two foremost nuclear powers cannot have this kind of relationship,” Mr. Tillerson said.Both he and Mr. Lavrov said a range of issues were discussed — most notably the crises in Syria, North Korea and Ukraine — and that both sides had agreed to establish a working group to examine, as Mr. Lavrov said, “the irritants” in relations between the United States and Russia. Mr. Tillerson reiterated the American view that President Bashar al-Assad of Syria, Russia’s chief Middle East ally, was responsible for the chemical weapons assault in northern Syria on April 4 that left more than 80 people dead, sickened hundreds and outraged the world.Mr. Lavrov reiterated the Russian view that the facts about the chemical weapons attack had yet to be determined, and denounced what he described as the “media hysteria” surrounding the assault. Further punctuating the Syria dispute, Russia vetoed a Western-backed resolution at the United Nations Security Council on Wednesday condemning the chemical weapons attack.
Lavrov says Russia, U.S. agree U.S. strikes on Syria should not be repeated: Interfax | Reuters: Russia and the United States have a shared understanding that U.S. air strikes on Syria should not be repeated, Russian Foreign Minister Sergei Lavrov told his Syrian counterpart Walid al-Moualem in Moscow on Thursday, Interfax news agency reported. He said this was "concluded" during Wednesday's visit of U.S. Secretary of State Rex Tillerson to Moscow. But in Washington, the U.S. State Department said Tillerson did not eliminate the possibility the United States may undertake future strikes. "The secretary explained there were no subsequent targets after the missile strike, but he did not rule out any future action," State Department acting spokesman Mark Toner said in a statement. "He stressed that Russia is in a position to use its influence over the Assad regime to ensure it is never again necessary for the U.S. to act," Toner said.
Assad: The Chemical Attack Is "100% Fabrication" --Following yesterday's icy meeting in Moscow between Rex Tillerson and Russian diplomat Sergey Lavron, the propaganda campaigns between the U.S., Syria and Russia seem to be ratcheting up to full force. Speaking with the BBC earlier this morning, Syrian President Bashar al-Assad said the U.S. account of the recent chemical weapons 'attack' in Syria was a "100% fabrication" which can only lead him to the conclusion that the West must be working "hand and glove with the terrorists.""We gave up our arsenal 3 years ago. Even if we had them we wouldn't use them. We have never used our chemical arsenal in our history.""Our information, that the West, mainly the United States, is hand and glove with the terrorists. They fabricated the whole story in order to have a pretext for the attack." "There was no investigation, no complete evidence about anything, the only things were allegations, and propaganda and they struck."
Russia sends 2 additional warships to Syria amid tensions over US cruise missile strike - Russia sent two corvettes, an oiler, and a tug boat to the Eastern Mediterranean off the coast of Syria days after two US Navy ships fired 59 cruise missiles at an airfield controlled by Syrian President Bashar al-Assad, a defense official told the US Naval Institute. The ships should reach the area within the next several days. Tensions between the US and Russia have peaked since the US struck Russia's stalwart ally, Assad, over what the US believes was a chemical weapons attack orchestrated by Syrian and Russian forces. Russia has warned of "extremely serious" consequences for the US strike and reportedly suspended key military agreements with the US that heighten the risk of war. The Russian ships will join the Admiral Grigorovich, which was the first Russian ship to respond after the strike. The Russian ships field very long range land attack cruise missiles, which Russian forces debuted from the Caspian Sea against targets in Syria in 2015.
Liberal leaders call for challenge to Gabbard over Syria skepticism -- (CNN) A pair of veteran leaders on the left, former Democratic National Committee Chairman Howard Dean and Center for American Progress President Neera Tanden, called on Hawaiians to vote Rep. Tulsi Gabbard out of office after the Democrat questioned whether Syrian President Bashar al-Assad was responsible for last week's chemical attack. "People of Hawaii's 2nd District -- was it not enough for you that your rep met with a murderous dictator? Will this move you?" Tanden tweeted Friday in response to Gabbard's comments on CNN that she is "skeptical" Assad is responsible for the chemical attack.Dean compared Gabbard's comments to President Donald Trump's Twitter blasts."This is a disgrace. Gabbard should not be in Congress," the former Vermont governor tweeted. He later added, "She sounds like Trump making excuses."Gabbard, who sits on the Armed Services and Foreign Affairs committees, took a somewhat mysterious trip alone earlier this year to meet with Assad in Syria without alerting House Speaker Paul Ryan -- a move that drew scorn from some of her House colleagues. But the liberal Democrat, who was one of then-Democratic presidential candidate Bernie Sanders' few supporters in Congress last year, explained she wanted to engage in dialogue with Assad.Gabbard told CNN on Friday that she wants to achieve peace in Syria, "Why should we just blindly follow this escalation of a counterproductive regime-change war?" "There's responsibility that goes around," Gabbard said."Standing here pointing fingers does not accomplish peace for the Syrian people. It will not bring about an end to this war."
Gabbard: ‘We need to learn from Iraq’ -- Rep. Tulsi Gabbard (D-Hawaii) has a message for the liberals attacking her criticism of President Trump’s missile strike on Syria, warning that a rush to aggression risks repeating the same mistakes that led the United States into the Iraq War.“We need to learn from Iraq and Libya — wars that were propagated as necessary to relieve human suffering, but actually increased human suffering many times over,” she said in an email to The Hill.Gabbard, a major in the Hawaii Army National Guard who served two tours in Iraq, has been highly critical of Trump’s decision last Thursday to launch 59 missiles at a Syrian airfield in response to a deadly chemical attack that killed scores of civilians, including children, in a western Syrian town days before.The Trump administration says the chemical attacks were carried out by Syrian President Bashar Assad — a charge Damascus denies — and congressional leaders from both parties have endorsed the president’s response. Gabbard’s position — particularly her skepticism that the Syrian government was behind the chemical attacks — has led to an outcry from some establishment Democrats, including former Democratic National Committee Chairman Howard Dean, who want her out of Congress.A meeting between Gabbard and Assad in January has only heightened the critics’ belief that she’s acting as an apologist for a tyrannical leader known to employ brutal tactics, even against his own people, to keep a grip on power in the country's yearslong civil war. But Gabbard, who sits on both the Armed Services and Foreign Affairs committees, maintains those critics are ignoring the lessons of recent history that have left the United States mired in costly Middle Eastern conflicts for more than a decade. Echoing the position of other liberal Democrats, Gabbard says the administration is conducting an unconstitutional war because Trump didn’t come to Congress before launching the strike. Going a step further, she’s also questioning the veracity of Trump’s claim that Assad is responsible for the chemical attacks.
Symbols of Strength – Ilargi - I don’t know anything more than anyone else does, outside of the decision makers’ circle, about the reasoning behind the Tomahawk missile attack on a Syrian airport. Have the US neocon warmongers won over Trump and the White House, as I see suggested? Have the Goldmanites? Is that the same group of people? If Trump has conceded to the warmongers, will Putin be next in line? Should Russia have pushed through when it had the upper hand in Syria, and ‘finished’ the job? All these things, and many more, are possible. What’s certain is that Trump’s popularity will surge in America. Nothing unites like a Tomahawk, it seems. Plus ça change… But what has really happened? ABC reports that the Syrian army appears to have been warned in advance of the attack, and pulled out its people and as much of its material as it could. That means either the Americans have warned them, or more likely the Russians have, as the US knew they would when it told Moscow about the impending ‘operation’ before it took place. And that makes it largely symbolic then, doesn’t it, as former National Security Adviser Richard Clarke suggests to ABC. Of course that would change if there are additional, and more deadly attacks, and that could happen any moment now. For now it’s more or less plausible though. But why launch a symbolic attack on Assad? Why not go ‘bigly’ if you really want him gone? It’s not exactly a first warning. Is it perhaps a symbol meant for Putin to understand? Does the US tell Moscow that it should better control Assad? Doesn’t sound convincing. But it still sounds better than Trump putting on a show for domestic consumption only. It may make him more popular, but he can do without the protests. There’s another element in all this that deserves more scrutiny. Sort of linked to the Putin-Assad connection. That is, why was the attack launched at the very moment that Xi Jinping was sitting down for dinner at Mar-a-Lago? Trump had reason to show the world that he’s willing to use his strength. You can question the whole thing, but it makes sense, from a military point of view, in more than one way. And the biggest threat to the US, and perhaps the world, is not Assad. It’s North Korea. The US had to tell China that its protégé is getting out of hand. That has been going on for a while of course, but Kim fired a bunch of rockets recently, and one of these days that could lead to a -nuclear?- ‘accident’. Countries like South Korea and Japan are getting very nervous, and the US has vowed to protect them. As Xi is well aware.
Don’t Start a New Cold War Over Syria - The American Conservative. The view from Cato. - Secretary of State Rex Tillerson arrived in Moscow this week for his previously scheduled official visit with Russian officials. His journey came at a time when the chill in bilateral relations is especially acute following the U.S. missile strikes on Syria in response to the Assad government’s alleged use of chemical weapons. Kremlin leaders were extremely annoyed at Washington’s action, and they hinted that Tillerson’s expected meeting with President Vladimir Putin might have to be canceled. Instead, his talks would be confined to sessions with his counterpart, Foreign Minister Sergei Lavrov. Tillerson did not retreat from the administration’s newly adopted hardline policy regarding that country. Indeed, he insisted that Russia sever its alliance with Bashar al-Assad’s government. Even before arriving in Moscow, Tillerson stated that Russian leaders needed to face the reality that the Assad family’s rule had reached an end. Both Putin and Lavrov flatly rejected that demand. Foreign Ministry spokesperson Maria Zakharova stated bluntly that “there is no use giving us ultimatums. This is simply counterproductive.” Beyond resentment at Washington’s brusque behavior, the Putin government’s stance reflects major policy differences between the two countries. Russian officials warn that ousting Assad would risk making Syria yet another playground for ISIS and other radical Islamist factions. That fear is well-founded. Despite Washington’s longstanding search for “moderate” Syrian rebels, fighters with that orientation are few on the ground and, with the exception of the Kurdish units in the Syrian Democratic Forces, they lack meaningful military capabilities. And the Kurds are pursuing their own agenda—securing a de facto independent state in northern Syria, just as they achieved in Iraqi Kurdistan following the U.S.-led overthrow of Saddam Hussein. The Russians are right. Although Assad is a brutal dictator, removing him would create a dangerous power vacuum in Syria. Even if ISIS did not succeed in filling that vacuum, most of the U.S.-backed rebels (with the exception of the secular Kurds) are nearly as radical. The leading, most powerful, non-ISIS faction is Tahrir al-Sham, formerly the Nusra Front, al-Qaeda’s affiliate in Syria. Together with its smaller, equally Islamist allies operating under the umbrella organization Ahrar al-Sham, the Nusra militants would likely dominate any post-Assad government. The only way to prevent such an outcome would be to send a large contingent of U.S. forces to occupy the country, and no sane American should embrace that option.
Prepare For The Coming War: “It’s Going To Obliterate The Global Financial System… Our Economy Will Not Survive” - You know what’s so tragic about America? Despite all of the wars our nation gets involved in, we’re secretly one of the most peaceful cultures on the planet. We voted for George Bush, because he promised us a non-interventionist foreign policy. We voted for Obama, because he promised to bring the troops home from Iraq and Afghanistan. We voted for Trump, because he promised to end the nation building policies of his predecessor.And that’s the real tragedy. We’ve been voting for peace for nearly 20 years now, and all we get is war.That should really tell you something. It should tell you that our system doesn’t care about what the president stands for, or what the voters want. The system is never held accountable for anything, so there is nothing stopping it. One way or another, the deep state always gets its way. So if our government wants a war, then you can bet that we’re going to war.That was made abundantly clear last week when President Trump ordered the bombing of an air base in Syria. The attack was so provocative, that the Kremlin went so far as to say that the US is now “only one step from war” with Russia. The man who was supposed to buck the system and drain the swamp; the man who promised to restore our relationship with Russia and pull back from brinkmanship, seems to have finally submitted to the warmongers in our government. The deep state’s plan to drag us into a horrible conflagration was only temporarily derailed by Trump, and now it appears that their plans are back on track. But there’s a silver lining in all of this. Once you know that war is inevitable, and you accept that fact, you can have a pretty good idea of what’s going to happen next. You can finally take steps to prepare for it.
Which Is More Important, China Or Syria? -- For the world as a whole and the US in particular, when it is put like that it is pretty obvious: China. It has the world’s largest population, largest economy in PPP terms, a rising military, expanding interests around the world, including making territorial demands on several neighbors, not to mention being a nuclear superpower as well as cyberpower, and more. Syria has a population of 22 million and an economy half the size of Puerto Rico’s. It is not a major oil exporter.However, last week it certainly looked like Syria was more important. President Trump meets with President Xi at Mar-a-Lago, and almost nothing is reported about the meeting other than some vague remarks. Important matters such as trade policy (the US has initiated an anti-dumping suit against China in steel), South China Sea issues, North Korea nuclear testing issues (US has just sent a major naval group towards the place), issues over currency management (with Trump long charging China with currency manipulation, even though it is now widely accepted that while they did it in the past the Chinese are not doing so now), climate change (where China is becoming world leader on the international policy stage while Trump claims that global warming is a “Chinese hoax”). They barely had a press conference, and what really went on in the meeting remains largely mysterious. So, wow, much better to have the headlines and the commentaries taken up with the apparently one-shot firing of 59 Tomahawk missiles at a base in Syria, after apparently warning both the Russians and the Syrians we were going to do it, in response to a chemical attack in Syria that killed about 80 civilians, including some children. This was certainly a bad attack, but it remains unclear if it was the Syrian military or some rebel groups, although probably it was the government, and if it was the government, it is unclear if it was done by some local commander on his own or with the explicit orders of President Assad, and if the latter, was it done with the foreknowledge of their allies, the Russians, and most especially President Putin. The Russians and Iranians are claiming that the rebels did the chem weapons attacke and are denouncing the US attack. But who really knows? I sure as heck do not, and I am not sure anybody in the US government knows either, especially given the 25 reasons that have since been given for this by various administration officials.
Xi-Trump summit ‘beats expectations’ but North Korea still a big divide | South China Morning Post: The leaders of China and the United States wrapped up their much-anticipated summit with both saying the talks put Sino-US ties on a good track – despite the bumpy diplomatic ride since US President Donald Trump’s election. The meeting on Friday yielded a bold commitment to address trade disputes and elevate their discussions, but a chasm remains over North Korea. The outcomes are symbolic but better than anticipated – Trump dropped his anti-China rhetoric, enabling President Xi Jinping to project himself as a capable manager of complex Sino-US ties. As with Xi’s first summit with Trump’s predecessor, Barack Obama, in 2013, the two presidents took a walk after the talks at the Mar-a-Lago resort in Florida. Trump described his relationship with Xi as “outstanding”, while Xi said he was ready to work to advance bilateral relations from a new starting point. US officials said the two countries would develop a 100-day programme to tackle trade conflicts, particularly trade imbalances. And a new consultation mechanism headed by the two leaders would be set up to reduce mistrust on a range of issues. Paul Haenle, director of the Beijing-based Carnegie-Tsinghua Centre, said the summit signalled Trump’s willingness to “back away from that zero-sum confrontation approach to China”.It also showed that “despite the uncertainty that the Trump election brought to the US and the world, Xi could manage it and could put the relationship in a place that would be beneficial to China, or at least not damage China’s interests”, Haenle said.
Chinese state media cheer Xi-Trump meeting, say confrontation not inevitable | Reuters: Chinese state media on Saturday cheered the meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping as one that showed the world that confrontation between the two powers was not inevitable. The official China Daily newspaper said it was encouraging to see the two-day summit that ended on Friday "going as well as it could" after earlier "confusing signals" from Washington about how it was approaching the U.S.-China relationship. Trump had campaigned with strident anti-China rhetoric and had angered Beijing before taking office by talking to the president of Taiwan, the self-ruled island Beijing claims as its own. But the two sides avoided any diplomatic gaffes at Trump's Mar-a-Lago resort in Florida that would have tarnished the meeting in the eyes of the protocol-conscious Chinese. China Daily said both parties appeared "equally enthusiastic about the constructive relationship they have promised to cultivate." "This may sound surreal to those preoccupied with an 'inescapable' conflict scenario between what they see as rising and incumbent powers," the newspaper wrote in an editorial. "But that Beijing and Washington have so far managed to do well in preventing conflicts shows confrontation is not inevitable." State-run Chinese tabloid Global Times said the meeting "served as an indicator that the China-U.S. relationship is still very much on course since the Trump administration took office in January" and it was likely the two nations would develop a more "pragmatic relationship."
Ford CEO Says Trump-Xi Meeting Sets Base for Stronger Ties - Ford Chief Executive Officer Mark Fields, in Shanghai to unveil the automaker’s plans to introduce more electrified models and pickup trucks in China, hailed the meeting between U.S. President Donald Trump and Chinese President Xi Jinping as a constructive step toward stronger ties. “When you have two leaders meet face to face, they become people to each other,” Fields said in an interview with Bloomberg Television on Saturday. “That’s a very firm foundation to then go off and make concrete advances to strengthen the ties between the two countries. I feel that’s very possible.”Worsening relations between the U.S. and China would hurt companies like Ford, which is looking to sell more vehicles in the world’s largest auto market and recently announced it will build its luxury Lincoln brand in the Asian nation to tap growing demand. In their public comments, the two presidents remarked generally about “progress” in their relationship and optimism about the future. That could indicate that the relationship between the two countries remains stable, despite Trump’s fiery accusations during his campaign, and afterward, that China has stolen U.S. manufacturing jobs. On China’s policy of requiring foreign automakers to set up local joint ventures in order to manufacture vehicles and tariffs on imported cars, Fields said that tangible reforms and opening up are needed. The issue is bigger than the 50 percent limit on foreign ownership of the ventures, he said, and there’s the need to decrease policy uncertainties, boost business confidence and create equal opportunities for each nation at the same time. Ford, which operates joint ventures in China with Chongqing Changan Automobile Co. and Jiangling Motors Corp., boosted sales by 14 percent to a record 1.27 million vehicles last year, in line with the industrywide growth rate.
U.S. Navy strike group to move toward Korean peninsula: U.S. official | Reuters: A U.S. Navy strike group will be moving toward the western Pacific Ocean near the Korean peninsula as a show of force, a U.S. official told Reuters on Saturday, as concerns grow about North Korea's advancing weapons program. Earlier this month North Korea tested a liquid-fueled Scud missile which only traveled a fraction of its range. The strike group, called Carl Vinson, includes an aircraft carrier and will make its way from Singapore toward the Korean peninsula, according to the official, who was not authorized to speak to the media and requested anonymity. "We feel the increased presence is necessary," the official said, citing North Korea's worrisome behavior. The news was first reported by Reuters. In a statement late Saturday, the U.S. Navy's Third Fleet said the strike group had been directed to sail north, but it did not specify the destination. The military vessels will operate in the Western Pacific rather than making previously planned port visits to Australia, it added. This year North Korean officials, including leader Kim Jong Un, have repeatedly indicated an intercontinental ballistic missile test or something similar could be coming, possibly as soon as April 15, the 105th birthday of North Korea's founding president and celebrated annually as "the Day of the Sun." Earlier this week U.S. President Donald Trump and Chinese President Xi Jinping met in Florida, where Trump pressed his counterpart to do more to curb North Korea's nuclear program. Trump's national security aides have completed a review of U.S. options to try to curb North Korea's nuclear and missile programs. These include economic and military measures but lean more toward sanctions and increased pressure on Beijing to rein in its reclusive neighbor.
North Korea Threatens U.S. With Nuclear Attack At Any Sign Of Pre-Emptive Strike --With the USS Carl Vinson carrier group steaming toward the Korean peninsula for what some speculate may be to launch a "decapitation" strike on the Kim Jong-Un regime, on Tuesday North Korean state media warned of a nuclear attack on the United States at any sign of a U.S. pre-emptive strike. North Korea's official Rodong Sinmun newspaper said the country was prepared to respond to any aggression by the United States. "Our revolutionary strong army is keenly watching every move by enemy elements with our nuclear sight focused on the U.S. invasionary bases not only in South Korea and the Pacific operation theatre but also in the U.S. mainland," it said.The North's foreign ministry, in a statement carried by its KCNA news agency, said the U.S. navy strike group's approach showed America's "reckless moves for invading had reached a serious phase"."We never beg for peace but we will take the toughest counteraction against the provocateurs in order to defend ourselves by powerful force of arms and keep to the road chosen by ourselves," an unidentified ministry spokesman said.Tensions escalated sharply over the past week on the Korean peninsula with talk of imminent military action by the United States gaining traction following its strikes last week against Syria and amid concerns the reclusive North may soon conduct a sixth nuclear test.The North also convened a Supreme People's Assembly session on Tuesday, one of its twice-yearly sessions in which major appointments are announced and national policy goals are formally approved. Delegates from around the North have been arriving in Pyongyang ahead of the assembly session. They visited statues of previous leaders Kim Il Sung and his son, Kim Jong Il, state media reported. Saturday is the 105th anniversary of the birth of Kim Il Sung, the country's founding father and grandfather of current ruler, Kim Jong Un. A military parade is expected in the North's capital, Pyongyang, to mark the day. North Korea often also marks important anniversaries with tests of its nuclear or missile capabilities in breach of U.N. Security Council resolutions.
U.S. May Launch Strike If North Korea Reaches For Nuclear Trigger - NBC News: The U.S. is prepared to launch a preemptive strike with conventional weapons against North Korea should officials become convinced that North Korea is about to follow through with a nuclear weapons test, multiple senior U.S. intelligence officials told NBC News. North Korea has warned that a "big event" is near, and U.S. officials say signs point to a nuclear test that could come as early as this weekend. The intelligence officials told NBC News that the U.S. has positioned two destroyers capable of shooting Tomahawk cruise missiles in the region, one just 300 miles from the North Korean nuclear test site. American heavy bombers are also positioned in Guam to attack North Korea should it be necessary, and earlier this week, the Pentagon announced that the USS Carl Vinson aircraft carrier strike group was being diverted to the area. The U.S. strike could include missiles and bombs, cyber and special operations on the ground. The danger of such an attack by the U.S. is that it could provoke the volatile and unpredictable North Korean regime to launch its own blistering attack on its southern neighbor. "The leadership in North Korea has shown absolutely no sign or interest in diplomacy or dialogue with any of the countries involved in this issue," Victor Cha, the Korea Chair at the Center for Strategic and International Studies told NBC News Thursday.
Trump orders military advisers to prepare plans to hit North Korea: President Trump has ordered his military advisers to be ready with a list of options to smash North Korea’s nuclear threat. One of the advisers, Lieutenant General H. R. McMaster, confirmed his Commander-in-Chief has made the order as a U.S. carrier strike group heads for the region. It is believed that among the options are combined special forces raids and pre-emptive missile strikes. One of the problems facing an American-led operation to hit Pyongyang’s leader Kim Jong-Un is the intricate tunnel network under the capital.War-planners have had difficulty mapping out the subterranean complex and believe there are hundreds of underground artillery and airplane sites. McMaster described the decision to redeploy the USS Carl Vinson to the Sea of Japan as ‘prudent’ given North Korea’s ‘pattern of provocative behaviour’ Speaking to Fox News, McMaster said: “It’s prudent to do it, isn’t it? “Presidents before and President Trump agreed that that is unacceptable, that what must happen is the denuclearisation of the peninsula.
China is suddenly leaning on North Korea — and it might be thanks to Trump - For the first time, the Chinese government appears to have laid down a bottom-line with North Korea and is threatening Pyongyang with a response of “unprecedented ferocity” if the government of Kim Jong Un goes ahead with a test of either an intercontinental ballistic missile or a nuclear device. In an editorial in the semi-official Global Times on Wednesday, Pyongyang was put on notice that it must rein in its nuclear ambitions, or else China’s oil shipments to North Korea could be “severely limited.” It is extraordinary for China to make this kind of threat. For more than a decade, as part of its strategy to prop up one of its only allies, China refused to allow the U.N. Security Council to even consider cutting oil shipments to North Korea. Beijing’s calculus was that the maintenance of the North Korean regime took precedence over everything. Now Beijing seems to be reconsidering its position. Perhaps even more significantly, on April 5, the Global Times, which is owned by the People’s Daily, the official mouthpiece of the Chinese Communist Party, laid out what it called China’s “bottom line” on the increasingly tense situation on the Korean Peninsula. First, the editorial said “the safety and stability” of China’s northeast must be assured. To that end, the editorial continued, no North Korean nuclear fallout can be allowed to “contaminate” the region. Second, North Korea cannot be allowed to “descend into the kind of turbulence that generates a huge outpouring of refugees,” the editorial said, adding that China will also not allow “a hostile government” in Pyongyang. It concluded by vowing that Beijing would not tolerate a U.S. military push towards the Yalu River. China has never before listed in such clear, albeit semi-official, terms what it wants for the Korean Peninsula. It’s never before hinted that it would oppose the formation of a government hostile to Beijing’s interests next door. So how is this related to Trump? Trump issued a series of tweets demanding that China do more to rein in North Korea. Trump administration sources have also leaked information vowing to punish a panoply of Chinese companies that have facilitated North Korea’s busting of U.N. sanctions.Meanwhile, the U.S. military sped up its plans to deploy the Terminal High Altitude Area Defense antimissile system in South Korea, despite China’s intense opposition. But that wasn’t all. When Secretary of State Rex Tillerson traveled to Asia in March he warned that the United States would consider a preemptive strike on the north if its nuclear program continued unabated. “The policy of strategic patience,” Tillerson announced, “has ended.” Finally, the North Korean bomb was front and center at the summit between Trump and China’s president, Xi Jinping, on April 6 and 7 at Trump’s Mar-a-Lago resort.
Whatever Trump said to China about North Korea, it seems like it worked -- When US President Donald Trump and Chinese President Xi Jinping were enjoying chocolate cake at the end of their first dinner together on Thursday, US Navy ships were pounding a Syrian airfield with a salvo of 59 cruise missiles. After a phone call on Tuesday night, the two signaled an agreement to work together to denuclearize North Korea, and China reportedly sent 150,000 troops to North Korea's border. The Trump administration has long tried to establish its willingness to use military force against Kim Jong Un's regime. "China insists on realizing the denuclearization of the peninsula ... and is willing to maintain communication and coordination with the American side over the issue on the peninsula," Xi was quoted as saying by the state broadcaster CCTV and other official media outlets after the call. "Had a very good call last night with the President of China concerning the menace of North Korea," Trump tweeted on Wednesday morning. Trump last month said China could end the North Korean crisis easily if it wanted to, but it had "done little to help." China has resisted taking hard action against North Korea since it has a vested interest in preserving the state, which acts as a physical and cultural buffer between China and the Western-oriented, democratic South Korea. But now, as the US Navy's USS Carl Vinson carrier-strike group looms just off the Korean peninsula, multilateral talks hold more promise than ever. Xi's response after his meeting with Trump signals he may be willing to go further in reeling in the rogue North Korean leader. Trump reportedly stressed the issue and suggested the US would unilaterally take care of the Kim regime if necessary.
US balks at branding China a ‘currency manipulator’ - The US Treasury warned China that it is closely scrutinising its foreign exchange and trade practices after past interventions caused “significant and long-lasting hardship” for American workers. But it declined to brand the country a currency manipulator despite Donald Trump’s campaign pledges. The Treasury’s twice-annual report on foreign exchange policies lashed the People’s Republic of China for its “long track record of engaging in persistent, large-scale, one-way foreign exchange intervention” but acknowledged that its more recent practices have aimed to prevent excessive depreciation in its exchange rate. The Treasury called on Beijing to prove that its change in foreign exchange strategy represents a “durable policy shift”. It added: “China continues to pursue a wide array of policies that limit market access for imported goods and services, and maintains a restrictive investment regime which adversely affects foreign investors.” Mr Trump pledged before the inauguration to brand China a currency manipulator on day one of his presidency but, earlier this week, he retreated from the vow as he acknowledged that Beijing’s foreign exchange practices had changed. He has also hinted at concessions on his trade agenda if Beijing did more to support America on North Korea. The Trump administration’s currency U-turn has been welcomed by officials and economists but it risks triggering a backlash from supporters who were drawn by the president’s attacks on a country he once dubbed a “grand champion” of currency manipulation. In its report, the Treasury acknowledged that China’s trade and current account surpluses narrowed in 2016, and that its currency was under “downward pressure throughout the year” as a result of capital outflows estimated at $700bn. However, it also added: “Treasury is concerned by the lack of progress made in reducing the bilateral trade surplus with the United States.”
Trump Reverses On NATO: "It's No Longer Obsolete" -- In a 'yuge' victory for the new administration, after spending less than 100 days in office no less, Trump has apparently managed to solve the issue of NATO's obsolescence after just declaring in a joint press conference with the NATO Secretary General that "I said it was obsolete. It's no longer obsolete." "The Secretary General and I had a productive discussion about what more NATO could do in the fight against terrorism. I complained about that a long time ago and they made a change. And now they do fight terrorism. I said it was obsolete. It's no longer obsolete."
Trump Flips On Five Core Key Campaign Promises In Under 24 Hours --Blink, and you missed Trump's blistering, seamless transformation into a mainstream politician. In the span of just a few hours, President Trump flipped to new positions on several core policy issues, backing off on no less than five repeated campaign promises. In a WSJ interview and a subsequent press conference, Trump either shifted or completely reversed positions on a number of foreign and economic policy decisions, including the fate of the US Dollar, how to handle China and the future of the chair of the Federal Reserve. Goodbye strong dollar and high interest rates. In an announcement that rocked currency markets, Trump told the WSJ that the U.S. dollar “is getting too strong” and he would prefer the Federal Reserve keep interest rates low. “I do like a low-interest rate policy, I must be honest with you,” Mr. Trump said. “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting—that will hurt ultimately,” he added. “Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good.”Trump then said the one thing that every other currency manipulator realizes all too well: “It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.”During his campaign Trump had repeatedly said that a "strong dollar" policy would be beneficial for the US economy, despite our repeat warnings that he will inevitably reverse on this, especially if and when the "Goldman" circle of advisors starts providing macroconomic advice. It is unclear if the shift in Trump's policy will mean that US economic data will now "mysteriously" begin to deteriorate to justify not only his request for a weaker dollar, but to also hit the breaks on Yellen's plans for further rate hikes over the next 2-3 years. In any case, the debate over the Fed's balance sheet unwind, and the trajectory of Fed hikes, is now on indefinite hiatus. The biggest loser here, again, are America's savers who may have been hoping that their bank deposits will finally earn some interest. As for the most notable outcome from this Trump statement, is that it counters his "desire" for a weaker dollar with the Fed's tightening bias. Will fireworks fly as Trump realizes that Yellen's actions are prompting the strong dollar? Stay tuned for what may be the most entertaining clash yet: Trump vs Yellen.
Two Months In, Trump Finds Big Promises Are Hard to Keep --President Donald Trump’s declaration that he won’t label China a currency manipulator stands as the clearest example of the difficulty he’s having delivering on big campaign promises.Trump backed away from a signature pledge of his White House bid on Wednesday, days before release of a closely-watched Treasury Department report on the currency practices of major U.S. trading partners.“They’re not currency manipulators,” Trump told the Wall Street Journal in an interview.The currency decision is one among many instances of Trump reversing course since taking office a little less than three months ago. Within the space of a few hours on Wednesday, Trump changed previously critical stances on the U.S. Export-Import Bank, the value of NATO, interest rates, and Federal Reserve Chair Janet Yellen. Likewise, his promises to renegotiate NAFTA, slap tariffs on Chinese goods, and repeal and replace the Affordable Care Act in his first days have been stymied, delayed or abandoned. And the missile strike on a Syrian airfield last week was the sort of foreign military intervention that candidate Trump had warned against. To be sure, the difficulty Trump faces sticking to his campaign promises is familiar to every president. Barack Obama was unable to realize his vow to close the prison at Guantanamo Bay, George W. Bush saw budget deficits balloon and the economy stall during his presidency, and overhauling the nation’s health-care system escaped Bill Clinton’s grasp. But those presidents, girded by previous political experience, acknowledged some of the political headwinds they’d face as they sought to implement ambitious agendas. Not so for Trump, who employed his characteristic bluster to promise dramatic change immediately upon assuming office.
What’s really behind Donald Trump’s flip-flops -- Nobody ever said that Donald Trump was a man of firm principle. Indeed, apart from a couple of rancid ideas about race and foreigners, one struggles to find anything Trump has consistently believed over the course of his life when it comes to political issues. But recently Trump has racked up an unusual number of flip-flops, with some interesting implications for the rest of his presidency. To begin, let’s look at what he has changed his mind about just in the last few days:
- He now thinks NATO is no longer obsolete
- He won’t label China a currency manipulator
- He now thinks the Export-Import bank should stay
- He now likes Janet Yellen and may renominate her as Fed chair
- The federal hiring freeze he ordered has now been lifted
You can look at each of these reversals and come up with an ideological interpretation. For instance, on the economic ones, you might say they represent the ascendance of the Wall Street wing of Trump’s advisers. But what they have more in common is the maintenance of the status quo. Here’s how it works. Trump the candidate makes all kinds of promises about radical change, blowing up the system, sweeping into Washington and remaking it from top to bottom. Many of the things he says are substantively ridiculous and born of ignorance, but none of his aides bother to tell him. Because who really cared back then? He wasn’t going to sit down for extended policy instruction, and the campaign seemed to be working pretty well anyway. But now he’s president, and instead of just making statements he’s making policy. So when one of these issues comes up, there’s a good chance someone will say, “Well actually sir, that could be a really bad idea.” They’ll explain why, and since Trump doesn’t really care about the substance of any of it, he’ll change his position.
McConnell: Trump 'learning the job' | TheHill: Senate Majority Leader Mitch McConnell (R-Ky.) is defending President Trump's decision to break with some of his campaign rhetoric and reverse a string of policy positions. "I think he's learning the job. I think President Trump is learning the job and some of the things that were said during the campaign I think he now knows that's simply not the way things ought to be," McConnell told Newsmax TV. McConnell was asked about Trump's decision on Wednesday to back away from his "day one" pledge to label China as a currency manipulator — a reversal that has sparked criticism from top Democrats. But the GOP leader also pointed to Trump's flip on NATO when he declared Wednesday that it is "no longer obsolete." Pressed if voters expected presidents to keep their campaign positions, McConnell argued there was "nothing wrong" about Trump's policy reversals. "In fact I welcome adjustments that he makes from the campaign," he told Newsmax TV. "I can't think of a single candidate who hasn't changed their mind once being elected president." In addition to NATO and China, Trump also reversed his positions on the Export-Import Bank and has sounded less optimistic about the chances of a renewed U.S.-Russia relationship.
Trump considers trade order that could lead to duties: official | Reuters: U.S. President Donald Trump is considering an executive order to launch a trade investigation that could lead to supplemental duties in certain product categories, a Trump administration official told Reuters. Trump has made reducing U.S. trade deficits a key focus of his economic agenda to try to grow American manufacturing jobs. He has taken particular aim at renegotiating trade relationships with China and Mexico. The new order, if issued, would seek to determine whether U.S. trade deficits for those product lines are the result of dumping of imported products below cost and unfair subsidies by foreign governments, the official said late on Sunday in Washington. That could eventually lead to additional import duties, but any decisions on such punishments would depend on the probe's findings, not "pre-determined conclusions," said the official, who spoke on the condition of anonymity because the order was still being considered. The official did not specify which product lines could be investigated. "The administration would use the results of that investigation to determine the best path forward, which could include everything from no action at all to the levying of supplemental duties," the official said. The Axios news website earlier quoted an official saying such an executive order would likely target steel and aluminum, two industries that are battling for more protection from Chinese imports. Axios said it also may target household appliances, where South Korean manufacturers with Chinese factories have gained market share. The Trump administration official did not provide any details to Reuters on timing of the executive order, which would be separate from a March 31 Trump order authorizing a 90-day Commerce Department study of trade abuses and their effect on U.S. trade deficits.
Trump’s Policies Spell Impending Recession for America -If President Trump continues down his current path of protectionism and anti-globalization, to try and put “America First”; then retaliatory measures by other world powers, huge domestic deficits, massive job losses and spiralling inflation could in fact put America last!Those are words coming from Mark T. Williams, Boston University finance professor, former Fed official and author of the acclaimed book on the Lehman Brothers debacle “Uncontrolled Risk”. According to Williams, Trump’s economic and foreign policies ignore the undeniable benefits that free and open trade has delivered globally. Going back in history, it has been free trade that has made post WWII America into the global economic powerhouse that it is today. To support his thesis, Williams points to America’s $18 trillion plus GDP, and a $2.5 trillion export market as proof that global trade does pay – especially for America. Exports are responsible for creating and supporting nearly 12 million American jobs; with nearly 25% of all manufacturing jobs in some way related to exports.Should Trump turn his economic guns to China, Williams predicts there will be a backlash that would only end in pushing America over the recession cliff. With a population of over 1.4 people, China’s growing middle class offers American exporter’s exceptional opportunity to further increase their trade footprint. Additionally, as a low-cost producer, China provides American consumers greater choice to buy lower-priced consumer products at home. A trade war with America’s Southern neighbor Mexico could further aggravate America’s fragile, yet recovering, economy. Despite all the rhetoric about huge trade imbalance between the two nations, US consumers are the net beneficiaries of 80% of Mexican exports to America. Any imposition of a proposed 35% border tax with Mexico could significantly increase US domestic prices for a whole array of goods – from cotton and coffee, to vegetables, cars, fruits and cell phones.
Trump’s promised $1 trillion infrastructure deal now on front burner—again - Logistics Management: The on-again, off-again, much-ballyooed $1 trillion infrastructure program promised by the fledgling Trump administration is on again. Sort of. After failing on its longstanding promise to fix Obamacare before moving onto the very complicated task of tax reform, the administration has sent conflicting messages about infrastructure. At first, it was a go immediately. Then it was relegated after tax reform, which meant 2018 – or maybe never. Now, at this moment, it’s a go ahead. Perhaps as early as May. Or maybe not. “We want to do a great infrastructure plan,” Trump told the New York Times. “I think it’s going to be one of the very bipartisan bills and it’s going to happen.” Then, just as if he were dousing hopes of a simple infrastructure bill unencumbered with partisan politics, the mercurial president added: “I may put it in with health care.”At least, Trump is now vowing to cut red tape to speed up approval of infrastructure projects and said his overhaul could top $1 trillion on roads, tunnels and bridges, one of his many campaign promises. His comments came at a White House meeting of 50 chief executives and other business leaders. Transportation Secretary Elaine Chao said recently the administration plans to release a legislative package in May. Investors have become more skeptical that the plan would win approval this year in Congress, which is controlled by Republicans who are traditionally wary of big government spending programs such as this. Chao also said that DOT “has a budget of $70 billion and we don’t build anything.” She was referring to the billions that DOT distributes Highway Trust Fund dollars through a formula that essentially acts as a block grant to states. Chao now says “money is not the problem,” adding: “There’s lots of money chasing too few deals. And so what we need to do is somehow work on the upstream part of rebuilding our infrastructure, and that is to let loose the permitting process so that deregulatory efforts can be ongoing.”
Tax Cuts for the Rich Aren’t an Economic Panacea — and Could Hurt Growth | Center on Budget and Policy Priorities - President Trump’s campaign tax plan and the House GOP “Better Way” tax plan would provide massive tax cuts that would overwhelmingly benefit high-income and high-wealth individuals. Conservatives defend these tax cuts by claiming that they will boost economic growth. For example, House Speaker Paul Ryan has said, “if you want faster economic growth, more upward mobility, and faster job creation, lower tax rates across the board is the key — it’s the secret sauce.” Economic evidence contradicts these claims, however. In reality, tax cuts — particularly for high-income people — are an ineffective way to spur economic growth, and they’re likely to harm the economy if they add to the deficit or are paired with cuts to investments that support the economy and working families.[1] Careful empirical research finds that tax cuts on high-income people’s earnings or their income from wealth (such as capital gains and dividends) don’t substantially boost work, saving, and investment — contrary to overstated “supply side” predictions.
- High-income people are unlikely to increase their work hours due to cuts in their tax rates, research shows. “Overall, evidence suggests [high-income Americans’] labor supply is insensitive to tax rates,” Leonard Burman, co-founder of the Tax Policy Center (TPC), notes.
- Tax cuts on capital gains and dividends flow overwhelmingly to the wealthiest filers in the country, but do little to boost saving and investment. The non-partisan Congressional Research Service (CRS) concludes that capital gains tax rate changes appear to have “little or no effect” on private saving.
- Tax economist Joel Slemrod concludes that, “there is no evidence that links aggregate economic performance to capital gains tax rates,” and TPC’s Burman has explained, “there’s no obvious relationship between capital gains, tax rates, and the rate of economic growth.”
- The Bush tax cuts included sharp tax cuts on capital gains and dividends that proponents said would spur immediate business growth, but a recent study found “empirical evidence that the 2003 tax cuts had little impact on investment or employment.”
- Tax cuts for high-income people also aren’t an effective way to encourage entrepreneurship. In fact, on balance, research suggests that “higher tax rates are more likely to encourage, rather than discourage, self-employment,” CRS concludes.
The IRS took millions from innocent people because of how they managed their bank accounts, inspector general finds --The report covers IRS cash seizures against businesses and individuals suspected of deliberately trying to avoid federal reporting requirements for large bank deposits.To combat criminal activity, individuals and businesses are required to report all bank deposits greater than $10,000 to federal authorities. Intentionally splitting up large sums of cash into sub-$10,000 amounts to avoid that reporting requirement is known as “structuring” and is illegal under the federal Bank Secrecy Act.But many business owners engaged in perfectly legal activities may be unaware of the law. Others are covered by insurance policies that don't cover cash losses greater than $10,000. Still others simply want to avoid extra paperwork, and keep their deposits less than $10,000 on the advice of bank employees or colleagues.While structuring is technically a crime, it's something of a secondary one. The reporting requirements were enacted to detect serious criminal activity, such as drug dealing and terrorism. They “were not put in place just so that the Government could enforce the reporting requirements,” as the IG's report puts it. But according to the report, that's exactly what happened at the IRS in recent years. The IRS pursued hundreds of cases from 2012 to 2015 on suspicion of structuring, but with no indications of connections to any criminal activity. Simply depositing cash in sums of less than $10,000 was all that it took to arouse agents' suspicions, leading to the eventual seizure and forfeiture of millions of dollars in cash from people not otherwise suspected of criminal activity.
Trump Backtracks; Confirms We "Have To Do Healthcare Before Tax Reform" --Back in late March, equity markets sold off on the first signs that Republicans were not going to be able to repeal and replace Obamacare as they had promised. Alas, the pessimism didn't last long as the BTFD crowd was able to quickly convince everyone that the failure of Obamacare was actually good for markets as it would allow the Trump administration to focus it's efforts on tax cuts instead...and, as usual, equities soared.That said, per Trump's latest interview with Maria Bartiromo of Fox Business which aired earlier this morning, the BTFD strategists may have to find another catalyst for the next dip as Trump confirmed that healthcare has to get done before tax reform and infrastructure:Trump: “I think we’re going very well with healthcare. And after that, we’re going to start on tax reform and infrastructure.” Not satisfied with Trump's subtle suggestion that healthcare would have to precede tax reform, Bartiromo pressed further....Bartiromo: "But, do you have to do healthcare before tax reform? When I speak with business managers they say tax reform is so much more impactful to moving the needle on economic growth."...at which point, she got a very clear answer: "Yes."Trump: “Yes. They’re all right. But because I’m saving a tremendous amount, hundreds and hundreds of millions of dollars we’re saving on healthcare. So we’re going to have a much better plan than ObamaCare, which is failing.” “So we’re saving tremendous amounts of money on health care when we get this done, number one. And most importantly, actually we’re going to have great healthcare. And all of that saving goes into the tax. If you don’t do that, you can’t put any of the savings into the tax cuts.”
Trump threatens to stop key ObamaCare payments: report | TheHill: President Trump is threatening to withhold key ObamaCare payments as a way to force Democrats to the negotiating table on healthcare, according to The Wall Street Journal. The Journal reported that Trump made the threat in an interview on Wednesday. “I don’t want people to get hurt,” Trump said. “What I think should happen — and will happen — is the Democrats will start calling me and negotiating.” If Trump follows through on what the Journal is reporting, he could use the ensuing chaos in ObamaCare's insurance markets to try to back Democrats into making a deal on repealing the law. Senate Democratic Leader Charles Schumer (N.Y.) said in response to the comments that "President Trump is threatening to hold hostage health care for millions of Americans, many of whom voted for him, to achieve a political goal of repeal that would take health care away from millions more." "This cynical strategy will fail," Schumer continued. "Our position remains unchanged: drop repeal, stop undermining our health care system, and we will certainly sit down and talk about ways to improve the Affordable Care Act." Trump did not definitively say whether he would seek to cancel the payments, known as cost-sharing reductions (CSRs), or whether Congress should appropriate the money, according to the Journal. In fact, Trump also acknowledged he might continue the payments so he would not be blamed for chaos in the system. He also cautioned: “That’s part of the reason that I may go the other way." "The longer I’m behind this desk and you have ObamaCare, the more I would own it,” he said.
Trump Threatens to Withhold Payments to Insurers to Press Democrats on Health Bill —Almost three weeks after canceling a vote on his health-care package over infighting among his fellow Republicans and the opposition of the Democrats, President Donald Trump dug back into the fight on Wednesday, threatening to withhold payments to insurers to force Democrats to the negotiating table. In an interview in the Oval Office, Mr. Trump said the White House may lack authority to make the payments established under his predecessor to reduce copayments and deductibles for some of the poorest customers who buy insurance under the 2010 Affordable Care Act. Cutting off the payments could trigger turmoil in insurance markets. “I don’t want people to get hurt,” Mr. Trump said. “What I think should happen—and will happen—is the Democrats will start calling me and negotiating.” In a 70-minute interview that touched on a range of foreign policy and domestic issues, Mr. Trump said he wouldn’t release any guidelines for a promised overhaul of the tax code until a health-care bill passes. He held out hope that Republicans could forge a new health-care law despite the failed previous effort and subsequent talks that didn’t yield a deal between the Freedom Caucus group of lawmakers and centrist Republicans..
Can Trump Take Health Care Hostage?, by Paul Krugman -- Three weeks have passed since the Trumpcare debacle. After eight years spent denouncing the Affordable Care Act, the G.O.P. finally found itself in a position to do what it had promised, and deliver something better. But it couldn’t.And Republicans, President Trump very much included, had nobody but themselves to blame. ...But Mr. Trump, as you may have noticed, isn’t big on accepting responsibility for his failures. Instead, he has decided to blame Democrats for not cooperating in the destruction of their proudest achievement in decades. And on Wednesday, in an interview with The Wall Street Journal, he openly threatened to sabotage health care for millions if the opposition party doesn’t give him what he wants. ...It’s a nasty political tactic. It’s also remarkably stupid.The nastiness should be obvious, but let’s spell it out. Mr. Trump is trying to bully Democrats by threatening to hurt millions of innocent bystanders — ordinary American families who have gained coverage thanks to health reform. ...Why does Mr. Trump even imagine that this threat might work? Implicitly, he’s saying that hurting innocent people doesn’t bother him as much as it bothers his opponents. Actually, this is probably true...What makes Mr. Trump’s tactic stupid as well as nasty is the reality that Democrats have no incentive whatsoever to give in. ...Maybe Mr. Trump believes that he could somehow shift the blame for the devastation he has threatened to wreak onto Democrats. “See, there’s the death spiral I predicted!” But that probably wouldn’t work even if he hadn’t effectively proclaimed his own guilt in advance. Voters tend to blame whoever holds the White House for bad things, and in this case they’d be right: ...So the Trump health care threat is, as I said, stupid as well as nasty. And it’s hard to believe that it will be carried out.But here’s the thing: Even if Mr. Trump wimps out, as he is doing on so many other issues, he may already have done much of the threatened damage. Insurers are deciding right now whether to participate in the 2018 Obamacare exchanges. Mr. Trump’s tough talk is creating a lot of uncertainty, which in itself may undermine coverage for many Americans. There is, of course, a good chance that Mr. Trump doesn’t understand any of this. Unfortunately, when you’re in the White House, what you don’t know can hurt a lot of people.
Trump’s threat prompts Democrats to play hardball over Obamacare payments -- Democrats signaled that they will seek to secure payments owed to health insurers under the Affordable Care Act as part of pending negotiations over a government spending bill Thursday — a new wrinkle in sensitive talks that emerged a day after President Trump threatened to use the payments to force Democrats to negotiate a replacement for the ACA. The “cost-sharing reduction” payments are meant to subsidize out-of-pocket expenses for low-income Americans who receive insurance through ACA marketplaces, and the payments are seen as a key factor in maintaining the stability of the market for individual insurance in many states. House Republicans sued the administration of President Barack Obama over the payments, and they have been tied up in litigation for months as insurers have warned that the impasse could threaten coverage for many Americans. Trump told the Wall Street Journal on Wednesday that he might hold back the payments to force Democrats to negotiate over replacing the Affordable Care Act. “I don’t want people to get hurt,” he told the paper. “What I think should happen — and will happen — is the Democrats will start calling me and negotiating.” Two Democratic aides familiar with the negotiations but not authorized to comment publicly on them said Trump’s remarks have now put the issue among the party’s top priorities as they negotiate a spending bill. Current federal appropriations expire April 28, and a partial government shutdown would follow if Republicans and Democrats cannot agree on how to extend funding. Both Senate Minority Leader Charles E. Schumer (D-N.Y.) and House Minority Leader Nancy Pelosi (D-Calif.) are determined to use Democrats’ leverage in the spending fight to force the Trump administration to make the insurance payments, the aides said. Republicans have their own demands — including funding for the southern border wall supported by Trump and also a provision that could block federal funding for “sanctuary cities” that do not cooperate with federal immigration authorities. But any spending bill will have to win some Democratic support to reach a 60-vote threshold in a chamber where Republicans have a 52-vote majority.
High-Risk Pools Pose a Dilemma for Conservatives –Ed Dolan - In contrast to liberals, who lean toward a single-payer system or public option, conservatives would like to limit the government’s role to the very sick and the very poor. For the poor, they seem ready (grudgingly) to accepted Medicaid, or something like it, as long as coverage is limited to the “truly needy.” What to do about the very sick is a more complicated problem. High-risk pools, which both HHS Secretary Tom Price and House Speaker Paul Ryan have endorsed, offer a possible solution, but one that comes with issues of its own. High-risk pools are a response to the inability of private companies to offer insurance at an affordable premium unless their pool of customers has enough healthy individuals to keep average claims low. If too many sick people join the pool, claims and premiums, begin to rise. Rising premiums cause healthy people to drop out of the pool and take their chances on life without coverage. The dropouts push premiums higher still for those who remain in the pool until, eventually, no one can afford coverage. The traditional way of dealing with such a “death spiral.” was to practice medical underwriting, which means dividing the population into separate pools according to health status. If medical underwriting is permitted, insurers quote premiums that reflect the actuarial risk of each pool. They may refuse altogether to cover people with pre-existing conditions, cover them only at very high rates, or place caps on annual or lifetime benefits. Although it keeps premiums affordable for the relatively healthy, medical underwriting inevitably means that some people cannot obtain coverage at an affordable premium, or have exhausted their coverage by reaching their spending caps. Before the Affordable Care Act (ACA or “Obamacare”) limited medical underwriting, many states created high-risk pools to meet their needs. Such pools were not intended to be profitable and were supported by government subsidies.
Trump Administration Considering 'Back-Door Way' to Cut Social Security - President Donald Trump, who campaigned on a promise not to cut Social Security, is reportedly considering a plan to eliminate much of the payroll tax that funds the critical safety net program.According to the Associated Press on Monday, the proposal is being floated as the Trump administration goes "back to the drawing board in a search for Republican consensus behind legislation to overhaul the U.S. tax system."The AP reported that one option "circulating this past week would change the House Republican plan to eliminate much of the payroll tax and cut corporate tax rates. This would require a new dedicated funding source for Social Security." And that, Zaid Jilani wrote at The Intercept, "would require counting on Trump's economic team to shepherd a solution through Congress—and for Congress to treat Social Security unlike other 'discretionary' general-fund programs whose budgets rise and fall with political currents."The AP continued: The change, proposed by a GOP lobbyist with close ties to the Trump administration, would transform [Texas Republican Rep. Kevin] Brady's plan on imports into something closer to a value-added tax by also eliminating the deduction of labor expenses. This would bring it in line with WTO rules and generate an additional $12 trillion over 10 years, according to budget estimates. Those additional revenues could then enable the end of the 12.4 percent payroll tax, split evenly between employers and employees, that funds Social Security, while keeping the health insurance payroll tax in place. This approach would give a worker earning $60,000 a year an additional $3,720 in take-home pay, a possible win that lawmakers could highlight back in their districts even though it would involve changing the funding mechanism for Social Security, according to the lobbyist, who asked for anonymity to discuss the proposal without disrupting early negotiations. Although some billed this as a bipartisan solution, and President Barack Obama did temporarily cut the payroll tax after the Great Recession, others note it probably would run into firm opposition from Democrats who are loathe to be seen as undermining Social Security. In a column on Monday, Michael Hiltzik of the Los Angeles Times described the plan as "an absolutely terrible idea, partially because it smells like a back-door way of cutting Social Security benefits. It needs to be nipped in the bud." Indeed, Nancy Altman, president of the advocacy group Social Security Works, called the scheme "a Trojan horse: It appears to be a gift, in the form of middle class tax relief, but would, if enacted, lead to the destruction of working Americans' fundamental economic security."
White House Moves to Eliminate Social Security Tax - The Trump administration is considering a proposal to remove Social Security’s dedicated funding stream by eliminating the payroll tax that funds it, the Associated Press reports.That would generate a considerable and highly visible tax cut for workers — 6.2 percent of their wages, putting an extra $3,720 a year into the paychecks of someone who makes $60,000 a year. And it would save the same amount for their employers.But Social Security advocates worry that it would undermine the program’s finances by making it reliant on general revenues. Nancy Altman, who co-directs the Social Security Works advocacy group, called it a potential stealth attack.“We were always able to say Social Security doesn’t add a penny to the deficit, and if all of a sudden there’s general revenue flowing to it, then it does contribute to the deficit,” she said. “It undermines the idea that it’s an earned benefit.” The Social Security payroll tax — assessed on all earnings up to $127,200 — is regressive in nature. It is, for instance, by far the heftiest federal tax burden on those who earn too little annually to owe much income tax. Its elimination would be a boon to most workers — but only if the funding stream were reliably and fully replaced.That would require counting on Trump’s economic team to shepherd a solution through Congress — and for Congress to treat Social Security unlike other “discretionary” general-fund programs whose budgets rise and fall with political currents. Furthermore, the rumored mechanism for making up the lost funding — said to be a form of value-added tax (VAT), based on eliminating deductions on labor expenses — would hit workers the hardest.
U.S. tax reform debate moves away from Ryan blueprint | Reuters: U.S. House Speaker Paul Ryan's tax reform blueprint appears to be losing its status as the likely framework for the first major tax overhaul since 1986, with rival approaches emerging from the White House, Senate and other quarters in Congress. Congressional aides, lobbyists and analysts say the changing focus could delay passage of a tax bill until late 2017 or 2018, potentially foiling Republican efforts to score a legislative victory for President Donald Trump by August, following last month's failed bill to repeal and replace Obamacare health insurance. Like the healthcare bill, the House Republican tax blueprint stems from Ryan's "A Better Way" legislative agenda launched during the 2016 election campaign. "The House can go and do what they want to do. We are going to formulate our own policies," White House budget director Mick Mulvaney told CNBC in an interview posted on the channel's website on Wednesday. "You will have a White House, Donald Trump tax plan that we are going to take down to the Hill and try and sell. In the meantime, Senate Republicans are expected to review a 2015 tax package from former House Ways and Means Committee Chairman Dave Camp, as a starting point for their own tax legislation. Members of the House Freedom Caucus, a bloc of conservative lawmakers that helped derail Ryan’s healthcare bill, have also suggested that expanding the deficit to stave off adding new taxes could be acceptable. "The blueprint was the Republican ideal, written as a campaign document. Now they're dealing with the realities of a closely divided Congress and a president who wants a win on this key, signature issue," said one business lobbyist, who spoke on condition of anonymity.
The IRS is using private debt collectors again. That’s a problem -- Last year, Congress authorized the Internal Revenue Service to use private debt collectors to go after unpaid tax liabilities—and this month, if you are one of the unfortunate, you may have already had the pleasure first-hand. The U.S. Treasury hopes to assign up to 1,000 delinquent accounts a month to each of four different companies, which will be able to keep 25 percent of the tax bills they collect.We’ve been here before—twice, in fact—and the government actually lost money. It is not at all clear why this time should be different. And even if the program does save the government money, as its proponents promise, turning over delinquent tax accounts to private debt collectors raises a host of issues that should give us pause. First, there is the philosophical question of whether certain government functions are just too important to turn over to private contractors. Private business is reputed to be more efficient and effective than government. We already outsource garbage collection. Why not tax collection? Being a tax law professor, I may be biased, but I think tax collection is different. Administering the tax system lies at the heart of the government’s duties, and hiring private collectors is different from hiring private garbage collectors. Taxes are one of the few ways people interact directly with their government. How they are collected has the potential to shape our view of the government and our obligations as citizens. Just ask the folks at United how even one bad experience can affect public perceptions. The IRS has a detailed manual that clearly lays out what agents can and cannot do. The IRS can easily monitor its employees and discipline those who violate the rules. It can also modify the rules as issues arise. When considering how best to proceed against delinquent taxpayers, agents are instructed to take a variety of considerations into account, including whether pursuing a taxpayer is in the government’s best interests; the potential impact on the taxpayer’s ability to meet basic living needs; and alternatives to simply seizing property, such as compromising on the debt or initiating installment plans. Absent the profit motive, they may make more humane decisions.
Top Frustrations With Tax System: Sense That Corporations, Wealthy Don’t Pay Fair Share | Pew Research Center: A majority of Americans now view the federal tax system as unfair, including similar shares of Republicans and Democrats. But partisans differ in their concerns about the tax system, with Democrats far more likely than Republicans to express frustration that some corporations and wealthy people don’t pay their “fair share.” Among the public overall, 62% say they are bothered “a lot” by the feeling that some corporations don’t pay their fair share of taxes, and 60% say the same about some wealthy people not paying their fair share. About four-in-ten (43%) say they are bothered a great deal by the complexity of the system. But with the April 18 tax filing deadline approaching, only about a quarter (27%) say they are bothered a lot by the amount they pay in taxes. And just 20% say that about the feeling that the poor do not pay their fair share of taxes. The latest national survey by Pew Research Center, conducted April 5-11, 2017 among 1,501 adults, finds an increase in the share saying that the tax system is unfair, largely because of a shift in opinion among Democrats. Currently, a 56% majority describes the federal tax system as either not too fair (29%) or not fair at all (27%). Fewer (42%) say it is very fair (2%) or moderately fair (40%). In both 2015 and 2010, opinion about the fairness of the tax system was evenly divided. Today, 54% of Democrats and Democratic-leaning independents say the tax system is not too fair or not at all fair, up from 43% two years ago. Most Republicans and Republican leaners (58%) also view the system as unfair; these views are little changed since 2015. The survey finds little change in recent years in people’s views about the fairness of their own tax burden. Just over half (54%) say they pay about the right amount in taxes, considering what they get from the federal government, while 40% say they pay more than their fair share. Only 5% say they pay less than what they should.
The Walmart Tax Every American Taxpayer Pays -- Every year, hardworking men and women all across the country face the harsh reality of paying their taxes. While the average American family has less than $1,000 in savings and nearly half have no retirement savings, in 2015, the average household paid $13,000 in income taxes. For so many Americans, this time of year is met with anxiety, fear, and anger as too many people struggle to pay their day-to-day bills, let alone their taxes.But what should fuel hard-working, tax-paying Americans’ anger, is the fact that so many of their tax dollars are being used year after year to support one of the nation’s largest welfare recipients – Walmart. A company with annual profits that averaged $15.5 billion over the last five years. Simply put, every American taxpayer is paying a tax they never heard of: The Walmart Tax.What is the Walmart Tax?According to a 2014 report by Americans for Tax Fairness, Walmart receives an estimated $6.2 billion in subsidies every year, primarily from the Federal Government. The reason? The world’s largest retailer, infamous for its poor working conditions and unfair treatment of employees, pays its workers so little that thousands of Walmart employees are forced to rely on public assistance programs like food stamps, Medicaid and subsidized housing. Programs funded by American taxpayers. No matter the town or city, if you have a Walmart in your community, you are paying a Walmart Tax. In fact, a single Walmart Supercenter is estimated to cost taxpayers between $904,542 and $1.74 million per year in public assistance money.For Walmart, this represents tens of millions of dollars in savings, all on the backs of America’s taxpayers and workers. Regardless of whether you shop at Walmart, every American taxpayer pays this “hidden tax.” And, who benefits from The Walmart Tax? Not our community, our schools, our state, or even our country. Who actually benefits is Walmart, a company that generates almost $500 billion in revenue every year.
Why Democrats have no regrets after McConnell's ‘nuclear’ blast - Democrats heard the argument throughout the Senate's bitter debate over Neil Gorsuch: Don’t filibuster this Supreme Court nominee — save your leverage for President Donald Trump's next pick, the one who could change the court's balance of power for a generation. But most Democrats decided that holding their fire this time would make no difference in the end. Story Continued Below Trump would choose the judges he wants, without regard to how Democrats might react, they concluded. And Majority Leader Mitch McConnell was intent on blowing up the filibuster for high court nominees, if not now, then next time, in order to maintain the GOP’s grip on the court. His unprecedented blockade of Merrick Garland, Barack Obama's Supreme Court nominee, made that clear, they believed. So if Democrats were going to lose the filibuster regardless, best to go down swinging now on a nominee many found far too conservative — a move that would also please a liberal base still spoiling for a fight against Trump. "Republicans telegraphed in their treatment of Garland that they were going to change the rules whenever they need to in order to get the court packed to their favor," Sen. Chris Murphy (D-Conn.) said in an interview. "Anybody who thought that giving Gorsuch the votes was going to allow us to have veto power over the second vacancy is deluding themselves." The risks of filibustering Gorsuch were painfully apparent to Democrats. Now that Republicans have triggered the “nuclear option” and unilaterally killed the 60-vote filibuster for high court nominees, Trump could feel liberated to tap an even more conservative nominee if a second Supreme Court vacancy occurs.
U.S. Immigration Agency Will Lose Millions Because It Can’t Process Visas Fast Enough - Lost amid the uproar over the Trump administration’s crackdown on undocumented immigrants is a change coming to the legal immigration system that’s expected to be costly for both U.S. companies and the government itself. Each year at about this time, U.S. Citizenship and Immigration Services receives a tidal wave of applications for H-1B visas, the ones for college-educated workers. For-profit companies usually have a five-day window in April to send in applications for new visas just as existing visa holders begin renewing theirs. The new wrinkle is that earlier this week USCIS suspended so-called “premium processing,” a program that allowed employers to pay extra to reduce visa wait times from as long as eight months to just two weeks. Officials have depicted the temporary stoppage as the upshot of a “significant surge” in demand for expedited service, but, in reality, it appears to reflect the agency’s own mismanagement and waste. According to USCIS records, congressional testimony and interviews with former agency officials, USCIS has plunged most of the expedited program’s revenues from the last eight years — some $2.3 billion — into a failed effort to digitize the larger immigration system, leaving inadequate resources to staff the H-1B portion that was its cash cow. “I can’t believe that my old agency could be that stupid and reckless,” said William Yates, a former senior USCIS official who helped create the fast-track program. “It infuriates me.” USCIS has occasionally suspended premium processing before, but the timing of this suspension, which is expected to last up to six months, is especially damaging. Some 236,000 H-1B applications poured in in April 2016.Pausing expedited service is likely to cause delays for tens of thousands of applicants for new visas, mainly workers at universities or research organizations, as well as foreign doctors who receive H-1Bs in exchange for working in areas that are medically underserved, according to USCIS data.It’ll also cost USCIS up to $100 million in lost fees, agency spokeswoman Carolyn Gwathmey acknowledged.
California and Trump’s Feds Headed to Major Clash on Immigration -- The federal government and bastions of opposition to President Trump’s anti-immigrant police state are on a slow-motion collision course.An 18-page memo by the Department of Homeland Security describes how the DHS and the Department of Justice are anticipating arresting, holding, processing and deporting large numbers of immigrants lacking visas. However, the memo also details how Trump’s coming crackdown is moving slowly, is poorly coordinated and barely funded—even as it has taken high-profile first steps like soliciting construction bids to build a border wall and is planning to showcase demonstration sections by late July.On the other hand, in states like California, where one in three residents is foreign born and half the children have at least one immigrant parent, state and local governments are moving to thwart any massive new deportation effort. From the highest political circles in the legislature, to briefings by county agencies telling employees not to assist federal immigration police, to local cities declaring themselves sanctuaries, a colossal struggle is taking shape. It will likely take months or longer before threshold questions—like what the feds can and can’t get away with—are resolved. So far, it appears California officials are ahead of Trump, who issued his anti-immigration orders in late January. The California Senate just passed one bill telling local and state agencies not to cooperate with federal immigration enforcement, another to provide lawyers for immigrants facing deportation, and another barring public employees from disclosing a person’s religion. Its legislative leaders have challenged Trump administration officials to stop making blank threats and specify what laws the state is violating. “If the Trump administration resorts to attempting to enforce its order against California, the Legislature will use all available means to defend the rights, values and safety of California,” the letter to Attorney General Jeff Sessions and Secretary of Homeland Security John Kelly said, saying the administration has irresponsibly accused California of preventing Immigrations and Customs Enforcement from arresting people—but wouldn’t cite specifics. The California Supreme Court’s chief justice had written to both Sessions and Kelly, protesting that ICE was “stalking” courthouses to arrest for deportees.
1470 Economists Say Immigration is Good for Us - David Henderson – We view the benefits of immigration as myriad:
- Immigration brings entrepreneurs who start new businesses that hire American workers.
- Immigration brings young workers who help o set the large-scale retirement of baby boomers.
- Immigration brings diverse skill sets that keep our workforce flexible, help companies grow, and increase the productivity of American workers.
- Immigrants are far more likely to work in innovative, job-creating fields such as science, technology, engineering, and math that create life-improving products and drive economic growth.
UK tourists to US may get asked to hand in passwords or be denied entry -- British travellers to the United States face the uncomfortable choice of handing over personal information, including social media passwords and mobile phone contacts, or running the risk of being denied entry to the country, under a new “extreme vetting” policy being considered by the Trump administration. Tourists from the UK and other US allies including Germany and France, could be forced to reveal personal data, as well as disclose financial information and face detailed ideological questioning, according to Trump administration officials quoted by the Wall Street Journal. While US citizens have established rights against unlawful searches at the border, the extent to which foreign travellers can resist requests to hand over personal information is unclear. The US customs and border patrol told the Guardian: “All international travellers arriving to the US are subject to US Customs and Border Protection (CBP) inspection. This inspection may include electronic devices such as computers, disks, drives, tapes, mobile phones and other communication devices, cameras, music and other media players and any other electronic or digital devices. “Keeping America safe and enforcing our nation’s laws in an increasingly digital world depends on our ability to lawfully examine all materials entering the US,” it added. The CBP said it strives to process arriving travellers as efficiently and securely as possible while ensuring compliance with laws and regulations governing the international arrival process. It did not answer specific questions about social media accounts and devices. The UK Foreign Office declined to provide any advice to British travellers, referring the Guardian only to its general foreign travel advice page for the US, which contains no information on digital privacy at the border.The Electronic Frontier Foundation, a US nonprofit which campaigns for digital civil rights, advises travellers: “Border agents cannot deny a US citizen admission to the country. However, if a foreign visitor declines, an agent may deny them entry. The group’s digital privacy guide continues: “If a foreign visitor refuses a border agent’s demand to unlock their digital device, provide the device password, or provide social media information, and the agent responds by denying entry, the foreign visitor may have little legal recourse.”
“Devastating Consequences” for Women, Girls as U.S. Defunds UN Agency (IPS) - The U.S. has withdrawn all of its funding to the UN Population Fund (UNFPA), an agency that works on family planning and reproductive health in over 150 countries. The decision is based on what the UNFPA says is an erroneous claim that it “supports, or participates in the management of, a program of coercive abortion or involuntary sterilisation (in China).” The claim was made by the U.S. State Department in a letter on Monday announcing the cuts, but has been described repeatedly as baseless, by those who know the UNFPA’s work. According to the UNFPA, it does not promote abortions and instead “accords the highest priority to voluntary family planning to prevent unintended pregnancies to eliminate recourse to abortion.” In a statement released in response to the funding cuts, the UNFPA said that “we have always valued the United States as a trusted partner and leader in helping to ensure that every pregnancy is wanted, every childbirth is safe, and every young person’s potential is fulfilled.”The U.S. is one of the largest contributors to UNFPA having provided over $75 million in 2015 alone, the third highest contribution from a government after the United Kingdom and Sweden. The U.S. is also the second largest funder of UNFPA’s humanitarian operations. Like other UN agencies, UNFPA is funded by governments voluntarily. International Women’s Health Coalition’s Director of Advocacy and Policy Shannon Kowalski told IPS that the cuts will have “devastating consequences” for girls and women around the world.“UNFPA has played a critical role in getting services to the most marginalised women…now their lives and health are at stake because of this,” Kowalski told IPS. She noted that the UN agency’s frontline work in crisis situations will be most affected, including the provision of sexual and reproductive health services to women who have been targeted by the Islamic State (IS) or other groups in the Middle Eastern region. According to the UN Foundation, the elimination of U.S. support threatens UNFPA’s ability to reach an estimated 48,000 women with safe childbirth in Syria and 55 women’s centers providing support for over 15,000 women and girl survivors of gender-based violence in Iraq, including one dedicated to more than 700 Yazidi sexual violence survivors.
Trump Fires Warning Shot in Battle Between Bannon and Kushner — As he grappled on Thursday with his first major decision involving military action, a fed-up and frustrated President Trump turned to his two top aides and told them he had had enough of their incessant knife-fights in the media.“Work this out,” Mr. Trump said, according to two people briefed on the exchange. The admonition was aimed at Stephen K. Bannon, the tempestuous chief strategist, and Reince Priebus, the mild-mannered chief of staff, over a series of dust-ups with Jared Kushner, the president’s son-in-law and senior adviser, and the top economic adviser, Gary D. Cohn.But they may not be able to.The president is said to be aware that a meaningful reconciliation will take work to achieve between Mr. Bannon, who sees himself as the keeper of Mr. Trump’s campaign promises, and the competing ideologies of Mr. Kushner and Mr. Cohn, a longtime Wall Street executive and a Democrat. And he is considering a shake-up of his senior staff, according to four people with direct knowledge of the process.Whether he acts on it remains to be seen. Mr. Trump has often pondered making changes for several weeks or even months before making them, if he does at all. He has a high tolerance for chaos, and a unique gift for creating it — and, despite his famous “You’re fired!” tagline from the show “The Apprentice,” an aversion to dismissing people. But this past week, one that some of his aides considered the best of his presidency, was marred by fits, starts and self-inflicted wounds — and the constant churn of news accounts of a White House at war with itself finally wore the president out. And notice of a possible shake-up was a warning shot to his team to make adjustments.
Reports: Fragile Peace Accord Reached in the White House’s Bannon-Kushner War -- On Thursday, Trump ordered two rival White House factions to hash out a peace deal after numerous media reports indicated that members of the Trump administration — led by Trump’s multitasked advisor and son-in-law, Jared Kushner — were openly fighting with White House strategist Steve Bannon and his rival turned ally, Chief of Staff Reince Priebus. “You guys are close. Knock it off,” and “work this out,” Trump reportedly told the factions on Thursday after growing tired of hearing about the feud in the press. The resulting Mar-a-Lago meeting on Friday, organized by Priebus and attended by Bannon, Kushner, and according to one report, Ivanka Trump, was apparently a success, per anonymous White House officials cited in news reports on Saturday. The rivals agreed to “bury the hatchet” after Priebus advised them to “stop with the palace intrigue” and work out their differences in private. How long that peace will hold — assuming an understanding was actually reached — is not clear. Of course, that Trump grew annoyed enough with the conflict to involve himself is itself news, since fostering infighting, chaos, and ruthless competition is the closest thing to a management philosophy the president has. But the rivalry did certainly get a lot of media attention, as White House leakers representing the factions clearly intended, and the negative coverage is reportedly what convinced Trump to get involved. There were even reports, which the White House has denied, that the president was considering a shake-up of his top staff — starting with firing the perpetually on-the-bubble Priebus and maybe even Bannon — if internal relations didn’t improve. According to Axios, the emergency summit thawed some of the ice: The meeting was “100 percent” focused on moving the president’s agenda, said one source. But the subtext was clear: The boss wanted them to make up and disarm. Although he had been considering changes on his top staff (and names of possible replacements had circulated among senior aides), they were being given the chance to fix it themselves. But earlier on Saturday, Axios’s Mike Allen also reported that a new, more-centrist White House philosophy was on the way, too. That ethos, espoused by Kushner and Ivanka and supported by the suddenly “with the program” Priebus, would be to embrace a more inclusive and open method of running the administration in order to focus on President Trump’s best interests rather than ideology — and one “top source” said Bannon would be gone if he didn’t get onboard with the new culture. Elsewhere, Politico reported that Priebus was still working with Bannon to prevent just such a shift.
Trump Threatens Bannon With Ultimatum Over Kushner Rift: "Straighten It Out Or I Will" -- For weeks now the media rumor mill has speculated over the imminent demise of Trump Chief Strategist, Steve Bannon. It all started when Bannon was removed from his post on the National Security Council earlier this month which prompted his now infamous response that he "loves a gunfight." Unfortunately, at least according to a very frank Trump interview with the New York Post, Bannon may have overplayed his hand. In a very terse but loaded statement, Trump downplayed Bannon's importance in crafting his 2016 campaign strategy and effectively offered him an ultimatum to clear up his issue with Jared Kushner or move on.“I like Steve, but you have to remember he was not involved in my campaign until very late,” Trump said. “I had already beaten all the senators and all the governors, and I didn’t know Steve. I’m my own strategist and it wasn’t like I was going to change strategies because I was facing crooked Hillary.”He ended by saying, “Steve is a good guy, but I told them to straighten it out or I will.”As Axios points out:If Bannon goes, there's no one of similar status in the White House who has the status to push the nationalist agenda to Trump – and more centrist figures are already ascendant (Jivanka, Gary Cohn). Without Bannon's voice, this becomes a much more conventional White House. It would be an acute normalizing of the staff, although no one can normalize Trump.As further evidence that team Bannon is 'on the outs' in the White House, apparently Bannon and his aides learned of Trump's interview when they read it in the New York Post. Of course, ousting Bannon is not without consequence for Trump. Bannon remains very popular at Breitbart and his ouster would likely be viewed as a move by Trump to the center which would almost certainly alienate his nationalist base in the Midwest.
Trump’s base turns on him - POLITICO: Donald Trump’s true believers are losing the faith. As Trump struggles to keep his campaign promises and flirts with political moderation, his most steadfast supporters — from veteran advisers to anti-immigration activists to the volunteers who dropped their jobs to help elect him — are increasingly dismayed by the direction of his presidency. Story Continued Below Their complaints range from Trump’s embrace of an interventionist foreign policy to his less hawkish tone on China to, most recently, his marginalization of his nationalist chief strategist, Steve Bannon. But the crux of their disillusionment, interviews with nearly two dozen Trump loyalists reveal, is a belief that Trump the candidate bears little resemblance to Trump the president. He’s failing, in their view, to deliver on his promise of a transformative “America First” agenda driven by hard-edged populism. "Donald Trump dropped an emotional anchor. He captured how Americans feel," said Tania Vojvodic, a fervent Trump supporter who founded one of his first campaign volunteer networks. "We expect him to keep his word, and right now he's not keeping his word." Earlier this week, Vojvodic launched a Facebook group called, “The concerned support base of President Trump,” which quickly drew several dozen sign-ups. She also changed the banner on her Facebook page to a picture of Bannon accompanied by the declaration: “Mr. President: I stand with Steve Bannon.” "I'm not so infatuated with Trump that I can't see the facts," she said. "People's belief, their trust in him, it’s declining."
Evangelicals are leaving their churches over Donald Trump - President Donald Trump might be the most divisive politician in history, but for many, politics is left behind when sitting in the pews. For others, bringing politics to the altar is driving them away.A survey from The Washington Post interviewed evangelicals before the 2016 election and after. Over one in ten left their church by mid-November and about 15 percent of church-going Americans who think politics has become too divisive left their church as well. Two groups ultimately ended up leaving their churches: Those who liked Trump while the pastor did not and those who didn’t like Trump but felt their pastor did. The no-win situation might be one of the reasons that pastors stopped talking about politics after November.This isn’t the first election where evangelicals played a role in politics. In 2004, President George W. Bush’s senior advisor Karl Rove worked with religious leaders to ensure 10 million evangelicals came to the polls to support Bush. The Post cited a forthcoming article that outlines two decades of data gathered about what happens to parishioners when they disagree with their church. However, Pew data also reveals that progressive and moderate evangelicals have been fleeing from churches for decades as their churches were taken over by the right-wing.
Daily Mail Pays Melania Trump $2.9 Million To Settle Lawsuit Over Modeling Claims --Britain's Daily Mail said Wednesday it agreed to pay First Lady Melania Trump $2.9 million in damages (according to the WSJ) and issue an apology after it published an article saying the U.S. First Lady had offered "services beyond simply modeling" when working as a model in the 1990s. The Daily Mail and its Mail Online website said in a statement that it accepts the allegations it published in a 2016 article are “not true” and apologized for the distress the article caused.Trump's wife had sued the publisher of the Daily Mail in Britain and also filed a $150 million (120 million pound) lawsuit against it in New York, claiming the article had cost her millions of dollars in potential business. The Daily Mail, which runs what it calls the world's largest English-language newspaper website, apologized for the article on Wednesday and issued a retraction on its home page."An article on 20th August 2016 about Melania Trump... questioned the nature of her work as a professional model, and republished allegations that she provided services beyond simply modeling," publisher Associated Newspapers said."We accept that these allegations about Mrs Trump are not true and we retract and withdraw them .... we have agreed to pay her damages and costs."
CIA chief calls WikiLeaks a 'hostile intelligence service' | Reuters: -- CIA Director Mike Pompeo on Thursday called WikiLeaks a "hostile intelligence service," using his first public speech as spy agency chief to denounce leakers who have plagued U.S. intelligence. Pompeo, in an address at the Center for Strategic and International Studies think tank, called WikiLeaks founder Julian Assange "a fraud" and "a coward." "It is time to call out WikiLeaks for what it really is, a non-state hostile intelligence service often abetted by state actors like Russia," Pompeo said. He said Russia's GRU military intelligence service used Wikileaks to distribute material hacked from Democratic National Committee computers during the 2016 U.S. presidential election. U.S. intelligence agencies have concluded that Russia stole the emails and took other actions to tilt the election in favor of eventual winner Donald Trump, a Republican, against Democratic candidate Hillary Clinton. Pompeo and President Donald Trump, who chose him to head the CIA, have not always been so critical of WikiLeaks. During a campaign rally last October, Trump praised the group for releasing hacked emails from the DNC by saying, "I love WikiLeaks." In July, Pompeo, than a Republican member of the House of Representatives, mentioned it in a Twitter post referring to claims that the DNC had slanted the candidate-selection process to favor Clinton. "Need further proof that the fix was in from Pres. Obama on down? BUSTED: 19,252 Emails from DNC Leaked by Wikileaks." WikiLeaks has published secret documents from the U.S. government and others and says its mission is to fight government secrecy and promote transparency. Pompeo said it has "encouraged its followers to find jobs at CIA in order to obtain intelligence."
Battle intensifies between Trump’s CIA, WikiLeaks | TheHill: The battle between the CIA and WikiLeaks is intensifying. CIA Director Mike Pompeo used his first major public remarks on Thursday to skewer WikiLeaks as a “non-state hostile intelligence service” willing to work with Russia and other foreign actors to promote their interests. He blasted Julian Assange as a “fraud” interested in his own fame, seeking to undermine efforts by the WikiLeaks founder to be viewed as a legitimate ally of civil libertarians. “It is time to call out WikiLeaks for what it really is, a non-state hostile intelligence service often abetted by state actors like Russia,” Pompeo said. “Assange is a narcissist who has created nothing of value,” the former Republican congressman charged. “He relies on the dirty work of others to make himself famous. He is a fraud—a coward hiding behind a screen.” WikiLeaks was quick to respond, sending out a series of messages on Twitter claiming that Pompeo vowed to “silence” the organization over its purported disclosures of CIA hacking tools and using his remarks to promote an op-ed written by Assange in the Washington Post. In the op-ed, Assange wrote that WikiLeaks had the same mission as news outlets such as the Post and The New York Times. The organization also mocked Pompeo by sending out a since-deleted tweet he wrote last July, when the former Kansas lawmaker cited stolen Democratic National Committee emails released by WikiLeaks as proof that the presidential nomination had been “fixed” for Hillary Clinton. Pompeo’s speech was a wide departure from President Trump’s praise of WikiLeaks on the campaign trail. Trump and his administration have taken a much more hostile approach to WikiLeaks since taking office.
Symantec attributes 40 cyber attacks to CIA-linked hacking tools | Reuters: Past cyber attacks on scores of organizations around the world were conducted with top-secret hacking tools that were exposed recently by the Web publisher Wikileaks, the security researcher Symantec Corp said on Monday. That means the attacks were likely conducted by the U.S. Central Intelligence Agency. The files posted by WikiLeaks appear to show internal CIA discussions of various tools for hacking into phones, computers and other electronic gear, along with programming code for some of them, and multiple people familiar with the matter have told Reuters that the documents came from the CIA or its contractors. Symantec said it had connected at least 40 attacks in 16 countries to the tools obtained by WikiLeaks, though it followed company policy by not formally blaming the CIA. The CIA has not confirmed the Wikileaks documents are genuine. But agency spokeswoman Heather Fritz Horniak said that any WikiLeaks disclosures aimed at damaging the intelligence community "not only jeopardize U.S. personnel and operations, but also equip our adversaries with tools and information to do us harm. "It is important to note that CIA is legally prohibited from conducting electronic surveillance targeting individuals here at home, including our fellow Americans, and CIA does not do so," Horniak said. She declined to comment on the specifics of Symantec's research. The CIA tools described by Wikileaks do not involve mass surveillance, and all of the targets were government entities or had legitimate national security value for other reasons, Symantec researcher Eric Chien said ahead of Monday's publication. In part because some of the targets are U.S. allies in Europe, "there are organizations in there that people would be surprised were targets," Chien said.
White House asks court to dismiss suit over regulation repeals | TheHill: The Trump administration is asking a federal court to dismiss a lawsuit over its executive order requiring agencies to repeal two rules for each new regulation they issue. Government lawyers argued in a court filing Monday that opponents of the order “ignore a 40-year history of presidential executive orders directing agencies … to revise or repeal regulatory requirements that are not necessary or cost justified.” The administration says the president has the power to issue an order requiring agencies to cut regulations as Trump did. The lawyers said the plaintiffs in the case — Public Citizen, the Natural Resources Defense Council and the Communications Workers of America — filed a premature claim because the administration has yet to actually end any regulations the way the order mandates. “Both history and precedent confirm that the latest executive order in this unbroken history is a valid exercise of the president’s Article II powers to supervise and manage the executive branch,” the lawyers wrote, referencing the order Trump signed on Jan. 30. The White House says the executive order is designed to roll back federal regulations — a promise Trump made repeatedly during the presidential campaign — when the federal government issues new rules. The three groups suing over the order say the Constitution does not give the president the power to undo rules unilaterally the way Trump is attempting.They argued the order would needlessly put health, environment and safety rules in regulators’ crosshairs when Trump's administration begins rolling out new rules.
House GOP vows to offer Dodd-Frank overhaul bill by end of April - A top House Republican lawmaker plans to roll out a new draft of his bill overhauling the Dodd-Frank Act, the sweeping financial reform law passed by Congress in 2010, by the end of April. In a statement to reporters Tuesday, a spokeswoman for House Financial Services Chairman Jeb Hensarling said he has set a deadline of unveiling an updated version of his bill to unwind the law "in the next few weeks." Until now, the Texas lawmaker and his staff have refrained from offering a specific timeline on when he might release his Dodd-Frank overhaul bill. Instead, the committee has been relaying the message that it could be "weeks" before a bill would be released -- and by "weeks" that "could be two weeks or 52 weeks," a lobbyist from a large bank told CNNMoney on Monday. "The House Republicans have been managing expectations of this lately," said Ian Katz, an analyst at Capital Alpha Partners. "They do still talk about overhauling Dodd-Frank. But they will note, 'Well, we don't control the Senate. I can't tell you what the Senate is going to do.'" Hensarling's statement comes on the heels President Trump's meeting with a group of chief executives on Tuesday, where he renewed his pledge to do a "major elimination of the horrendous" Dodd-Frank regulations. Sources familiar with the matter told CNNMoney that Hensarling had been waiting for a green light from leadership that his bill would be considered on the House floor, before announcing any plans to hold a committee markup or to release the updated bill publicly. The latest version of Hensarling's bill would significantly reduce the power of the Consumer Financial Protection Bureau, placing it under tougher scrutiny by the White House and restructuring the agency's leadership into a commission rather than a single director, according to an outline sent to the Republicans on the House Financial Services Committee seen by CNNMoney.
Trump eyes repeal-and-replace strategy for Dodd-Frank - President Trump on Tuesday reiterated his pledge to roll back the Dodd-Frank Act and replace it with “something else," although the prospects of such a legislative overhaul remain remote. Speaking to the press after a meeting with a group of CEOs from several industries, Trump made a series of wide-ranging remarks about the actions he intended to pursue to make the U.S. more business-friendly, including reducing the burden of financial regulations on the financial sector.
Trump's message to bankers: Wall Street reform rules may be eliminated | Reuters: President Donald Trump told a group of chief executives on Tuesday that his administration was revamping the Wall Street reform law known as Dodd-Frank and might eliminate the rules and replace them with "something else." At the beginning of his administration, Trump ordered reviews of the major banking rules put in place after the 2008 financial crisis, and last week he said officials were planning a "major haircut" for them. "For the bankers in the room, they'll be very happy because we're really doing a major streamlining and, perhaps, elimination, and replacing it with something else," Trump said on Tuesday. "That will be the minimum. But we're doing a major elimination of the horrendous Dodd-Frank regulations, keeping some obviously, but getting rid of many," he said. The White House is not unilaterally able to upend Dodd-Frank’s rules, almost all of which are implemented by independent regulatory agencies like the Securities and Exchange Commission and the Federal Reserve. A sweeping change to the law would require congressional action, though in some cases regulators may also have wiggle room to make changes through a formal rule-making process. In February, Trump issued an executive order requiring Treasury Secretary Steve Mnuchin to consult with U.S. regulators and submit a report outlining a proposal for possible regulatory and legislative changes that would help fuel economic growth and promote American business interests. That report, due to be released in June, will likely serve as a blueprint for possible changes down the road.
The key positions Trump must fill in financial services - President Trump has been in office for nearly 12 weeks, but he still hasn’t nominated several critical positions among financial services regulators. Moreover, the list of vacancies and those with expired terms just grew longer last week as Federal Reserve Board Gov. Daniel Tarullo stepped down and Comptroller of the Currency Thomas Curry’s term expired. Following is a guide to what’s vacant now, and when other posts will be available. (slides)
4 Senators have introduced a bill that could dramatically change the way Wall Street works -- Earlier today, I reported on a confidential meeting yesterday where White House economic advisor and ex-Goldman executive Gary Cohn had dropped a bombshell by speaking in support of reverting to a version of the Glass-Steagall Act. It had once separated commercial banks from all other financial activities, but was repealed in 1999 – with terrible consequences that ended in the Financial Crisis. The digital ink on that article wasn’t even dry when Senator Elizabeth Warren (D-Massachusetts), who’d been part of that meeting, announced today that she and three other senators – John McCain (R-Arizona), Maria Cantwell (D-Washington), and Angus King (I-Maine) – would re-introduce “the 21st Century Glass-Steagall Act.” Senator Warren said in the statement that it would protect American taxpayers, help community banks and credit unions compete, and decrease the likelihood of future financial crises: "Reinstating Glass-Steagall has broad bipartisan support from the public and policymakers, including from President Trump, Treasury Secretary Steve Mnuchin, and National Economic Council Director Gary Cohn. Both the 2016 Democratic and Republican party platforms supported reinstating Glass-Steagall. “The legislation, first introduced in the 113th Congress [2013-2014] by Senators Warren, McCain, Cantwell and King, would separate traditional banks that have savings and checking accounts and are insured by the Federal Deposit Insurance Corporation from riskier financial institutions that offer services such as investment banking, insurance, swaps dealing, and hedge fund and private equity activities. "The bill would clarify regulatory interpretations of banking law provisions that undermined the protections under the original Glass-Steagall and would make 'Too Big to Fail' institutions smaller and safer, minimizing the likelihood of a government bailout." Senator Warren added:“Despite the progress since 2008, the biggest banks continue to threaten our economy. For 50 years, the original Glass-Steagall Act helped produce broad-based economic growth and avoid any major financial crisis.” “The 21st Century Glass-Steagall Act will re-establish the wall between commercial and investment banking and make our financial system more stable and secure. Reinstating Glass-Steagall has broad bipartisan support, and it’s time to get it done.”
Sorry, Jamie. 'Too big to fail' is alive and well -- JPMorgan Chase CEO Jamie Dimon has provided little comfort with his recent assurance that taxpayers are no longer on the hook for the nation’s largest and riskiest financial firms. In his annual letter to shareholders, Dimon wrote that not only have post-crisis reforms largely eliminated the chance of a megabank failure, but the reforms would also prevent a domino effect in the financial markets if such a scenario were to occur again. Don’t believe everything you read. Dimon’s pledge fails to address the increasing concentration of our banking system in the hands of a few multitrillion-dollar financial behemoths. This trend has only been exacerbated by the 2008 Wall Street crisis that, of course, set off the worst economic downturn since the Great Depression and ushered in a wave of new regulations on the community banks that did not cause the crisis. In fact, 0.2% of all U.S. banks hold nearly 70% of industry assets and enjoy the lowest cost of funds in the banking industry despite having the lowest credit quality. This represents a precarious risk to the broader financial sector and an artificial funding advantage subsidized by an implicit taxpayer guarantee. The letter ignores a long precedent of the federal government stepping in to save troubled megabanks and their creditors. History indicates that not only are financial crises unpredictable, but regulatory safeguards designed for the last crisis fail to stop future ones. As Federal Reserve Bank of Minneapolis President Neel Kashkari wrote in a blog post, governments are quick to rescue those that hold debt in the largest financial firms to ward off contagion and collapse.Meanwhile, concerns remain that the largest banks’ private gains and socialized losses have spawned morally hazardous behavior, in which megabank employees take excessive risks knowing that taxpayers have their backs. Wells Fargo’s phony-accounts scandal demonstrates the harm of the megabanks’ grow-at-all-costs mentality, while the largest banks have repeatedly displayed financial impropriety within a system they are capable of rigging. No wonder the Federal Reserve Bank of Minneapolis and the Government Accountability Office have concluded that the "too big to fail" problem persists. After all, the Justice Department never brought a case against senior Wall Street executives following the 2008 crisis. At the time, then-U.S. Attorney General Eric Holder admitted that prosecutors held off on megabank prosecutions over fears of the economic impact. Not only are the largest banks too big to fail, they are too big to jail.
Big US Banks Make Laughable Excuses for Preserving Failed Universal Bank Model -- Yves Smith - In today’s lead story at the Financial Times, Big US banks defy calls that they should be broken up, American megabanks make clear that they don’t think much of the financial savvy of investors or the business press. In quarterly earning calls, bank analysts were pressing executives on the news reports that former Goldman exec, now director of the National Economic Council Gary Cohn told senators last week told a group of senators that he was in favor of Glass-Steagall break-up-the-banks style legislation. Our comments:
- Wake me up when this gets serious. Cohn made it clear that he supported a breakup bill. While Trump has also said he wanted to revive Glass-Steagall, he didn’t say that very often on the campaign trail and there are many things he did say often and pretty consistently, like questioning why the US is carrying so much of the cost of NATO, he’s either reversed himself or is now backing a weak-tea version that his base regards as a sellout, such as Trump’s promises about NAFTA. Plus any Glass-Steagall type bill gets passed only over rabid anti-regulation House Financial Services committee chairman Jeb Hensarling’s dead body.
- Don’t buy Jamie Dimon’s Brooklyn Bridge. Big complicated banks are not good for investors, no matter how much banks put their hands on their hearts and try to convince you otherwise. Here was the argument, per the pink paper:The biggest banks in America are defying calls to break themselves up, arguing that the benefits of size and diversity were on display during a very mixed set of first-quarter results.At JPMorgan Chase, finance chief Marianne Lake said on Thursday that the bank’s universal model was a “source of strength” for the broader economy, as she unveiled a 20 per cent drop in quarterly profits from consumer banking.In the investment-banking part of the business, however, profits were up 64 per cent from a bleak period a year ago, boosted by a surge in bond trading and plenty of sales of debt and equity by big companies. Anyone with proper finance training can tell you this is nonsense. Investors should be making portfolio diversification choices, not corporate execs asserting “synergy” on their behalf. Investors love earnings streams that are not much or better yet negatively correlated with the stock market; that’s one of the reasons they were willing to pay hedgies their inflated management and carry fees. Hedge funds promised returns that didn’t synch with stock market averages. When that proved to be less and less true and the results weren’t so hot generally, investors started beating a major retreat from the strategy. The idea that bigger banks are better is a flat-out canard that we’ve debunked regularly since the inception of this site. Suffice it to say that every study ever done of US banks shows that they have a slightly negative cost curve once a certain asset size threshold is passed. Translation: bigger banks are actually have higher expenses per dollar of bank assets than smaller banks. Now you might say, “But what about those bank mergers where they fire lots of people! Doesn’t that prove bank consolidation saves costs?” No. The cost curve issue means the banks that were combined could have gotten those expenses lowered all on their own, and maybe some more. However, mergers provide an excuse to do what managements normally are too nice or too lazy to do, which is get ruthless about headcount.
CLO managers holding out hope for regulatory relief -- There's a great deal of skepticism about the Trump administration's ability to affect regulatory relief. Yet some of the players most affected by rules enacted under Dodd-Frank are preparing for its potential repeal. Since December, sponsors of new-issue securitizations have been required to keep 5% of the economic risk in deals. This has proven to be particularly onerous for sponsors of collateralized loan obligations, most of whom are asset managers will little balance sheet of their own. CLO managers have gone to great lengths to avoid triggering the requirement on deals that predate the rule.
LSTA takes risk retention fight to the top - For the past two years, the Loan Syndications & Trading Association has lobbied, largely unsuccessfully, to limit the impact of rules requiring CLO managers to keep "skin in the game" of their deals. The trade group has appealed to Congress as well as federal regulators, arguing that risk-retention requirements, which were designed to discourage irresponsible underwriting, should not be applied to collateralized loan obligations. It has even taken the Securities and Exchange Commission, as well as the Federal Reserve, to court.
SEC Targets Seeking Alpha, Benzinga In Crack Down On "Fake News" Pump And Dumps --With the recent crackdown on political "fake news", where a handful of media mega-corporations such as Facebook and Google have emerged as the ultimate arbiter of what is real or isn't, in the process unleashing allegations of conflicts of interest, it was only a matter of time before the SEC got the hint and brought the hammer down. That time is now, because as Reuters reports, the SEC on Monday announced a crackdown against "pump and dump" stock promotion schemes in which writers were secretly paid to post hundreds of bullish articles about public companies on financial websites.Some 27 individuals and entities, including a Hollywood actress (shown below), were charged with misleading investors into believing they were reading "independent, unbiased analyses" on websites such as Seeking Alpha, Benzinga and Wall Street Cheat Sheet.The SEC said many writers used pseudonyms such as Equity Options Guru, The Swiss Trader, Trading Maven and Wonderful Wizard to hype stocks. It was not immediately clear if bearish "pseudonymous characters" were also responsible for talking down stocks.While not as pervasive as alleged "fake news" in the political realm, the SEC said had it identified more than 450 problem articles, of which more than 250 falsely said the writers were not being paid.Unlike traditional cases where the SEC alleges fraud, usually involving trading on inside information, in this case the crackdown is not against improper market information but misrepresentation of conflicts of interest and marketing. "This is different from the fraud cases that you usually see us bring," Stephanie Avakian, acting director of the SEC enforcement division, said on the conference call. "Here, we allege that the fraud was in presenting the analysis as impartial," she said. "It was bought and paid for."
Surprise! People weren’t analysing biotech penny stocks just for kicks - Can we go ahead and put ‘securities analysis’ on the list of things people don’t actually want to do without some guarantee of pay? It’s unclear why anyone ever thought differently. Sure, social media has turned people into zero-cost content-generation machines, but most of that is the equivalent of digital scrapbooking or showing off. Twitter users parse 10-K filings and market charts, but that serves as marketing for subscriber-only analysis or traders talking their books. Given all of this, it shouldn’t really be surprising to hear that stock promoters are charged with secretly sponsoring more than 250 positive posts about small-cap stocks on sites like Seeking Alpha between 2011 and 2014, according to a raft of SEC filings. (Click here to see the full list of posts sponsored by one of the promoters.) The promoters also secretly paid writers to contribute to other sites, according to the SEC, with varying levels of brand recognition and credibility: Forbes.com, TheStreet.com and something called ‘SmallCap Network’, to name a few. (None on Alphaville, of course!) The writers did so under a colourful array of pseudonyms like The Swiss Trader, Amy Baldwin, Equity Options Guru, Wonderful Wizard, Itradethebios, Cris Frangold, and so on.The main problem with this was that these writers didn’t say anywhere that they were getting paid by a stock promoter. Lying is pretty obviously a Bad Thing to do.
Goodbye Fiduciary Rule? Department of Labor Delays Implementation Until June -- naked capitalism by Jerri-lynn Scofield -- Last week, the Department of Labor (DOL) formally announced it would delay implementation of the “fiduciary rule”– previously promulgated in 2016 and due otherwise to come into effect on Monday, April 10– until June 9. By that date, the DOL may elect to implement the rule as written, revise it, or torpedo it entirely. What is the fiduciary rule and why does it matter? Permit me to quote from my February post on this topic: This rule would impose a basic fiduciary duty standard on investment advisors, requiring them to act in a client’s best interest. The fiduciary rule replaces the previous suitability standard, which consumer advocates have criticised for allowing investment advisors to provide conflicted advice, motivated by fees. This suitability standard imposes costs estimated at $17 billion annually on investors and depresses investment returns on retirement savings by a percentage point. Brokerages and insurance companies rely heavily on commission-based compensation. The latest delay does not necessarily spell the death knell for some form of the rule. As I noted in my February post– relying on reporting in The Wall Street Journal, “Procedures for complying with such a complicated framework are not developed overnight, and many investment advisers had already taken steps to conform theirs to the new framework that was slated to come into effect in April.” Further reporting from Saturday’s Wall Street Journal, New Retirement Rule Is Delayed, but Not Its Impact further expands on this point, describing steps already undertaken by many investment advisers to comply with the rule as promulgated, under the assumption that the rule would be implemented according to the original schedule. When Trump issued his February memo, many measures were either in place, or in the process of being implemented, and these are not easily reversed: The rule would have required brokers who oversee $3 trillion in tax-advantaged retirement savings to act in their clients’ best interest. That is a stricter standard than many brokerages were using. After the rule was unveiled in April 2016, some brokerages moved clients from commission-based accounts that could run afoul of the rule to fee-only accounts. Among firms that disclosed their plans after the fiduciary rule was announced, Merrill Lynch— Bank of America Corp.’s wealth-management unit—and J.P. Morgan Chase & Co. say they are still moving most clients to fee-based accounts. A J.P. Morgan spokesman said the bank would push back its deadline to track the Labor Department’s actions. Other brokerages including Morgan Stanley and Edward Jones have said they would keep some previously announced changes, such as lower commission charges and some sales restrictions.
Director Corday’s appearance before House Committee: strong on theater, weak on substance -- Despite its long duration (over five hours including a recess for a vote), the House Financial Services Committee’s hearing on April 5 at which Director Cordray was the sole witness provided a strong dose of political theater but little in the way of new information or substance. Although there were many important questions that Committee members could have asked Director Cordray (we suggested several in a prior blog post), members mostly returned to familiar themes in their questions and remarks. For Republican members, those themes included CFPB overreach and unaccountability to Congressional oversight, damage to credit availability and community banks resulting from CFPB guidance and regulations, excessive spending, and mistreatment of CFPB employees. Familiar themes of Democratic members included how the financial crisis gave rise to the CFPB and how the CFPB serves consumers by protecting them from discrimination, fraud, and other unlawful practices. Thehearing’s battle lines were drawn during the opening remarks of Chairman Hensarling and Ranking Member Waters. Chairman Hensarling began his remarks by referencing press reports that Director Cordray intends to run for Ohio governor, expressing surprise that he had not returned to Ohio to do so, and was still serving as CFPB director given that President Trump had the right to dismiss him at will. He then called on the President to immediately dismiss Director Corday, claiming that the PHH decision allowed the President to do so without the need to show cause. He also asserted that even if the President needs cause to dismiss Director Cordray, there are numerous grounds on which President Trump could rely. According to Chairman Hensarling, such grounds include the harm inflicted on consumers by the CFPB’s auto lending guidance (as well as the illegality of the CFPB’s attempt to regulate auto dealers through such guidance) and Director Cordray’s unilateral reversal of well-settled RESPA guidance in the PHH case. In addition to Chairman Hensarling’s comments, several other committee members, in their questioning of Director Cordray, raised the issue of his resignation. Rep. Duffy asserted that because Director Cordray had served as a recess appointee from January 2012 until his Senate confirmation in July 2013, he has already effectively served a five-year term as director and “consistent with the spirit” of Dodd-Frank, should step down voluntarily now. When asked by Rep. Hollingworth if he would resign if requested to do so by President Trump, Director Cordray responded that he would follow the law.
Argument preview: Court to consider application of Fair Debt Collection Practices Act to debt buyers - Following on the heels of the January argument in Midland Funding v. Johnson, the argument next week in Henson v. Santander Consumer USA brings the court for the second time this term to the Fair Debt Collection Practices Act, universally referred to as the FDCPA. The question is a basic one: whether the statute applies to the relatively recent group of large “debt buyers,” entities that purchase the debts they collect instead of limiting themselves to providing collection services to the lenders that originated the defaulted obligations.The case turns on the relatively odd policy choice that Congress made when it enacted the FDCPA. The basic plan of the statute is to define a lengthy list of inappropriate collection activities and then to prohibit them, but only when they are engaged in by a “debt collector.” What that means is that Citibank’s activities collecting credit-card debts from its cardholders are wholly unregulated by the FDCPA, but if it hires a third party to collect those same debts, the activities of that third party will be subject to pervasive scrutiny under the FDCPA. As I mentioned above, this case involves a third fact scenario, relatively unusual at the time Congress adopted the statute, that arises when a creditor sells its debts for collection by a completely separate entity.The case involves a series of car loans that CitiFinancial made to the petitioners, Ricky Henson and a group of other individuals. For a time, the respondent, Santander Consumer USA, serviced those loans for CitiFinancial, but after the borrowers went into default Santander purchased the loans, which it is now attempting to collect on its own account.The key phrase in the statute defines a debt collector as “any person who regularly collects … debts owed or due … another.” The borrowers argue that a debt is “owed” to the entity that originated it but “due” to the person who has acquired it. Accordingly, they say, loans held by a debt buyer like Santander are not “due and owing” to the debt buyer, because they are still “owed” to the original lender (CitiFinancial, in this case). Santander, by contrast, argues that the debts are “due and owing” to Santander, because Santander has purchased them, and that it therefore is not a debt collector subject to regulation under the FDCPA.
Scottrade Bank’s breach underlines third-party vendor risk -- When Scottrade Bank recently confirmed a data breach that exposed nonpublic information of 20,000 consumer and business customers, it did something unusual. Instead of offering no explanation or a vague description of what happened, waiting for a full investigation to reveal the details, the St. Louis bank immediately pointed the finger at one of its vendors. “On April 2, Genpact, a third-party vendor, confirmed that it had uploaded a data set to one of its cloud servers that did not have all security protocols in place,” the bank said in a statement late last week. “As a result, the data was not fully secured for a period of time.” The SQL file contained commercial loan application information for a business-to-business unit of Scottrade Bank. The bank said Genpact immediately secured the information and traced the issue to a configuration error on the vendor’s part while uploading the file. Genpact declined a request for an interview, but offered this statement: “Genpact takes data protection very seriously. As soon as we learned of this matter, we immediately secured the data file. We are conducting an analysis to identify the extent to which the data may have been accessed, and have also engaged with a leading forensics firm to help us in this regard. We believe this is an isolated incident and there is no indication that any other clients or operations were impacted.” The exposure of the database was discovered by MacKeeper researcher Chris Vickery on March 31, in the course of searching for random phrases on the domain s3.amazonaws.com. “It's as bad as I expected,” he tweeted. “Bank-related. Plaintext passwords. Big name company. I've reached out to them.” The next day he tweeted: “Bank-related find is verified as secured now. Agreed not to name entity for 3 days. Allowing log investigation and PR prep time."
Fed names Jerome Powell to head oversight of 'too big to fail' banks - Apr. 7, 2017: The Federal Reserve tapped Jerome Powell to be the new point man overseeing how Wall Street banks are regulated. Powell, who has been a governor on the board since 2012, was assigned to head the bank oversight committee, according to role changes posted on the Fed's website Friday. The announcement comes days after Daniel Tarullo, the central bank's regulatory czar stepped down after being in the position for the past eight years. Powell's appointment is unlikely to create a directional shift in the Fed's supervision of the largest banks, including JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC). The former undersecretary of the Treasury for President George H. W. Bush, who was responsible for financial institution policy, among other areas, has largely shared Tarullo's views on financial regulation. One area of shared agreement is the so-called Volcker Rule, which restricts banks from proprietary trading, tucked in the 2010 Dodd-Frank reform law. Powell has urged Congress to rewrite the rule, arguing that the litmus test of regulators asking, "Is it proprietary trading or something else?" only winds up adding "tremendous expense and burden," according to remarks he made in Chicago in January. Tarullo has also endorsed rethinking the rule, which he said was "too complicated," as part of a broader review of the 2010 law.President Trump has asked Treasury Secretary Steven Mnuchin to conduct a review of current regulations to determine if certain policies can be changed or thrown out. As part of that, the administration is likely to scrutinize the merits of the Volcker Rule, along with others.
Remittance startup uses bitcoin as a bridge between bank accounts --A startup called bridge21 thinks it can use bitcoin to beat banks and money transmitters at the international transfer game—at least for remittances to Mexico. It works like this: The startup allows any user with a U.S. bank account to send money to a Mexican bank account. Dollars are withdrawn from the user's account and used to buy bitcoin, which bridge21 refers to simply as "digital cash." The company then sends the bitcoin to Mexico, where it is sold for pesos, which are deposited into the recipient's bank account. The process takes only minutes, following a single confirmation on the bitcoin network. "Our rates are based on the price of digital cash in the sending and receiving countries, not the bank exchange rates used by everyone else,” Will Madden, bridge21's founder and CEO, said in a news release. “This means we can often send money at rates no other money transfer company or bank can offer."Bridge21 is often able to send money to Mexico for 2% or even 5% less than the midmarket rate, he added. The company has chosen a fraught time to launch its service. As immigration has become a hot-button issue in recent years, remittances have come under fire. President Trump has said he wants to confiscate a portion of Mexicans' remittances to pay for his border wall. Meanwhile, bitcoin is going through one of its periodic constitutional crises, with a technical debate over how to scale the network threatening to split the currency into two competing systems. But the problem bridge21 seeks to solve is real. Remittances are costly, and the poorest or more desperate people are often charged the highest fees. Migrants from sub-Saharan Africa, for instance, pay more to send money home than any other group—an average of 9.81%, much higher than the global average of 7.45% and more than one and a half times what it costs to send money to South Asia
The Large Bitcoin Collider Is Generating Trillions of Keys and Breaking Into Wallets -- For nearly a year, a group of cryptography enthusiasts has been pooling their resources on a quixotic quest to brute-force crack one of bitcoin's cryptographic algorithms for creating wallet addresses. This is thought to be impossible today, but if they succeed, at least one element of bitcoin's cryptography will be instantly obsolete. It's probably due to the scope of the challenge that the project is called the Large Bitcoin Collider, after the Large Hadron Collider, the world's largest particle accelerator. But instead of new physics, the Large Bitcoin Collider is hunting cryptographic collisions—essentially proving that a supposedly unique and random string of numbers can be duplicated. More on collisions and their ramifications for bitcoin later, but along the way the LBC is using its computing power to try and bust open bitcoin wallets owned by other people, and potentially taking the coins inside. The basics are this: bitcoin addresses containing funds can be accessed by private keys, which are generated at the same time as the address. Technically, a number of private keys could work with any given address, but you'd need a huge amount of computing power to brute force your way through enough possibilities to find any of them. The LBC attempts to accomplish this by recruiting the computing power of anyone who's willing to download and run their software.Finding a private key that works with an existing wallet is a fast-and-loose version of "cracking," and gives the attacker access to all the funds inside. But when someone in the LBC pool finds a working private key, do they get to keep the coins?"In principle yes, although there is a process defined where—if someone appears with an alternate key—the pool members consider him the owner of the address," "Rico," the pseudonymous lead of LBC, told me in an email. He would only tell me that he's a computer programmer "past his 40s," who lives in Europe.
Banks still spooked by bitcoin, Wells lawsuit shows - A legal dispute between Wells Fargo and one of the world’s largest bitcoin exchanges is underlining persistent doubts about the willingness of U.S. banks to participate in the digital currency world. In a lawsuit filed earlier this month, the Hong Kong-based exchange Bitfinex and another company alleged that Wells effectively blocked U.S. customers from selling their virtual currency holdings. With clients unable to redeem funds, the suit said, Wells’ decision has “substantially interfered with plaintiffs’ ability to operate their businesses.”
Wells Fargo Claws Back $75 Million from 2 Former Executives Amid Fraudulent Sales Scandal — The problems at Wells Fargo and its overly aggressive sales culture date back at least 15 years, and management had little interest in dealing with the issue until it spiraled out of control resulting in millions of accounts being opened fraudulently, according to an investigation by the company's board of directors.The bank's board also clawed back another $75 million in pay from two former executives, CEO John Stumpf and community bank executive Carrie Tolstedt, saying both executives dragged their feet for years regarding problems at the second-largest U.S. bank. Both were ultimately unwilling to accept criticism that the bank's sales-focused business model was failing.The 110-page report has been in the works since September, when Wells acknowledged that its employees opened up to 2 million checking and credit card accounts without customers' authorization. Trying to meet unnaturally high sales goals, Wells employees even created phony email addresses to sign customers up for online banking services."(Wells' management) created pressure on employees to sell unwanted or unneeded products to customers and, in some cases, to open unauthorized accounts," the board said in its report.Many current and former employees have talked of intense and constant pressure from managers to sell and open accounts, and some said it pushed them into unethical behavior. The report backs up those employees' accounts."It was common to blame employees who violated Wells Fargo's rules without analyzing what caused or motivated them to do so ... (or determine) whether there were responsible individuals, who while they might have no directed the specific misconduct, contributed to the environment (that caused it)," the board said. The report also says that problems in the bank's sales culture date back to at least 2002, far earlier than what the bank had previously said. And that Stumpf knew about sales problems at a branch in Colorado since at least that year.
Wells Fargo Fake Accounts Investigation Whitewashes Glaring Risk Management Failures - Yves Smith - Sherman & Sterling, engaged by Wells Fargo’s board to investigate its “fake accounts” scandal, issued a 113 page report which includes more ugly details about the California bank’s abusive sales practices. In connection with the release of this document, Wells announced that it was clawing back $28 million more from former CEO John Stumpf, who had already voluntarily given up $41 million, and $47 million from the former head of the community bank, Carrie Tolstedt. The chairman of the board was also making the media rounds trying to persuade skeptical newscasters that having Stumpf retain 3/4 of the pay he’d earned when the abuses were underway (they now are acknowledged to have been visible as early as 2002) was adequate. The New York Times depicted the report as “scathing”. In fact, it is a carefully crafted document to dump all responsibility on Stumpf and Toldstedt, both of whom clearly are culpable, and shield the board and the new CEO. Anyone who knows much about banking will see clear footprints that the board ignored basic risk management failures and poor governance structures. Ironically, the only part of the cover-up that might be plausible is that the new CEO, Tim Sloan, as having been head of a completely unrelated business until he was elevated to Chief Operating Office in 2015, does appear to have been organizationally removed enough to be blameless. He also appears to have tried taking action against Tolstedt fairly quickly given how loyal Stumpf was to her (as in Sloan would have been forced to proceed carefully). First, we’ll go through how Sherman & Sterling covered up for the board. Then we’ll discuss other issues, such as what the new developments say regarding legal liability and the possibility of prosecution.
Exclusive: U.S. regulator removes top examiner for Wells Fargo - sources | Reuters: The most senior bank examiner for Wells Fargo has been removed by a U.S. regulator in the wake of the bank's unauthorized accounts scandal, people familiar with the matter told Reuters this week. The Office of the Comptroller of the Currency, the lead regulator for national banks, stripped the examiner, Bradley Linskens, of his supervisory powers within the last two weeks, said three sources, who were not authorized to discuss the matter publicly. Linskens did not immediately respond to requests for comment. OCC spokesman Bryan Hubbard declined to comment. Wells Fargo's board is expected to release a report on Monday detailing what went wrong at the fourth-largest U.S. bank, according to sources familiar with the matter. The bank and its board both declined to comment. In September, Wells Fargo reached a $190 million settlement with the OCC and other regulators over its opening millions of accounts in customers' names without their permission. At the time, the bank said as many as 2 million accounts were affected, but has since said the number might be larger. The report is the result of a seven-month investigation by Wells Fargo's board of directors into how and why the sales abuses happened. Thousands of employees were dismissed over the matter, and several have publicly said they opened the fake accounts to hit aggressive sales targets set by managers. Wells Fargo now faces probes from other government agencies including the Department of Justice, which is investigating whether any laws were broken. Linskens was responsible for day-to-day supervision of Wells Fargo and managed a staff of more than 60 people, according to past notices from the OCC. He joined the OCC in 1993 and earliest oversight of Wells Fargo began in 2006.
Wells Just Reported The Worst Mortgage Number Since The Financial Crisis - When we reported Wells Fargo's Q4 earnings back in January, we drew readers' attention to one specific line of business, the one we dubbed the bank's "bread and butter", namely mortgage lending, and which as we then reported was "the biggest alarm" because "as a result of rising rates, Wells' residential mortgage applications and pipelines both tumbled, specifically in Q4 Wells' mortgage applications plunged by $25bn from the prior quarter to $75bn, while the mortgage origination pipeline plunged by nearly half to just $30 billion, and just shy of all time lows recorded in late 2013 and 2014." Fast forward one quarter when what was already a bad situation, just got as bad as it has been since the financial crisis, because buried deep in its presentation accompanying otherwise sold Q1 results (EPS small beat, revenue small miss), Wells just reported that its 'bread and butter' is virtually gone, and in Q1 the amount of all-important Mortgage Applications has tumbled by a whopping 23% to just $59 billion, below the lows hit in early 2014, and at fresh lows since the financial crisis. And while Wells' application pipeline was not quite as dire, it too was just shy of fresh post crisis lows at only $28 billion, in line with the lowest numbers reported this decade.
Trump’s DOJ takes same hard line as Obama’s in Wells probe - Banks may be hoping for a friendlier enforcement environment under the Trump administration, but legal experts suggest a lighter touch will probably not extend to Wells Fargo for the ongoing scandal tied to the bank's sales practices. As the bank conducts its own internal probe of the scandal, the Department of Justice appears to be continuing its aggressive, behind-the-scenes investigation — begun under the Obama administration — of high-level Wells executives over phony accounts that led to the firing of 5,300 employees.
Barclays’ Whistleblower-Gate Raises Alarms Bells - Pam Martens - It is not a promising development for changing the culture of Wall Street when today’s newswires are reporting the sordid details of how the big Wall Street player, Barclays, engaged U.S. law enforcement in an attempt to hunt down the identity of an internal whistleblower. More on that in a moment, but first some background. […] Even whistleblowers within financial regulatory bodies like the Securities and Exchange Commission were subjected to retaliation by their own watchdog agency. That unconscionable conduct has continued long after the passage of Dodd-Frank, as the Carmen Segarra case at banking watchdog, the New York Federal Reserve Bank, strongly suggests. Despite a Senate hearing of the matter, the President of the New York Fed, William Dudley, has kept his job and become the preposterous, self-anointed lecturer on changing Wall Street’s culture. Against this backdrop comes today’s story about Jes Staley, CEO of Barclays for just the past 15 months and formerly a three-decade exec at JPMorgan Chase: both banks being in serial trouble with regulators. Staley’s long tenure on Wall Street suggests that it would be next to impossible for him not to have heard about Dodd-Frank and its protections for whistleblowers. But when confronted with an internal whistleblower who had come forward anonymously, Staley unleashed the dogs in attempting to find out his or her identity. According to a statement released by Barclays, Staley used both an internal group and U.S. law enforcement in efforts to identify the whistleblower, raising the question as to whether laws really mean anything when it comes to the financial industry. The Board of Barclays hired an outside law firm to investigate the matter, Simmons & Simmons LLP, and concluded that it would not fire Staley but simply issue a written reprimand and cut his bonus.
Whistleblower, after retaliation by JPMorgan, pays Finra price, too - Out of money to keep fighting his former employer, JPMorgan Chase whistleblower Johnny Burris has settled his case with the Financial Industry Regulatory Authority over a $624 client loss, accepting a $5,000 fine and a five-day suspension. The settlement means Finra is known to have punished just one individual associated with a 2015 product-pushing case in which JPMorgan admitted it breached its fiduciary duty to clients nationwide: a whistleblower. Burris says he spent $50,000 defending himself in the case. “They've still done nothing to anybody at JPMorgan, for God's sake," says Burris, now a registered investment adviser in Surprise, Ariz., "but they come after me for trying to help out my clients."In settling, Burris neither admitted nor denied guilt.Officials at JPMorgan and Finra declined to comment for this story.In 2015 JPMorgan admitted it breached its fiduciary duty by pushing the bank's own high-priced investments on unsuspecting clients. It paid the highest Securities and Exchange Commission fine of the year in the case, at $267 million, and another $40 million to the Commodity Futures Trading Commission in a parallel case. The fines came three years after Burris supplied the SEC with hundreds of pages of documentary and other evidence about the same alleged sales practices, including recordings of managers urging him to push certain products. That $307 million in total is substantially more than the $185 million in fines paid by Wells Fargo in the high-profile phony-accounts scandal last year that continues to draw national attention
Why women in finance are punished more harshly for misconduct - (podcast) Researchers studied misconduct data for all 1.2 million financial advisers registered in the U.S. from 2005 to 2015 and found that, following an incidence of wrongdoing, female advisers are 20% more likely to lose their jobs and 30% less likely to land new jobs compared to male advisers. Women face harsher punishment despite engaging in less costly misconduct and despite a lower propensity towards repeat offenses. Mark Egan, assistant professor of finance at the University of Minnesota, explains the double standard to Penny Crosman, editor-at-large at American Banker, and Bonnie McGeer, executive editor of American Banker Magazine.
Skepticism Grows About Higher Fed Rates Helping Banks’ Margins - When the Federal Reserve raised benchmark interest rates last month, it took North Carolina lender BB&T Corp. less than an hour to announce it was passing that cost along to borrowers. Depositors, however, have yet to see the benefit.For many investors, such discipline means U.S. banks are about to feast on rising interest rates -- profiting from a fatter margin between what they charge for loans, and the rewards offered depositors who provide the funds. Now, a small but growing chorus of senior executives and analysts is signaling that resolve may fray and that shareholder optimism is too high. Banks are under unprecedented pressure to break ranks and compete for deposits. Compared with past cycles, more savers are web savvy -- able to comparison shop and transfer money online to firms offering better deals. Money-market funds that suffered for years with near-zero rates are eager to lure back customers. And new liquidity rules encourage banks to draw more funding from consumer deposits, pushing lenders to fight for those clients. “We’ve never really seen this movie before,” JPMorgan Chase & Co. Chief Financial Officer Marianne Lake warned investors in February. Lenders are “coming off of zero-bound rates in a world where liquidity requirements and technology advancements will increase the competition to get deposits and where customers are more rate aware.” In a raft of recent research notes, analysts said they will listen carefully for U.S. bank leaders to project deposit rates when their companies start reporting first-quarter results April 13. Net income at the nation’s six biggest banks -- JPMorgan, Citigroup Inc., Bank of America Corp., Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley -- will probably climb 15 percent to $21.3 billion in the period, helped by improvement in net interest margins, according to estimates compiled by Bloomberg. But many analysts are underestimating the speed at which banks may need to increase their so-called deposit beta, the share of Fed rate hikes that banks say will get passed along to depositors,
Negative interest rates aren’t just dangerous. They don’t work - Although the Federal Reserve embarked on a long-anticipated move to increase interest rates last month, the Fed still has a ways to go before rates are normalized. The increase in the Fed funds rate to a nominal range of 0.75% to 1% set it still considerably below the rate of inflation, which was 2.7% for the 12 months ending in February. Interest rates for most of the last decade and a half have been unnaturally low — in "real" terms the benchmark rate has already been negative — reflecting policymakers’ misguided approach to try to accelerate economic activity. Economist Richard Sylla has argued that we now have the lowest interest rates in recorded history. And yet, some other countries have gone even further, implementing negative interest rate policies. Speaking of negative rates at a congressional hearing last year, Fed Chair Janet Yellen said, “I wouldn’t take those off the table.” During and after the financial crisis, the notion gained currency that central banks needed to drive interest rates negative to stimulate short-term consumption and investment to pump up moribund economies. But a negative-rate policy is a dangerous idea, and the results are sketchy in countries where they have been tried. Today, nominal benchmark interest rates in Japan, Switzerland, Denmark and Sweden are negative. A desired result from negative rates is that savers will start spending, helping the economy grow. But counterintuitively, savings rates in some nations with negative interest rates have increased, reflecting economic anxiety, while negative-rate policies in those countries have had other unintended consequences. Interest rates are the economy’s most important price. They dynamically allocate capital between consumption and investment today, and, in the future, between spenders and savers. With negative rates, the idea is that forcing consumers and businesses to pay to hold cash in banks — which is a form of severe financial repression — will encourage them to spend rather than save. If businesses are paid to borrow, in theory, they can justify investing immediately in all manner of projects that otherwise wouldn’t clear normal internal hurdle rates. But there’s a fly in the ointment. Negative-rate policies assume the only way for people to save is to keep their money in a bank, which sets interest rate yields on deposits. However, as long as cash exists, savers have another option. Rather than lose money, they can get a safe 0% return by storing cash under their mattresses or in safes, thereby frustrating central banks’ purpose of spurring spending.
Banks scramble to fix old systems as IT 'cowboys' ride into sunset | Reuters - Bill Hinshaw is not a typical 75-year-old. He divides his time between his family – he has 32 grandchildren and great-grandchildren – and helping U.S. companies avert crippling computer meltdowns. Hinshaw, who got into programming in the 1960s when computers took up entire rooms and programmers used punch cards, is a member of a dwindling community of IT veterans who specialize in a vintage programming language called COBOL.The Common Business-Oriented Language was developed nearly 60 years ago and has been gradually replaced by newer, more versatile languages such as Java, C and Python. Although few universities still offer COBOL courses, the language remains crucial to businesses and institutions around the world.In the United States, the financial sector, major corporations and parts of the federal government still largely rely on it because it underpins powerful systems that were built in the 70s or 80s and never fully replaced. (GRAPHIC: tmsnrt.rs/2nMf18G)And here lies the problem: if something goes wrong, few people know how to fix it.The stakes are especially high for the financial industry, where an estimated $3 trillion in daily commerce flows through COBOL systems. The language underpins deposit accounts, check-clearing services, card networks, ATMs, mortgage servicing, loan ledgers and other services.The industry's aggressive push into digital banking makes it even more important to solve the COBOL dilemma. Mobile apps and other new tools are written in modern languages that need to work seamlessly with old underlying systems. That is where Hinshaw and fellow COBOL specialists come in. A few years ago, the north Texas resident planned to shutter his IT firm and retire after decades of working with financial and public institutions, but calls from former clients just kept coming.
Business Press Waking Up to Bank Legacy IT Risk -- Yves Smith - After we’ve been writing about the problem of the ticking time bomb of bank legacy systems written in COBOL that depends on a shrinking pool of aging programmers to baby them for now nearly two years, Reuters reports on the issue. Chuck L flagged a Reuters story, Banks scramble to fix old systems as IT ‘cowboys’ ride into sunset, which made some of the points we’ve been making but frustratingly missed other key elements. Here’s what Reuters confirmed:Banks and the Federal government are running mission-critical core systems on COBOL, and only a small number of older software engineers have the expertise to keep the systems running. From the article: In the United States, the financial sector, major corporations and parts of the federal government still largely rely on it because it underpins powerful systems that were built in the 70s or 80s and never fully replaced… Experienced COBOL programmers can earn more than $100 an hour when they get called in to patch up glitches, rewrite coding manuals or make new systems work with old. For their customers such expenses pale in comparison with what it would cost to replace the old systems altogether, not to mention the risks involved. Here’s what Reuters missed: Why, in an era when IT grads find it hard to get entry-level jobs in the US, are young programmers not learning COBOL as a guaranteed meal ticket? Basically, it’s completely uncool and extremely tedious to work with by modern standards. Given how narrowminded employers are, if you get good at COBOL, I woudl bet it’s assumed you are only capable of doing grunt coding and would never get into the circles to work on the fantasy of getting rich by developing a hip app.I’m sure expert readers will flag other issues, but the huge shortcoming of COBOL is that there are no equivalent of editing programs. Every line of code in a routine must be inspected and changed line by line. The original sin of software development is failure to document the code. In fairness, the Reuters story does allude to the issue: But COBOL veterans say it takes more than just knowing the language itself. COBOL-based systems vary widely and original programmers rarely wrote handbooks, making trouble-shooting difficult for others. What this does not make quite clear is that given the lack of documentation, it will always be cheaper and lower risk to have someone who is familiar with the code baby it, best of all the guy who originally wrote it. And that means any time you bring someone in, they are going to have to sort out not just the code that might be causing fits and starts, but the considerable interdependencies that have developed over time.
Smaller US banks better at banking than the big ones - The Federal Reserve Bank of New York recently released its latest chart pack covering “Quarterly Trends for Consolidated U.S. Banking Organizations”. There’s lots in there to digest, but one thing that stood out was the superiority of smaller banks — those with less than $50 billion assets — relative to larger lenders. The gap is particularly noticeable when compared to the biggest banks, defined as having at least $500 billion in assets. Start with net interest margins. The gap between what a bank earns on its assets and what it pays to fund those position is supposed to represent how much value it creates. Temporary big spreads could come from unsustainable risk-taking, but persistent net interest income suggests some combination of government subsidies and actual skill at finding borrowers to lend to. Now look at this: Smaller banks have net interest margins nearly double those at the biggest firms. This is even more remarkable since smaller banks are less likely to benefit from state guarantees than the “systemically important” institutions. Moreover, their margins have improved in the years since the crisis and resisted the downward trend many have blamed on monetary policy. Smaller banks weren’t taking more risks to achieve these superior returns. They did far better than their larger cousins when it came to avoiding losses during the financial crisis: The net charge-off rate at the smallest banks peaked at half what it was at larger lenders. This outperformance can be attributed to superior underwriting in residential mortgages: And consumer credit: In other loan categories, charge-off rates were almost identical across different bank sizes.The combination of much higher margins and far lower losses implies smaller banks might be benefiting from specialisation. Focusing on a particular geography, industry, or customer demographic might give them the ability to find better opportunities than the lumbering behemoths, while also avoiding the pitfalls that come from failing to invest in due diligence. The smallest banks pair this with conservative balance sheets. They have been the most aggressive about building loan-loss reserves relative to their stock of non-performing loans:
Commercial lenders brace for damage from retail plunge -- A litany of bankruptcies among retailers has many lenders on edge as they and others try to predict how much damage it could do to bank earnings — and how soon. The rise of Amazon and other online commerce sites has reached a tipping point, and many retail competitors have thrown in the towel, especially apparel and general-merchandise stores. Just this year, retailers that have filed for bankruptcy or planned widespread store closings include American Apparel, Bebe Stores, HHGregg, J.C. Penney, The Limited, Payless Shoe Source and Wet Seal.
Bank Of America: "Previously This Has Only Happened In 2000 And 2008" - Although it will not come as a surprise to regular readers that, for various reasons, loan growth in the US has not only ground to a halt but, for the all important Commercial and Industrial Segment, has dropped at the fastest rate since the financial crisis, some (until recently) economic optimists, such as Bank of America's Ethan Harris, are only now start to realize that the post-election "recovery" was a mirage.A quick recap of where loan creation stood in the last week: according to the Fed's H.8 statement, things continued to deteriorate, and C&I loans rose just 2.8% Y/Y, the worst reading since the start of the decade and on pace to print a negative number - traditionally associated with recessions - within the next four weeks, while total loans and leases rose by just 3.8% in the last week of March, less than half the stable 8% growth rate observed for much of 2014 and 2015.Yet while zerohedge readers have been familiar with this chart for months, it appears to have been a surprise to BofA's chief economist. However, in a report titled "Is soft the new hard data?", Ethan Harris confirms that he has finally observed the sharp swoon lower and is not at all happy by it.As he writes in his Friday weekly recap note, "this week saw some softness in hard data as auto sales and jobs growth declined sharply. While two observations do not make a trend, this occurrence nevertheless is noteworthy as on the one hand very positive sentiment indicators suggest activity should pick up... ... while on the other hand loan data suggests everybody is in wait-and-see mode pending details of fiscal stimulus (=tax reform) - which highlights the risk of softer hard economic data."A frustrated Harris then admits that such a sharp and protracted decline in loan creation has only happened twice before: the 2000 and 2008 recessions.
Sorry Goldman: The Loan Collapse Is Real -- Two weeks ago, in order to preserve Goldman's happy narrative that US growth is still strong (which is ironic because while on one hand Goldman tells its clients to buy the dollar, at the same time it tells Trump to short it), Goldman tried to justify the apparent collapse in loan growth, which as we showed earlier this week, is growing at the slowest pace in 6 years, and will soon contract outright.What Goldman said boiled down to a form of "calendar effect", or the argument that since loan creation had aggressively ramped up one year ago when E&Ps were aggressively drawing down on revolvers, it made Y/Y comparisons appear like a big slowdown, when in fact the current rate of growth was mostly stable and reflected roll offs of borrowing bases. This is what Goldman said:C&I bank loans represent yet another casualty of the energy sector contraction of 2015 and 2016. More specifically, we believe the current C&I slowdown reflects payback from credit facility usage by commodities firms, many of which began drawing upon credit lines in late 2015 as financial conditions tightened and the debt issuance window closed. Following a brief acceleration in C&I lending in early 2016, bank loan growth waned in late 2016 and early 2017 once capital markets reopened and banks renegotiated and restructured credit lines. Available loan data are consistent with the timing and sector-level incidence of these inflections, and in our view, the credit line payback story is the most likely explanation of the current C&I loan shortfall, which we peg at roughly $100bn.Today, in addition to reporting the worst mortgage applications number since the financial crisis, as US consumer demand for mortgage imploded at a pace indicative of an outright recession and confirming the Fed is unable to hike rates further without crashing housung, Wells Fargo provided a handy slide which provided some further color to Goldman's theory. What it found was that while Commercial Loans, and specifically C&I loans, which slid by $1.6BN sequentially, have indeed dropped in part due to a reduction in O&G loans, "with ~50% of the reduction from proceeds that borrowers have raised in the capital markets and used to payoff/paydown loans" and the "additional payoffs/paydowns resulting from the strong and liquid capital markets environment"...
Race should have no place in fintech lending decisions -- I’m concerned that new lending companies aren’t taking the necessary steps to ensure that all Americans with a solid business idea — regardless of their race or ethnicity — are able to access fair and affordable business credit due to potentially discriminatory fintech algorithms. Fintech companies are a new and innovative way to provide consumers and small businesses the opportunity to gain access to capital at lower costs than traditional banks by eliminating the “middleman.” However, with a relatively new and expanding model, it is critical that we be certain these innovative companies are not targeting those most susceptible to financial risks with predatory or discriminatory lending practices. There are serious concerns that some of these fintech companies are developing algorithms that may lead to outcomes that disproportionately harm minority-owned businesses. It is no secret that throughout the history of our country, certain financial institutions, whether they are banks or nonbanks, have engaged in discrimination against communities of color. “Redlining” and other practices have been banned, but it is more difficult to determine whether fintech lenders using mysterious algorithms are treating all borrowers fairly. The fintech industry argues that algorithms reduce potential discrimination, but it has provided no data to support the claim. While community banks underwrite small-business loans by meeting with their clients directly, fintech algorithms make decisions based on data of which the borrower may be totally unaware. For example, decisions could be made based on who they follow on Twitter, or the number of criminal records in their ZIP code. Algorithms are designed by humans who may draw conclusions about a borrower on attributes that have nothing to do with their business idea. In order for us to have an economically mobile society, known to many as the American dream, small-business credit should be more focused on the quality of a borrower’s business plan, rather than on discriminatory characteristics of someone’s credit profile.
CFPB proposes new changes to HMDA - The Consumer Financial Protection Bureau issued a much-asked-for proposal to clarify the 2015 updates to the Home Mortgage Disclosure Act rule, in order to help ensure industry compliance, according to the national regulator.The bureau first released updates to HMDA in October 2015 to improve the quality and type of data reported by financial institutions, the CFPB claims.From there, the CFPB gave the industry about three years to become compliant, with most of the updated requirements taking effect in January 2018.And ever since the bureau issued the new HMDA final rule, the industry has been on high alert to come into compliance, even going so far as to say that HMDA is replacing TRID (the TILA-RESPA Integrated Disclosure rule) as the most dreaded mortgage acronym.After public outreach and engagement, the CFPB stated that it identified opportunities to clarify parts of the 2015 HMDA Final Rule, which would help financial institutions comply.“Today’s proposal contains a number of clarifications, technical corrections, and minor changes to the HMDA regulation. These include clarifying certain key terms, such as ‘temporary financing’ and ‘automated underwriting system,’” the CFPB release stated. [Read the proposed changes by clicking here.] “The proposal would also, for example, establish transition rules for reporting certain loans purchased by financial institutions. Another proposed change would facilitate reporting the census tract of a property, using a new geocoding tool the CFPB plans to provide online,” it continued.The CFPB said that it seeks input from a wide range of stakeholders and invites the public to submit written comments on the proposal.The proposal will be open for public comment for 30 days after its publication in the Federal Register.
FHA can't put off technology upgrades any longer — The Federal Housing Administration needs additional funds to replace a 1960s-era computer operating system and make other necessary tech updates, according to Richard Green, a former senior adviser to the Department of Housing and Urban Development. "Something bad is going to happen unless they address this," Green said in an interview. "If the system fails, FHA single-family and multifamily loans will be unavailable until a replacement system is up and running."
The Man in Charge of Fixing Fannie and Freddie Knows Them All Too Well - Gretchen Morgenson --You may not know much about Craig S. Phillips, special counselor to Steven Mnuchin, the United States Treasury secretary. Because Mr. Phillips was not a political appointee, he did not face congressional scrutiny before he began directing our nation’s housing policy, one of his main tasks. Getting to know Mr. Phillips and his background is a worthwhile exercise, especially because he’s determining the Trump administration’s path forward on Fannie Mae and Freddie Mac, the mortgage finance giants that remain in conservatorship.Mr. Phillips certainly knows a thing or two about Fannie and Freddie. As the leader of Morgan Stanley’s mortgage desk during the peak mortgage-mania years of 2004 and 2005, he ran the operation that bundled loans and sold them to the two government-sponsored enterprises. When those loans blew up and the government sued Morgan Stanley, Mr. Phillips was a named defendant in the initial case — a case that resulted in the firm paying a $1.25 billion settlement. Mr. Phillips’s landing at Treasury is peculiar from a political standpoint. He contributed over $100,000 to Hillary Clinton’s presidential campaign last fall. Much more germane is the work he’s done on Wall Street, much of it in the mortgage arena. According to regulatory records, Mr. Phillips has spent 38 years at an array of Wall Street firms, including Credit Suisse First Boston, Morgan Stanley and, most recently, BlackRock, the huge asset manager. While there, he headed the financial markets advisory and client solutions teams at BlackRock Solutions, the powerhouse advisory unit; he left in January. Perhaps most salient on Mr. Phillips’s résumé are his years at Morgan Stanley, where he led the firm’s mortgage securities unit. He started in the company’s fixed income division in 1994 and rose to global head of securities products. He was also the chief executive of Morgan Stanley ABS Capital I Inc., signing mortgage securitization documents filed with the Securities and Exchange Commission. As head of securities products, Mr. Phillips directed the unit of Morgan Stanley that packaged and sold billions of dollars of home loan bundles to Fannie Mae, Freddie Mac and other investors. Some of these securitizations blew up in the financial crisis, generating billions of dollars in losses to the investors who bought them.
Foreclosure activity drops below pre-recession levels in 47% of U.S. -- Foreclosure activity in the first quarter of 2017 plummeted as 102 out of 216 metro areas fell below pre-recession levels, according to a report from ATTOM Data Solutions, a fused property database. As these 47% of metros fell below pre-crisis levels, foreclosure filings including default notices, scheduled auctions and bank repossessions were reported on 234,508 properties in the first quarter. This is down 19% from last year, and down 11% from the fourth quarter 2016 to the lowest level since the third quarter 2006. This quarterly decrease comes as no surprise as February’s report showed foreclosure activity dropped to an 11-year low for the 17th consecutive month of annual decreases. In fact, the first quarter foreclosure activity was down 16% from the pre-recession average of 278,912 foreclosure filings per quarter. “U.S. foreclosure activity on a quarterly basis first dipped below pre-recession averages in the fourth quarter of last year, and this report shows that trend continuing for the second consecutive quarter,” ATTOM Senior Vice President Daren Blomquist said. “The number of local markets dropping below pre-recession levels continues to grow, up from 78 a year ago to 102 in this report.” A total of 83,145 properties had foreclosure filings in March, an increase of 1% from last month but still down 24% from last year, marking the 18th consecutive month of annual decreases in foreclosure activity.
MBA: Mortgage Applications Increase in Latest Weekly Survey - From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey Mortgage applications increased 1.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 7, 2017.
... The Refinance Index remained unchanged from the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 5 percent compared with the previous week and was 3 percent higher than the same week one year ago. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.28 percent from 4.34 percent, with points increasing to 0.38 from 0.31 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990. Refinance activity remains low - and will not increase significantly unless rates fall sharply. The second graph shows the MBA mortgage purchase index. Even with the increase in mortgage rates late last year, purchase activity is still up.However refinance activity has declined significantly since rates increased.
"Mortgage Rates Hit New 2017 Lows" --From Matthew Graham at Mortgage News Daily: Mortgage Rates Hit New 2017 Lows: Mortgage rates moved lower today--significantly in some cases--with the average lender making it back to 2017's lows for the first time since January. Rates came close to 2017's lows in late February and again last week before officially crossing the line today. Lenders are now fairly evenly split between 4.0% and 4.125% in terms of the most prevalent conventional 30yr fixed quote on top tier scenarios. A few of the most aggressive lenders are now quoting rates in the high 3's (emphasis on "few"), and there are still more than a few lenders up at 4.25%. Here is a table from Mortgage News Daily: Home Loan Rates View More Refinance Rates
Rates Move Deeper Into 2017 Lows After Trump Comments --Mortgage rates continued lower today, bringing them even deeper into new lows for 2017. Bond markets (which underlie rate movement) were already doing just fine this morning, but got a boost from Trump's comments on the strength of the US Dollar in the afternoon. Specifically, Trump said the dollar is "too strong." The implication is that the administration will do what it can to promote a weaker dollar, and such efforts are seen simultaneously putting downward pressure on rates.Whereas lenders were more evenly split between 4.0% and 4.125% yesterday, the former now enjoys a small majority. That means that 4.0% is now the most prevalently-quoted conventional 30yr fixed rate for top tier scenarios and that some of the more aggressive lenders are quoting 3.875%.Fears mount over US construction boom - More than a million new apartments have sprung up across the US in a post-crisis construction surge. Now bankers who funded the boom are worried: have developers built too much? As concerns grow about a supply glut, financial watchdogs this month began scrutinising how the largest lenders would cope with a property market crash.Officials at the Federal Reserve ordered banks to set out how they would fare if commercial real estate (CRE) prices dropped 35 per cent and rental apartment values collapsed by more. While a simulated property downturn has long been part of banks’ annual “stress tests”, the Fed has made CRE risks a bigger focus this year, reflecting increasing worries that bubbles are forming in parts of US real estate. Eric Rosengren, head of the Boston Fed, last month singled out “trendy” apartment buildings in big cities, highlighting that prices had “increased sharply”. Other policymakers, including Fed chair Janet Yellen and comptroller of the currency Thomas Curry, have also made cautionary comments. Almost a decade since the financial crisis — when CRE prices dropped as much as 40 per cent, even more than residential housing — bankers as well as regulators are again growing nervous about the sector.“We’re being very wary of it right now,” says Mary Ann Scully, chief executive of Maryland-based Howard Bank. Referring to the crisis, she adds: “The wound has healed, the scab is gone, and we [as an industry] are thinking this isn’t such a bad asset class after all — but we often have shorter memories than we should.” Banks have piled in to funding apartment rentals — especially upscale developments in big city centres — partly because post-crisis regulation has put them off residential mortgages. Demographic factors — millennials are more likely to rent downtown than buy in the suburbs, for instance — have also fuelled the boom.
Record High Multi-Family Construction Set To Wreak Havoc On Apartment Rents --Softening apartment rents, particularly in the massively over-priced, millennial safe-spaces of New York City and San Francisco, have been a frequent topic of conversation for us over the past several quarters...here are just a couple of recent examples:
- NYC Real Estate Bubble Bursts As Apartment Sales Crash 20%
- New York Real Estate Prices Plunge In 4Q As Listing Days and Discounts Soar
- San Fran Home Sales Crash To Lowest Level Since 2008 As Pricing Reset Gets Underway
- "It's About Time For Recession" Property Manager Warns As Rents Drop "For First Time In Career"
Now, a new report from Goldman's Credit Strategy Team, led by Marty Young, helps to highlight some of the key data points that suggest that sinking rent will likely not be just an ephemeral problem. To start, an just like almost any bubble, sinking rents are the symptom of a massive, multi-year supply bubble in multi-family housing units sparked by, among other things, cheap borrowing costs for commercial builders. Per the chart below, multi-family units under construction is now at record highs and have eclipsed the previous bubble peak by nearly 40%.
America’s Retailers Are Closing Stores Faster Than Ever - The battered American retail industry took a few more lumps this week, with stores at both ends of the price spectrum preparing to close their doors.At the bottom, the seemingly ubiquitous Payless Inc. shoe chain filed for bankruptcy and announced plans to shutter hundreds of locations. Ralph Lauren Corp., meanwhile, said it will close its flagship Fifth Avenue Polo store -- a symbol of old-fashioned luxury that no longer resonates with today’s shoppers.And the teen-apparel retailer Rue21 Inc. could be the next casualty. The chain, which has about 1,000 stores, is preparing to file for bankruptcy as soon as this month, according to people familiar with the situation. Just a few years ago, it was sold to private equity firm Apax Partners for about a billion dollars. “I don’t know how many malls can reinvent themselves.” The rapid descent of so many retailers has left shopping malls with hundreds of slots to fill, and the pain could be just beginning. More than 10 percent of U.S. retail space, or nearly 1 billion square feet, may need to be closed, converted to other uses or renegotiated for lower rent in coming years, according to data provided to Bloomberg by CoStar Group.The blight also is taking a toll on jobs. According to Labor Department figures released on Friday, retailers cut around 30,000 positions in March. That was about the same total as in February and marked the worst two-month showing since 2009.Urban Outfitters Chief Executive Officer Richard Hayne didn’t mince words when he sized up the situation last month. Malls added way too many stores in recent years -- and way too many of them sell the same thing: apparel. “This created a bubble, and like housing, that bubble has now burst,” he said. “We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”
What in the World Is Causing the Retail Meltdown of 2017? -- From rural strip-malls to Manhattan’s avenues, it has been a disastrous two years for retail.There have been nine retail bankruptcies in 2017—as many as all of 2016. J.C. Penney, RadioShack, Macy’s, and Sears have each announced more than 100 store closures. Sports Authority has liquidated, and Payless has filed for bankruptcy. Last week, several apparel companies’ stocks hit new multi-year lows, including Lululemon, Urban Outfitters, and American Eagle, and Ralph Lauren announced that it is closing its flagship Polo store on Fifth Avenue, one of several brands to abandon that iconic thoroughfare.A deep recession might explain an extinction-level event for large retailers. But GDP has been growing for eight straight years, gas prices are low, unemployment is under 5 percent, and the last 18 months have been quietly excellent years for wage growth, particularly for middle- and lower-income Americans.So, what the heck is going on? The reality is that overall retail spending continues to grow steadily, if a little meagerly. But several trends—including the rise of e-commerce, the over-supply of malls, and the surprising effects of a restaurant renaissance—have conspired to change the face of American shopping. Here are three explanations for the recent demise of America’s storefronts.
- 1. People are simply buying more stuff online than they used to. The simplest explanation for the demise of brick-and-mortar shops is that Amazon is eating retail. Between 2010 and last year, Amazon’s sales in North America quintupled from $16 billion to $80 billion. Sears’ revenue last year was about $22 billion, so you could say Amazon has grown by three Sears in six years. Even more remarkable, according to several reports, half of all U.S. households are now Amazon Prime subscribers.
- 2. America built way too many malls. -- The number of malls in the U.S. grew more than twice as fast as the population between 1970 and 2015, according to Cowen Research. By one measure of consumerist plentitude—shopping center “gross leasable area”—the U.S. has 40 percent more shopping space per capita than Canada, five times more the the U.K., and 10 times more than Germany. Mall visits declined 50 percent between 2010 and 2013, according to the real-estate research firm Cushman and Wakefield, and they've kept falling every year since.
- 3. Americans are shifting their spending from materialism to meals out with friends.
Leading Index for Commercial Real Estate Increases in March - Note: This index is a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing. From Dodge Data Analytics: Dodge Momentum Index Springs Forward in March The Dodge Momentum Index increased by 0.9% in March to 144.4 (2000=100) from its revised February reading of 143.2. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The Momentum Index has now risen for six consecutive months, with much of the gain being driven by institutional projects entering planning while commercial projects so far in 2017 have receded slightly. The institutional portion of the Momentum Index rose 3.7% in March, and is 23.0% higher than the end of 2016. Commercial planning meanwhile fell 1.2% in March and is down 2.9% from December 2016. However, the overall Momentum Index, as well as the commercial and institutional components, are well above their year-ago levels. This continues to signal the potential for increased construction activity in 2017 despite the short-term setbacks that are inherent in the volatile month-to-month planning data.
Great Debt Unwind: Consumer Bankruptcies Jump, First since 2010; Commercial Bankruptcies Spike -- Wolf Richter - Commercial bankruptcy filings, from corporations to sole proprietorships, spiked 28% in March from February, the largest month-to-month move in the data series of the American Bankruptcy Institute going back to 2012. They’re up 8% year-over-year. Over the past 24 months, they soared 37%! At 3,658, they’re at the highest level for any March since 2013.Commercial bankruptcy filings skyrocketed during the Financial Crisis and peaked in March 2010 at 9,004. Then they fell sharply until they reached their low point in October 2015. November 2015 was the turning point, when for the first time since March 2010, commercial bankruptcy filings rose year-over-year. Bankruptcy filings are highly seasonal, reaching their annual lows in December and January. Then they rise into tax season, peak in March or April, and zigzag lower for the remainder of the year. The data is not seasonally or otherwise adjusted – one of the raw and unvarnished measures of how businesses are faring in the economy. Note that there is no “plateauing” in this chart: since the low-point in September 2015, commercial bankruptcies have soared 65%! That red spike is the mega-increase in March: At first, they blamed the oil bust. The price of oil began to collapse in mid-2014. By 2015, worried bankers put their hands on the money spigot, and a number of companies in that sector, along with their suppliers and contractors, threw in the towel and started filing for bankruptcy protection. But now the price of oil has somewhat recovered, banks have reopened the spigot, Wall Street has once again the hots for the sector, new money is gushing into it, and oil & gas bankruptcy filings have abated. So now they blame brick-and-mortar retail which is in terminal decline, given the shift to online sales. I have reported extensively on the distress of the larger chain stores, but brick-and-mortar retailers include countless smaller operations and stores that no ratings agency follows because they’re too small and can’t issue bonds, and many of them are even more distressed. Businesses file for bankruptcy protection because they have too much debt. Even brick-and-mortar retailers with little debt can get by just fine. Their sales might decline, and they might not make much money, but they can keep going. However, brick-and-mortar retailers with large amounts of debt are toast.
Exposing Who's Behind Surging Subprime Delinquencies (Hint: Rhymes With 'Perennials') -For months now we've been writing about the mysteriously rising subprime delinquencies afflicting auto ABS structures despite repeated confirmations from the Fed and equity markets that 'everything is awesome' (see "Auto Bubble Burst Begins As Subprime Delinquencies Soar To 2009 Levels" and "Signs Of An Auto Bubble: Soaring Delinquencies In These 266 Subprime ABS Deals Can't Be Good" for a couple of recent examples). Shockingly, as confirmed by the chart below from UBS strategist Matthew Mish, 2016 vintage subprime auto ABS structures are even underperforming 2007/2008 vintage securitizations.Now, Mish is back with more survey data explaining the who/what/when/where/why's of spiking loan delinquencies. Ironically, survey results suggest that households making over $100,000 per year are 2.5x more likely to default on loan payments over the next 12 months than those making under $40,000...because making more money just means you can afford more debt, right? First, the survey evidence suggests the rise in consumer default perceptions has occurred primarily in the middle and upper household incomes cohort. And those consumers concerned with missing a payment are highest in the upper income category (household incomes of $100k+). In particular, the most elevated readings occur at the lower ends of the middle and higher income categories (i.e., 50-74k and 100-149k, respectively. Of course, the most 'shocking' results of the survey suggest that our precious snowflake millennials are over 5x more likely to default than folks aged 45 and above. That said, we suspect that many of those defaults may come from student loan debt...which is totally bogus because higher education should be 'totes free', right?
Consumer debt growth can't outpace wages forever: James Saft | Reuters: U.S. consumers are taking out debt at a far faster rate than their incomes or the economy are growing, and just as we may be hitting a peak in employment. Add in rising interest rates courtesy of the Federal Reserve and you have the consumer sector - 70 percent of the U.S. economy - treading on thin and thinning ice. U.S. consumers have run up over $1 trillion on credit cards, hitting a level not seen since January 2009 and up 6.2 percent from a year ago. For comparison, wages are up less than 3 percent and the economy is growing just under 2 percent a year. Borrowers can only take on debt at twice the rate they increase the ability to service it for so long. Student and auto loans are also at $1-trillion-plus levels and also growing about twice as fast as wages or the economy. To be sure, the percentage of disposable income the average household needs to service debt is hovering at about 10 percent, near all-time lows. So too are interest rates, and the thing about interest rate changes at very low levels is that small increases in absolute terms imply large increases in proportional ones. Two important points about the backdrop: Firstly, the Fed, happy to 'normalize' rates while it can, is likely to hike rates by a quarter percentage point twice more this year and, as indicated in the most recent interest-rate-setting meeting minutes, is also planning to begin the long and fraught process of unwinding its $4.5 trillion balance sheet. Secondly, while labor market conditions are on par with their 2006-2007 peak, according to Barclays Capital, momentum in the labor market is flagging. Friday’s jobs report showed payrolls expanding by just 98,000 in March, far less than expected, even as the jobless rate fell to just 4.5 percent.
Michigan Consumer Sentiment: April Preliminary Inches Up --The University of Michigan Preliminary Consumer Sentiment for April came in at 98.0, up from the March Final reading of 96.9. Investing.com had forecast 96.5. Surveys of Consumers chief economist, Richard Curtin, makes the following comments: Consumer sentiment inched upward in early April mainly due to more favorable views of current economic conditions. The Current Economic Conditions Index rose to its highest level since 2000 and nearly reached its all-time peak of 121.1 set in 1999. The Expectations Index improved only slightly, remaining largely unchanged at favorable levels for the past three months. While partisanship had no impact on the Current Conditions Index (Democrats and Republicans differed by just 0.4 points), the data suggest the beginning of a convergence on the Expectations Index, with the figure for Democrats rising 7% and falling for Republicans by 7%, although the gap still remained an astonishing 50.5 Index points. Much more progress on shrinking the partisan gap is needed to bring economic expectations in line with reality. A slow pace of convergence will make it more difficult to disentangle political fervor from what appears to be a growing sense among consumers that the economy will experience fundamental changes in the years ahead. It can be anticipated that optimism will commingle with uncertainty, causing uneven spending patterns across months. Moreover, differential price trends for assets, products, and imports will cause uneven trends in incomes, wealth, and spending across products as well as economic subgroups. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
BofA Finds Surging Consumer Confidence Does Not Result In Higher Spending --While markets are closed tomorrow for Good Friday, the Census Bureau will release both CPI and Retail Sales data at their regularly scheduled times. And since it will be impossible to trade these numbers as they are released, here is a courtesy advance look from Bank of America which as usual has released its internal debt and credit card data in advance of the government report. What it found is that while there has been a slight improvement to the surprisingly poor data from recent months, it is nowhere near what one would expect based on near record consumer confidence surveys.As BofA's Michelle Meyer writes, according to the BAC internal card data, consumer spending improved in March relative to the weak pace in February. The bank's estimate of retail sales ex-autos, derived from the aggregated credit and debit card data, increased at a 0.4% mom seasonally adjusted pace in March - the highest print in nearly a year - even as gasoline prices declined on a seasonally adjusted basis in March. While Meyer notes that this points to "healthy growth in core control retail sales released by the Census Bureau on Friday", she cautions that "the gain may not be quite as strong given that the BAC data had been trending below the Census and was therefore due for a bounce higher."Furthermore, the monthly pattern has been particularly noisy of late – sales fell sharply in December (-0.9%), rebounded in January (1.6%) but slipped lower in February (-0.1%). There gave been a number of “special factors” which influenced retail sales, including the timing of the Christmas and New Year’s holidays and the delay in tax refunds which likely delayed spending from February to March. Therefore it is prudent to smooth through the wiggles – on a three-month moving basis, retail sales ex-autos are up 0.6% mom, while retail sales ex-autos are up 4.5%And while retail sales point to a modest improvement, Meyer writes that the potential rebound is nowhere near close to matching "the dramatic improvement in consumer confidence", which is also Bank of America's Chart of the month.
Retail Sales decreased 0.2% in March -- On a monthly basis, retail sales decreased 0.2 percent from February to March (seasonally adjusted), and sales were up 5.2 percent from March 2016. From the Census Bureau report:Advance estimates of U.S. retail and food services sales for March 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $470.8 billion, a decrease of 0.2 percent from the previous month, and 5.2 percent above March 2016. ... The January 2017 to February 2017 percent change was revised from up 0.1 percent to down 0.3 percent. This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were down 0.2% in March.The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.Retail and Food service sales, ex-gasoline, increased by 4.5% on a YoY basis. The decrease in March was below expectations, and sales for February were revised down. A weak report.
Retail Sales: March Growth Slightly Below Expectations - The Census Bureau's Advance Retail Sales Report for March released this morning showed a decrease over the February figures. Headline sales came in at -0.2% month-over-month to one decimal and the February number was revised downward from 0.1% to -0.3%. Today's headline number was below the Investing.com consensus of -0.1%. Core sales (ex Autos) came in at 0.1% MoM, which was below the Investing.com consensus of 0.3% and the February Core was revised downward. Here is the introduction from today's report:Advance estimates of U.S. retail and food services sales for March 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $470.8 billion, a decrease of 0.2 percent (±0.5 percent)* from the previous month, and 5.2 percent (±0.9 percent) above March 2016. Total sales for the January 2017 through March 2017 period were up 5.4 percent (±0.7 percent) from the same period a year ago. The January 2017 to February 2017 percent change was revised from up 0.1 percent (±0.5 percent)* to down 0.3 percent (±0.2 percent).Retail trade sales were down 0.2 percent (±0.5 percent)* from February 2017, and up 5.5 percent (±0.9 percent) from last year. Gasoline Stations sales were up 14.3 percent (±1.4 percent) from March 2016, while Nonstore Retailers were up 11.9 percent (±1.8 percent) from last year. [view full report] The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.
Consumer Price Index: Headline CPI At 2.4% - The Bureau of Labor Statistics released the March Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.38%, down from 2.74% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.00%, down from the previous month's 2.22%. Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data: The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.3 percent in March on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.4 percent before seasonal adjustment.The March decline was the first 1-month decrease in the seasonally adjusted all items index since February 2016. A decline in the gasoline index was the largest factor, with a decrease in the index for wireless telephone services also contributing. The energy index declined 3.2 percent, with the gasoline index falling 6.2 percent, and other major energy component indexes decreasing as well. The food index rose 0.3 percent, with the index for food at home increasing 0.5 percent, its largest increase since May 2014.The index for all items less food and energy fell 0.1 percent in March, its first decline since January 2010. The shelter index rose 0.1 percent, and the indexes for motor vehicle insurance, medical care, tobacco, airline fares, and alcoholic beverages also increased in March. These increases were more than offset by declines in several indexes, including those for wireless telephone services, used cars and trucks, new vehicles, and apparel.The all items index rose 2.4 percent for the 12 months ending March, a smaller increase than the 2.7-percent rise for the period ending February. The index for all items less food and energy rose 2.0 percent over the last 12 months, the smallest 12-month increase since November 2015. The energy index rose 10.9 percent over the last year, while the food index increased 0.5 percent. [More…] The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index.
"Reflation" Is Official Dead: Core CPI Tumbles For The First Time In Over Seven Years -- The reflation trade is officially over. At the same time that retail sales posted the worst 2 month drop in 2 years, CPI - the bedrock behind the Fed's rate hiking intentions - just hit a brick wall, and after months of headline CPI growth mostly the back of the energy "base effect", in March this ended with a thud, when headline CPI printed at -0.3%, badly missing expectations of an unchanged print. The number was so bad, all 79 economist estimates missed the number (predicting a -0.2% low). The biggest driver for the headline plunge was energy, which declined 3.2%, with the gasoline index falling 6.2%, and other major energy component indexes decreasing as well. The food index rose 0.3 percent, with the index for food at home increasing 0.5% its largest increase since May 2014. But the real story was in the core number, because CPI ex-food and energy dropped -0.1%, another huge miss to the +0.2% rise expected, and also the first - and worst - decline since January 2010. Among the core components, the shelter index rose 0.1 percent, and the indexes for motor vehicle insurance, medical care, tobacco, airline fares, and alcoholic beverages also increased in March. These increases were offset by declines in several indexes, including those for wireless telephone services, used cars and trucks, new vehicles, and apparel. More details from the report that will likely assure that Yellen will not be hiking rates for a long time:The index for all items less food and energy declined 0.1 percent in March. The index for communication fell 3.5 percent as the index for wireless telephone services decreased 7.0 percent, the largest 1-month decline in the history of the index. The index for used cars and trucks continued to fall, declining 0.9 percent in March, and the new vehicles index decreased 0.3 percent. The apparel index declined 0.7 percent in March after rising 0.6 percent in February.The shelter index rose 0.1 percent in March, its smallest increase since June 2014. The rent index rose 0.3 percent and the index for owners' equivalent rent advanced 0.2 percent, but the index for lodging away from home fell 2.4 percent. The medical care index increased 0.1 percent in March, as the index for hospital services rose 0.4 percent, the index for prescription drugs was unchanged, and the physicians' services index declined 0.3 percent. The index for motor vehicle insurance continued to rise, increasing 1.2 percent in March. The index for tobacco rose 0.5 percent, the airline fares index increased 0.4 percent, and the index for alcoholic beverages rose 0.2 percent. The indexes for recreation, for education, and for household furnishings and operations were unchanged in March.
Fall in US consumer prices dents ‘Trumpflation’ hopes -- US consumer prices unexpectedly weakened last month and a sharp drop in automobile sales suggested Americans were reining in their spending, casting fresh doubt on expectations for ‘Trumpflation’ that has driven a post-election market boom. The bout of disappointing data issued on Friday was the latest to dent hopes that a proposed deregulation push and new infrastructure spending under President Donald Trump would trigger faster growth in the US and help drag the global economy out of the doldrums. Even before the release of the new inflation data — which showed consumer prices other than food and energy slipping 0.1 per cent last month, confounding expectations of an increase — financial markets had begun to cast doubt on the euphoria that gripped investors in the immediate aftermath of Mr Trump’s election. Further muddying the picture, a closely watched tracking forecast by the Atlanta Federal Reserve for the annualised rate of growth in the first quarter dipped to 0.5 per cent from a previous reading of 0.6 per cent on the back of Friday’s reports. In early February, the model pointed to a growth rate of 3.4 per cent. If accurate, that pace of expansion would be the lowest in three years. A separate estimate from the New York Fed was also cut to 2.6 per cent from 2.8 per cent. Yields on benchmark US Treasuries, which drop when inflation and growth prospects decline, have fallen for five straight weeks, hitting levels not seen since the week after the November vote. The March inflation reading represented a “huge downside miss” and will leave “lingering doubts about the popular reflation narrative” until prices show signs they are rising agin, said Michael Feroli, chief US economist at JPMorgan. The month-on-month fall in core prices was the first since 2010, an event that had not occurred previously since the 1980s. The year-on-year core consumer inflation rate dipped to 2 per cent, also missing forecasts of an increase, to sit at its lowest level since 2015.
March Producer Price Index: Final Demand Down 0.1% - Today's release of the March Producer Price Index (PPI) for Final Demand came in at -0.1% month-over-month seasonally adjusted, down from last month's 0.3%. It is at 2.3% year-over-year, up from 2.2% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.0% MoM, down from 0.3% the previous month and is up 1.6% YoY. Investing.com MoM consensus forecasts were for 0.0% headline and 0.2% core. Here is the summary of the news release on Final Demand:The Producer Price Index for final demand declined 0.1 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.3 percent in February and 0.6 percent in January (See table A.) On an unadjusted basis, the final demand index rose 2.3 percent for the 12 months ended March 2017, the largest increase since moving up 2.4 percent for the 12 months ended March 2012. In March 2017, three-fourths of the decrease in the final demand index is attributable to prices for final demand services, which fell 0.1 percent. The index for final demand goods also inched down 0.1 percent. Prices for final demand less foods, energy, and trade services edged up 0.1 percent in March, the tenth straight advance. For the 12 months ended in March, the index for final demand less foods, energy, and trade services climbed 1.7 percent. More… The BLS shifted its focus to its new "Final Demand" series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates. As this overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.
March Producer Prices Disappoint, Drop Most Since August - Despite a modest rise in Final Demand producer prices to 2.3% YoY (from +2.2% YoY), this was a miss.. Highest PPI Final Demand YoY in 5 years... But combined with a 0.1% decline MoM - the biggest drop since August 2016 - suggests the inflationary impulse is fading. The full breakdown shows Core PPI was unchanged, missing expectations of a 0.2% MoM gain (and missing the YoY expectation of a 1.8% gain). PPI Services: A 4.1-percent drop in the index for loan services (partial) led the March decline in prices for final demand services. The indexes for apparel, footwear, and accessories retailing; securities brokerage, dealing, and investment advice; health, beauty, and optical goods retailing; and truck transportation of freight also moved lower. The indexes for food and alcohol retailing, machinery and equipment parts and supplies wholesaling, and insurance also advanced. PPI Goods: Leading the March decrease in prices for final demand goods, the gasoline index fell 8.3 percent. Prices for liquefied petroleum gas; jet fuel; hay, hayseeds, and oilseeds; and integrated microcircuits also moved lower. In contrast, the index for motor vehicles rose 0.9 percent.
U.S. Business Inventories Rise In Line With Estimates In February - Business inventories in the U.S. increased in line with economist estimates in the month of February, according to a report released by the Commerce Department on Friday. The Commerce Department said business inventories rose by 0.3 percent in February, matching the increase seen in January as well as expectations. Wholesale inventories rebounded after declining in the previous month, climbing by 0.4 percent in February after dipping by 0.2 percent in January. Additionally, the Commerce Department said business sales crept up by 0.2 percent in February following a 0.3 percent increase in January. Wholesale sales climbed by 0.6 percent and manufacturing sales rose by 0.3 percent, although retail sales fell by 0.3 percent. With inventories and sales both rising, the total business inventories/sales ratio came in at 1.35 in February, unchanged from January.
The relentless push to add connectivity to home gadgets is creating dangerous side effects that figure to get even worse. MIT -- Botnets have existed for at least a decade. As early as 2000, hackers were breaking into computers over the Internet and controlling them en masse from centralized systems. Among other things, the hackers used the combined computing power of these botnets to launch distributed denial-of-service attacks, which flood websites with traffic to take them down. But now the problem is getting worse, thanks to a flood of cheap webcams, digital video recorders, and other gadgets in the “Internet of things.” Because these devices typically have little or no security, hackers can take them over with little effort. And that makes it easier than ever to build huge botnets that take down much more than one site at a time.In October, a botnet made up of 100,000 compromised gadgets knocked an Internet infrastructure provider partially offline. Taking down that provider, Dyn, resulted in a cascade of effects that ultimately caused a long list of high-profile websites, including Twitter and Netflix, to temporarily disappear from the Internet. More attacks are sure to follow: the botnet that attacked Dyn was created with publicly available malware called Mirai that largely automates the process of coöpting computers. The best defense would be for everything online to run only secure software, so botnets couldn’t be created in the first place. This isn’t going to happen anytime soon. Internet of things devices are not designed with security in mind and often have no way of being patched. The things that have become part of Mirai botnets, for example, will be vulnerable until their owners throw them away. Botnets will get larger and more powerful simply because the number of vulnerable devices will go up by orders of magnitude over the next few years.
Even sex toys can be connected to the internet – and hacked -- Your photos aren’t safe online. Repeated incidents of celebrities having their internet accounts hacked and intimate pictures distributed across the web have made this clear. Yet one company decided to put a camera into a sex toy and connect it to the internet. And, predictably, a security firm now claims it has found a way to hack and intercept the vibrator’s video stream. This follows the recent case of another smart vibrator manufacturer, Standard Innovation, agreeing to pay an out-of-court settlement of CAD$4m (£2.4m), after it emerged that the company was harvesting data from its devices. The case was started by two unnamed female users who realised that the device was collecting and relaying data on how often it was used, the vibration settings selected and – eyebrow-raisingly – its temperature, all linked to each user’s email address. This meant the firm could build a rather detailed and personal profile of an individual’s sexual activity.Such data collection is becoming more common thanks to the growth of the Internet of Things, which is essentially a way of describing devices that can send and receive data online, from fitness trackers to smart fridges that tell you when you’ve run out of milk. With the spread of this technology, concerns over what personal information is being collected – and who can access it – are only going to become more important. The device in the Standard Innovation case was a sex toy called the We-Vibe, a vibrator that can be controlled from an app via Bluetooth. Smart sex toys can act just like fitness trackers, recording the activity of their users. But the activity they track is a little more sensitive. And connecting any device online creates a risk it can be hacked. The particular vulnerability of the We-Vibe was revealed back in 2016 when two independent hackers speaking at the DEF CON conference showed that a third party could take control of the vibrator. They also broke the news that the We-Vibe was sending data every minute it was being used.
LA area Port Traffic increased in March --Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic. The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.On a rolling 12 month basis, inbound traffic was up 1.6% compared to the rolling 12 months ending in February. Outbound traffic was up 0.8% compared to 12 months ending in February.The downturn in exports in 2015 was probably due to the slowdown in China and the stronger dollar. Now exports are picking up again, The 2nd graph is the monthly data (with a strong seasonal pattern for imports). Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March depending on the timing of the Chinese New Year. The Chinese New Year was early this year, so imports declined in February and rebounded in March In general both exports and imports have been increasing.
US import prices fell 0.2% in March, matching expectations: U.S. import prices recorded their biggest drop in seven months in March as the cost of petroleum declined, but the underlying trend pointed to a moderate rise in imported inflation as the dollar's rally fades. The Labor Department said on Wednesday import prices fell 0.2 percent last month, the largest drop since August, after a 0.4 percent increase in February. That lowered the year-on-year increase in import prices to 4.2 percent from 4.8 percent in February. Economists polled by Reuters had forecast import prices slipping 0.2 percent last month. U.S. financial markets were little moved by the report. The drop in import prices is unlikely to be sustained with oil prices pushing higher in recent days amid rising geopolitical tensions following last week's U.S. missile strike on Syria and reports that Saudi Arabia wants to extend production cuts enacted in January for another six months. Despite weak imported price pressures, domestic inflation is rising. Most consumer inflation measures have pushed above the Federal Reserve's 2 percent target. A report on Thursday is expected to show producer prices unchanged in March, but rising 2.4 percent on a year-on-year basis, according to a Reuters survey of economists.
NFIB Small Business Survey: Index Slips Slightly in March, Optimism Sustained - The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for March came in at 104.7, down 0.6 from the previous month's 105.3. The index is at the 97th percentile in this series. Today's number came in at the Investing.com forecast. Here is an excerpt from the opening summary of the news release.The remarkable surge in small business optimism that began in November of last year was sustained in March, according to the National Federation of Independent Business (NFIB) Small Business Economic Trends Report, released today.“Small business owners remain optimistic about the future of the economy and the direction of consumer confidence,” said NFIB President and CEO Juanita Duggan. “We are encouraged by signs that optimism is translating into economic activity, such as capital investment and job creation.”The Index slipped 0.6 points in March to 104.7, still a very strong reading. Actual earnings, capital expenditure plans, and job-creation plans posted gains in March. Sales expectations, which have been flying high for months, dropped by 8 points, a sign that the Optimism Index could be moderating after a strong run.The first chart below highlights the 1986 baseline level of 100 and includes some labels to help us visualize that dramatic change in small-business sentiment that accompanied the Great Financial Crisis. Compare, for example, the relative resilience of the index during the 2000-2003 collapse of the Tech Bubble with the far weaker readings following the Great Recession that ended in June 2009.
NY Fed research implies small business expectations are mostly worthless - One of the funny consequences of America’s presidential election was a massive spike in the “small business optimism index” published by the National Federation of Independent Businesses. The question is whether this will have any predictive power for business investment, hiring, sales, or credit demand. So far the data suggest the answer is “no”. Reasonable people might argue it’s too early to tell, however, and that the change in sentiment will eventually flow through to stronger growth.New research produced by the Federal Reserve Bank of New York in conjunction with the other regional Feds suggests otherwise. (Their survey of small businesses covered a range of subjects, focusing in particular on credit supply and demand.) The “expectations” of small businessmen just aren’t worth much because they tend to be unreasonably “optimistic”.The chart below shows that small businesses in the survey expect higher sales and that they’ll boost hiring: The difference between the share of small businesses expecting growth and the share expecting things will get worse has been consistently high for the past few years Unfortunately these expectations had no predictive power. The chart below shows the difference between the share of businesses that actually experienced growth in profits, sales, and workers and the share of businesses that experienced falling profits, sales, and headcount: Two points are worth highlighting. First, there is a massive gap between what small businesses expected in each year and what they actually achieved. (The New York Fed didn’t ask about profit expectations.) Second, the gap isn’t constant. Instead, expectations seem to be fixed at an unreasonably high level of optimism while reality moves around accordingly.
SBA’s McMahon: We're well funded, but don't want to tap out -- It never hurts to have a little excess capacity when dealing with the Small Business Administration’s popular 7(a) loan program. Linda McMahon, who runs the agency, provided assurances Wednesday that the program has enough funding authority to continue guaranteeing loans until its fiscal year ends on Sept. 30. Still, she is asking lawmakers to back a proposal that would let her implement a 15% increase in the program’s funding authority — currently set at $26.5 billion — to offset an unanticipated spike in demand.
Weekly Initial Unemployment Claims decrease to 234,000 -- The DOL reported: In the week ending April 8, the advance figure for seasonally adjusted initial claims was 234,000, a decrease of 1,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 234,000 to 235,000. The 4-week moving average was 247,250, a decrease of 3,000 from the previous week's revised average. The previous week's average was revised up by 250 from 250,000 to 250,250. The previous week was revised up.The following graph shows the 4-week moving average of weekly claims since 1971.
Thoughts on Friday's Jobs Report - Dean Baker -- There was probably too much made out of the slowing in payroll employment growth in the March jobs numbers reported yesterday. This was likely driven in large part by the unusually good weather in January and February that brought a lot of spring hiring forward. However, there were a couple of items that did not get the attention they deserve. First, there is some limited evidence that wage growth is slowing. Typically, the year-over-year change in the average hourly wage is reported. While the growth in this measure slowed slightly last month, a problem with the year-over-year rate is that it reflects wage growth over the last year, not just recent months. I prefer taking the annualized rate of growth for the average of the last three months compared with the average of the prior three months. This measure can be sensitive to erratic month-to-month changes, but at least it focuses on a more recent period, rather than telling us about the wage growth from nine or ten months ago. Here's the picture using this series since the start of 2013. As the figure shows, there was some very modest increase in the rate of wage growth in early 2016, with a peak of 3.1 percent in May of 2016. Since then, the general direction has been downward, with the rate over the last three months being less than 2.5 percent. This matters hugely for the Fed's interest rate policy, since a main issue for those looking to raise rates is that inflation could start rising above target levels. That seems unlikely if the rate of wage growth is stable or slowing. In this respect it is also worth noting that the Employment Cost Index (ECI), a broader measure of compensation that includes non-wage benefits like health care, shows zero evidence of acceleration over this period. Over the last twelve months the ECI has risen 2.2 percent. That is the same rate of increase as we saw in this index three years earlier. In short, you really can't find any evidence of accelerating wage growth in the data. The evidence of deceleration is too weak to say anything conclusive, but if anything, wage growth is going in the wrong direction to make the case for the inflation hawks.
The Labor Market Conditions Index Down in March - The latest update of the Labor Market Conditions Index for March is at 0.4, down from February's 1.5. The LMCI is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. The cumulative index (discussed below) peaked twelve months ago in December 2015. The indicator, designed to illustrate expansion and contraction of labor market conditions, was initially announced in May 2014, but the data series was constructed back to August 1976. Here is a linear view of the complete LMCI. We've highlighted recessions with callouts for its value the month recessions begin and for the latest index value.
BLS: Job Openings "little changed" in February From the BLS: Job Openings and Labor Turnover Summary: The number of job openings was little changed at 5.7 million on the last business day of February, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.3 million and 5.1 million, respectively. ... The number of quits was essentially unchanged at 3.1 million in February. The quits rate was 2.1 percent. The number of quits was little changed for total private and for government. The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS. Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for February, the most recent employment report was for March. Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover. When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.
Jobs openings were increased in February to 5.743 million from 5.625 million in January. Job openings are mostly moving sideways at a high level.
The number of job openings (yellow) are up 3% year-over-year. Quits are up 3% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").
Labor Market JOLTed: Rate Of Hiring Suffers Biggest Drop In 4 Years --While too backward looking to be actionable (reflecting the labor situation with a 2 month delay) especially in a time when everyone is focused on the future - or lack thereof - of Trump's fiscal policies today's JOLTs report failed to capture the sharp slowdown in the March jobs report, instead corroborating the last of the "good" payroll prints, that of February.So what did "Janet Yellen's favorite labor market indicator" show? First the good news: after flatlining for the previous six months, job openings had the biggest monthly increase since September, rising by 118K to 5.743 million, from 5.625m in January, and higher than expected. As a result, the job opening rate (job openings as a % of total employment plus openings) rose modestly to 3.8% from 3.7% prior monthAnd while America's millions of job openings remain unfilled (the highest number was in educational and health services, followed by professional and business services), a more troubling trend could be observed in the one chart that actually matters from a so-called job "flow" perspective, hiring.The BLS reported that in February, the number of Americans hired dropped to 5.314 million, sliding by 110K or the biggest monthly drop since April. Putting the above chart in a more troubling light was the Y/Y % rate of change: as shown in the chart below, not only did the rate of hiring not rise over the past year, but in February it declined by 3.6% relative to last year. This was the biggest decline in the annual rate of hiring in over four years, going back to March 2013.
Philly Fed: State Coincident Indexes increased in 38 states in January -- From the Philly Fed: The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for January 2017. Over the past three months, the indexes increased in 46 states, decreased in three, and remained stable in one, for a three-month diffusion index of 86. In the past month, the indexes increased in 38 states, decreased in five, and remained stable in seven, for a one-month diffusion index of 66. Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed: This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged). In January 39 states had increasing activity (including minor increases). The downturn in 2015 and 2016, in the number of states increasing, was mostly related to the decline in oil prices. I'm not sure why this index was weak in January. Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and almost all green now. Source: Philly Fed. Note: For complaints about red / green issues, please contact the Philly Fed.
The Despair of Learning That Experience No Longer Matters -- Of all the accounts of the plight of the white working class that appeared during the 2016 election, the work of the married Princeton economists Anne Case and Angus Deaton seemed to cut most deeply. In 2015, Case and Deaton published research finding that although mortality is declining for virtually every other demographic group in every developed country, it has been rising for middle-aged white Americans since the early nineteen-nineties. The increase, they argued, was due almost exclusively to what they called “deaths of despair”—suicides, drug and alcohol poisoning, and chronic liver disease. During the campaign, their findings raised the possibility that whatever energies had consumed the white working class were not limited to political or cultural grievances but had a more pathological source, one that showed up in the United States but nowhere else.Case and Deaton published a second paper last month, in which they emphasized that the epidemic they had described was concentrated among white people without any college education. But they also searched for a source for what they had called despair. They wondered if a decline in income might explain the phenomenon, but that idea turned out not to fit the data so well. They noticed that another long-running pattern fit more precisely—a decline in what economists call returns to experience. The return to experience is a way to describe what you get in return for aging. It describes the increase in wages that workers normally see throughout their careers. The return to experience tends to be higher for more skilled jobs: a doctor might expect the line between what she earns in her first year and what she earns in her fifties to rise in a satisfyingly steady upward trajectory; a coal miner might find it depressingly flat. But even workers with less education and skills grow more efficient the longer they hold a job, and so paying them more makes sense. Unions, in arguing for pay that rises with seniority, invoke a belief in the return to experience. It comes close to measuring what we might otherwise call wisdom.
How Many Americans Go Hungry? - One of the most basic measures of well-being is whether people have enough food to eat. Whether the U.S. does well in this regard seems to depend on who you ask. There are many people in the so-called food movement who seem to think we're doing ok on this front and that food is actually too cheap. There are other groups like Feeding America that think hunger is a serious concern and are doing what they can to reduce it. The USDA Economic Research Service produces the most widely used measure of hunger (or as they call it "food security"). According to their data: “An estimated 12.7 percent of American households were food insecure at least some time during the year in 2015, meaning they lacked access to enough food for an active, healthy life for all household members. That is down from 14.0 percent in 2014.” This figure shot up during the great recession (reaching a high of 14.9% of households in 2011) but has subsequently fallen a bit as indicated above, but still remains higher than was the case prior to 2008 when it was regularly in the 10 to 11% range. I was curious how the sample of people I study every month in my Food Demand Survey (FooDS) matches up with these official government statistics. In the most recent April 2017 edition of FooDS, we added some questions (the short 6-item measure) based on work by the USDA to measure food insecurity. As an example, one of the questions is "'The food that I bought just didn’t last, and I didn’t have money to get more.' Was that often, sometimes, or never true for you/your household in the last 12 months?" Data from FooDS reveals a strikingly high level of food insecurity - much higher than what the USDA reports. According to the criteria outlined at the above link, we found a whopping 46.7% or respondents were classified as having low or very low food security (22.9% of the sample had low food security and 23.8% had very low food security). The USDA assumes that if you make enough money you can't be food insecure. In their latest report, they indicate in footnote 5: “To reduce the burden on higher income respondents, households with incomes above 185 percent of the Federal poverty line that give no indication of food-access problems on either of two preliminary screening questions are deemed to be food secure and are not asked the questions in the food security assessment series. ”
Your House Is Under Arrest - Imagine you’re in a casino, and you’re having the night of your life. The sounds of hundreds of slot machines fill the air, punctuated by bursts of joy as people around the room strike gold. Bright lights are flashing, people are celebrating — and suddenly, you’re one of them. You just made a big bet, and against all odds, you scored $50,000. Quickly, you take your winnings and head back home, driving a little fast in your excitement. Abruptly, police sirens sound behind you. You pull to the side of the road and learn you were driving three miles over the speed limit. The cop who pulled you over doesn’t charge you with a crime or even hand you a speeding ticket — but he finds your winnings and decides to confiscate them because they’re “suspicious.” And there goes your $50,000 … just like that. Sounds crazy, right? Unfortunately, that’s what happened to Tan Nguyen back in 2014. This insane process is called “civil asset forfeiture,” and it allows the cops to legally seize your property if they suspect it’s been used in illicit activity — even if you haven’t been charged with a crime. Each year, law enforcement agencies seize billions of dollars’ worth of cash and property from American citizens. And according to the Institute for Justice, law enforcement agencies in 13 states and the District of Columbia don’t even have to report or record the value of the property they confiscate. Just one example: The Southern Poverty Law Center found that agencies in nine Alabama counties (roughly 30% of the state’s population) seized over $2 million in 2016. And most of the time, the state was able to keep the cash after obtaining a court order. Clearly, civil asset forfeiture is an outrageous system that’s desperately in need of reform. Sen. Rand Paul and Rep. Tim Walberg have recently reintroduced legislation to do that, titled the Fifth Amendment Integrity Restoration Act, but reform (if it does pass) doesn’t happen overnight.
Property Tax Bills May Spike Due To School Pension Underfunding - Thousands of Michigan home and property owners may be looking at higher property tax bills after May 2, and one reason is that state officials have failed to adequately fund the school pension system over the past 30 years. The cost of catching up on unfunded pension promises is stressing local school budgets and pressuring officials to seek higher property tax rates. It may be happening already in one Livingston County school district. Hartland Consolidated Schools is one of many districts across the state asking voters to approve a property tax increase next month, with the school district stating that expenses have outpaced revenue. The Hartland districts’ annual payments to the state-run retirement system have risen from $2.76 million in 2011 to $7.23 million in 2016. That increase represents $4.47 million per year that is no longer available to pay for textbooks, teacher raises or perhaps local property tax reductions instead of increases. The language in Hartland’s May 2 ballot measure, called a sinking fund tax, says it would generate about $600,000 a year if approved by voters. Hartland is getting about $1,100 more per student in total state funding this year than it did in the 2011-12 school year. Its total state revenue comes to $42.5 million, but there’s a catch: Part of the amount, $3.6 million this year, must be sent right back to Lansing to cover the district’s share of past pension underfunding. In 2011-12, the district only had to send back $474,000. “The impact is that it does not help us at all as the money is an in-and-out flow,” said Hartland Superintendent Chuck Hughes in an email. “It actually hurts us if people in the community think that this is added revenue to the budget.”
How the Greediest Charter School Operators Loot Taxpayers Via Real Estate Deals -- An interview with the University of Connecticut’s Preston Green, co-author of Are Charter Schools the Second Coming of Enron?: An Examination of the Gatekeepers That Protect against Dangerous Related-Party Transactions in the Charter School Sector, which was published in the Indians Law Journal
More Evidence That Charter Schools Are a Taxpayer Ripoff That Delivers Poor Results --A blockbuster report detailing how California’s charter school industry has wasted hundreds of millions of taxpayer dollars by opening and building schools in communities that don’t need them and often end up doing worse than nearby public schools, is a nationwide warning about how education privateers hijack public funds and harm K-12 public schools.“This report finds that this funding [building, buying, leasing] is almost completely disconnected from educational policy objectives, and the results are, in turn, scattershot and haphazard,” the report’s executive summary begins. “Hundreds of millions of dollars are being spent each year without any meaningful strategy. Far too much of this public funding is spent on schools built in neighborhoods that have no need for additional classroom space, and which offer no improvement over the quality of education already available in nearby public schools. In the worst cases, public facilities funding has gone to schools that were found to have discriminatory enrollment policies and others that have engaged in unethical or corrupt practices.”The report, “Spending Blind: The Failure of Policy Planning in California Charter School Funding,” was written by the University of Oregon’s Gordon Lafer for In The Public Interest, a research and policy center based in Oakland, California.Its findings are significant on national and statewide levels, especially since California has more charter schools than any other state and the Trump administration has proposed spending $20 billion for a range of “school choice” initiatives, from charter public schools to tuition vouchers for religious schools or to subsidize home schooling. Charter schools are privately run K-12 schools and have become an industry dominated by corporate franchises seeking rapid growth.The school reform template embraced by the Trump administration’s K-12 privatization agenda would use many of the same fiscal devices and tax-based incentives the new report has documented as wasting California taxpayer funds and harming nearby traditional schools.Viewed from the level of state politics, where most of the nation’s K-12 education policies are sanctioned and administered, the report highlights a fundamental injustice. California’s charter industry accessed more than $2.5 billion in government-backed bonds, tax credits and grants to lease, build or buy schools in communities where school districts could not meet the legal criteria to build new schools because current or future enrollments would not justify that expansion.
New York just made tuition free at public colleges for middle class - New York just became the first state in the nation to make tuition free for middle class students at both two- and four-year public colleges. Governor Andrew Cuomo introduced the tuition-free plan in January. Lawmakers agreed to include it in the state budget, which was approved by the Assembly on Saturday and by the Senate late Sunday night. The governor is expected to sign the budget bills. Tuition will be free for residents who earn up to a specific income cap, which will be phased in over the first three years. Starting this fall, undergraduate students who attend a State University of New York or City University of New York school will be eligible for the Excelsior Scholarship if their families earn no more than $100,000 a year. The income cap will lift to $110,000 next year and will reach $125,000 in 2019. Those eligible will pay nothing for tuition, which costs $6,470 annually at four-year schools and about $4,350 a year at community colleges. But they will still be on the hook for the cost of fees and room and board if they live on campus. Those other expenses can add up to $14,000 a year. Students must take 30 credits a year to receive the scholarship. Some lawmakers had spoken out against this requirement, because it excludes students who enroll part time. In the final proposal, Cuomo said the credit requirement is "flexible" so that any student facing hardship will be able to pause and restart the program, or take fewer credits one semester than another. After they graduate, students who receive the scholarship must live and work in New York for the same number of years they received funding. If they leave the state, their scholarship will be converted into a loan. This requirement was not included in the governor's initial proposal.
Tennessee House passes free community college bill | WKRN News 2: (AP) – The Tennessee House has passed a bill that lets older adults without a college degree or certificate attend community college free of charge. The bill, which was pushed by Republican Gov. Bill Haslam, comes three years after Tennessee became the first state in the nation to allow new high school graduates to receive free community college. The state currently offers free tuition to all adults at Tennessee’s technical schools. The bill, which still has to clear the Senate, passed 87-6. The program is expected to cost the state $11 million after it is fully implemented. Officials say lottery proceeds will pay for the program. If the bill becomes law, both full and part-time students would be eligible to participate as early as fall 2018.
Yale Endowment Blasts Low-Fee Critics, Says Gains Would Sag - Yale University, one of the most-watched and best-performing college endowments, defended the fees it pays to external managers, saying in an annual investment report that a low-cost passive strategy would have “shortchanged’’ the Ivy League school’s students and faculty. While declining to provide details about how much the fund pays, its managers earn “large performance-based fees,’’ the report said. The $25.4 billion endowment, the second largest in higher education behind Harvard, has been run since 1985 by David Swensen and returned 3.4 percent for the most recent fiscal year when college endowments lost 2 percent on average. Fees for private equity and hedge fund managers, some of whom command 2 percent for management and 20 percent for performance, or even more, have become a heated topic. Berkshire Hathaway Inc.’s Warren Buffett and writer Malcolm Gladwell have taken public shots at the structure, and Gladwell specifically targeted Yale two years ago. Congress, concerned about the rising price tag of college, also has raised questions about tax-exempt endowments and asked about manager fees in an inquiry to the richest 56 private colleges last year, a question most schools didn’t fully answer.
Student Debt Bubble Sucks Even More Out of Economy and Ruins Lives, Yet Officials Keep Inflating It -- Yves Smith - The Financial Times has a generally good update on the state of the student debt bubble in the US. The article interesting not just for what it says but also for what goes unsaid. I’ll recap its main points with additional commentary. Note that many of the underlying issues will be familiar to NC readers, but it is nevertheless useful to stay current. Access to student debt keeps inflating the cost of education. This may seem obvious but it can’t be said often enough. Per the article: While the headline consumer price index is 2.7 per cent, between 2016 and 2017 published tuition and fee prices rose by 9 per cent at four-year state institutions, and 13 per cent at posher private colleges.It wasn’t all that long ago that the cost of a year at an Ivy League college was $50,000 per year. Author Rana Foroohar was warned by high school counselors that the price tag for her daughter to attend one of them or a liberal arts college would be around $72,000 a year. Spending increases are not going into improving education. As we’ve pointed out before, adjuncts are being squeezed into penury while the adminisphere bloat continues, as MBAs have swarmed in like locusts. Another waste of money is over-investment in plant. Again from the story:A large chunk of the hike was due to schools hiring more administrators (who “brand build” and recruit wealthy donors) and building expensive facilities designed to lure wealthier, full-fee-paying students. This not only leads to excess borrowing on the part of universities — a number of them are caught up in dicey bond deals like the sort that sunk the city of Detroit — but higher tuition for students.And there is a secondary effect. As education cost rise, students are becoming more mercenary in their choices, and in not a good way. This is another manifestation of what John Kay calls obliquity: in a complex system, trying to map a direct path will fail because it’s impossible to map the terrain well enough to identify one. Thus naive direct paths like “maximize shareholder value” do less well at achieving that objective than richer, more complicated goals. And for many grads, an investment in higher education now has a negative return on equity. A 2014 Economist article points out that the widely cited studies of whether college is worth the cost or not omit key factors that skew their results in favor of paying for higher education.
The US college debt bubble is becoming dangerous - Rapid run-ups in debt are the single biggest predictor of market trouble. So it is worth noting that over the past 10 years the amount of student loan debt in the US has grown by 170 per cent, to a whopping $1.4tn — more than car loans, or credit card debt. Indeed, as an expert at the Consumer Financial Protection Bureau recently pointed out to me, since 2008 we have basically swapped a housing debt bubble for a student loan bubble. No wonder NY Federal Reserve president Bill Dudley fretted last week that high levels of student debt and default are a “headwind to economic activity”. In America, 44m people have student debt. Eight million of those borrowers are in default. That’s a default rate which is still higher than pre-crisis levels — unlike the default rate for mortgages, credit cards or even car loans. Rising college education costs will not help shrink those numbers. While the headline consumer price index is 2.7 per cent, between 2016 and 2017 published tuition and fee prices rose by 9 per cent at four-year state institutions, and 13 per cent at posher private colleges. A large chunk of the hike was due to schools hiring more administrators (who “brand build” and recruit wealthy donors) and building expensive facilities designed to lure wealthier, full-fee-paying students. This not only leads to excess borrowing on the part of universities — a number of them are caught up in dicey bond deals like the sort that sunk the city of Detroit — but higher tuition for students. The average debt load individual graduates carry is up 70 per cent over the past decade, to about $34,000.Having just attended the first college preparation meeting at my daughter’s high school, where I was told to expect a $72,000 a year sticker fee for Ivy League and liberal arts colleges, I would feel lucky to get away with just that. This is clearly, as Mr Dudley observed, a headwind to stronger consumer spending. Growing student debt has been linked to everything from decreased rates of first time home ownership, to higher rental prices, to lower purchases of white goods and all the things that people buy to fill homes. Indeed, given their debt loads, I wonder how much of the “rent not buy” spending habits of Millennials are a matter of choice. But there are even more worrisome links between high student debt loads and health issues like depression, and marital failures. The whole thing is compounded by the fact that a large chunk of those holding massive debt do not end up with degrees, having had to drop out from the stress of trying to study, work, and pay back massive loans at the same time. That means they will never even get the income boost that a college degree still provides — creating a snowball cycle of downward mobility in the country’s most vulnerable populations.
Betsy DeVos Withdraws Obama-Era Student Loan Protections -- President Trump's Education Secretary Betsy DeVos undercut student loan protections on Tuesday that were put in place by the administration of former President Barack Obama. The Obama policy memorandums withdrawn by DeVos required that the government’s Federal Student Aid office do more to help borrowers manage or discharge their debt, Bloomberg reports. DeVos said in a press memo that she was rescinding the previous administration's list of demands to "demonstrate sound fiscal stewardship of public dollar" and limit the cost to taxpayers. The move came after a letter from industry lobbying National Council of Higher Education Resources asking Congress to alter or delay the Education Department's changes.Then-President Obama issued the guidance after a wave of student loan defaults and allegations that lenders were providing false information, charging unexpected fees and cheating borrowers out of repayment rights. The guidelines also aimed to reduce awarding contracts to firms who mistreated or misled borrowers. The current contracts are set to expire in 2019.
Betsy DeVos reverses Obama-era directives aimed at protecting student loan borrowers - A directive just issued by Betsy DeVos is raising alarm among student loan borrower advocates. In a memo sent Tuesday to James Runcie, the chief operating officer of Federal Student Aid (FSA), DeVos rescinded Obama-era directives aimed at holding student loan servicers — the companies hired by the government to manage the repayment process — accountable for working in borrowers’ best interests. In the memo, DeVos withdrew guidance sent by former Secretary of Education John King to Runcie, instructing him to consider a servicer’s past performance when deciding whether to award the company a new contract. DeVos’s memo also withdraws a directive sent by former undersecretary of education Ted Mitchell instructing Runcie to hold servicers accountable for meeting basic customer service standards, like responding quickly to borrowers, and reward those companies that do the best at ensuring borrowers are on track toward repaying their loans. “Undoing these memos is a very concerning indication of how much (Department of Education officials) value protecting borrowers versus how much they want to insulate servicers,” said Alexis Goldstein, a senior policy analyst at Americans for Financial Reform. “Is this meant to be a message that says we are less concerned with borrowers and more concerned with protecting servicers even if they made mistakes in the past?” The memo comes as higher education leaders and borrower advocates are watching closely to see how the Trump administration treats student loan borrowers. Last month they expressed concern after the Department of Education reversed an Obama-era directive preventing student loan debt collectors from charging high fees to defaulted borrowers who make an effort quickly to become current on their debts. The exact implications of DeVos’s new guidelines remain unclear. The Department didn’t immediately respond to a request for comment. The agency is currently in the midst of awarding a new lucrative servicing contract to a single entity. Two public companies, Navient and Nelnet, are finalists for the new award. But it’s hard to say whether that contract process will continue, given DeVos’s new memo, or whether the Department will begin again with an entirely new contract process.
US Marshals: DeVos security detail could cost nearly $8M | TheHill -- Education Secretary Betsy DeVos has been under additional security since February, The Washington Post reported on Friday, a factor that could cost the government as much as $7.8 million through September.The U.S. Marshals Service said a threat assessment for DeVos in February required her to be placed under additional security detail, and that the agency would be reimbursed for the extra cost by the Education Department.The Education Department said the $7.8 million figure is only an estimate of the cost. While past education secretaries have had security details, they are typically protected by department employees, rather than the Marshals Service. An unidentified department employee told the Post that members of the in-house security team remain on the payroll but are not guarding DeVos and have not been assigned new duties.A department spokesman said his agency would defer to the federal marshals and their determination about the necessary protections for the Education secretary. As a result, the Marshals Service is hiring 22 additional employees to guard DeVos, according to The Post. The threat assessment reportedly followed an episode in February, in which DeVos was blocked from entering a Washington, D.C., public school by protesters. She was eventually able to enter the school.
Maryland on track to give attorney general power to sue for drug price-gouging - Maryland could become the first state to give its attorney general the power to take legal action against drug companies that dramatically increase the price of off-patent or generic drugs under a measure that is moving through the General Assembly.Attorney General Brian E. Frosh (D) proposed the legislation, which received final approval in the Senate on Friday. The House passed the measure last month, and now the two chambers must reconcile the differences in the bill before the General Assembly adjourns Monday at midnight.The vote on the price-gouging bill was among a flurry of activity in the legislature during the final days of its session.A Senate committee broke through a logjam and voted unanimously to advance portions of the Trust Act, a bill to limit police cooperation with federal immigration enforcement efforts. After debating the legislation for more than two weeks, the 11-member panel decided to tuck the least-controversial parts into a separate immigration-related measure that will move to the full Senate on Monday.The surviving proposals would bar local and state police from stopping or questioning individuals solely to determine their immigration status or country of origin, and from creating registries based on factors that could be used for discrimination, such as race and religion.
George W. Bush pens op-ed urging full funding for anti-AIDS program | TheHill: Former President George W. Bush is urging lawmakers to continue fully funding the President’s Emergency Plan for AIDS Relief (PEPFAR), an initiative he founded during his presidency to fight the AIDS epidemic in Africa. “I argue that we shouldn’t spend money on programs that don’t work, whether at home or abroad,” Bush wrote in an op-ed for The Washington Post on Friday. “But they should fully fund programs that have proven to be efficient, effective and results-oriented. Saving nearly 12 million lives is proof that PEPFAR works, and I urge our government to fully fund it.” The budget proposal put forward by the Trump Administration includes a $300 million cut from PEPFAR. Bush, who in his work for the George W. Bush Institute has formed partnerships to combat diseases like cervical cancer, said Americans “should keep going until the job is done” making an AIDS-free generation in Africa. The Pink Ribbon Red Ribbon partnership with Bush’s organization has helped train health workers in Africa and screen women for cancers like breast and cervical. “It is clear that the generosity of the American people has had a huge impact — one that reflects the view that all lives are precious, and to whom much is given, much is required. This lifesaving work also has a practical purpose for Americans,” Bush wrote.
Cities Where You Don’t Want to Get Sick - Medical errors and suboptimal hospital conditions are a leading cause of death in the United States, resulting in hundreds of thousands of fatalities each year. Of course, some hospitals are worse than others, and the quality of care in a hospital depends largely on where the facility is located.Clear and effective communication from medical practitioners, clean and quiet rooms, timely treatment, and efficient use of medical technology and resources are all aspects of high-quality hospital care. While best practices such as these do not guarantee the best patient outcomes, hospitals that excel in these areas tend to report lower readmission and death rates — two of the most commonly used metrics when measuring hospital quality. 24/7 Wall St. reviewed readmission rates, mortality rates, and hospital grades published by hospital rating organization Leapfrog Group to identify the metropolitan areas with the worst hospitals. The Hot Springs, Arkansas metro area is the worst area in which to visit a hospital. Visalia-Porterville, California rounds out the list of metros with the worst hospitals in 10th place.Nationwide, 15.7% of discharged hospital patients return to the hospital within 30 days. Such patients return with infections after surgery, blood clots left untreated, and other unplanned complications. Readmission rates do not vary tremendously across metropolitan areas. In most of these 10 cities, however, readmission rates are inline with or higher than the national percentage. Based on a range of expert-determined and government-set standards, including for example the tracking of prescriptions, adequate ICU physician staff, and the patient experience, patient safety watchdog Leapfrog Group rates hospitals A through F. In the most recent assessment, the group found that compared to A-rated hospitals the risk of avoidable death is 35% higher in C hospitals and 50% higher in D and F hospitals. The average grade of hospitals in all of the 10 worst cities is C or worse.It is likely no coincidence that all of the worst metropolitan areas in which to get sick are also among the nation’s poorer areas. The median household incomes in all of these areas do not exceed the national median of $53,657 a year. Of the 10 cities, only the Altoona, Pennsylvania area has a poverty rate lower than the national poverty rate of 15.6%. Click here to see the cities where you don’t want to get sick.
Rich Americans live up to 15 years longer than poor peers, studies find - Increasing inequality means wealthy Americans can now expect to live up to 15 years longer than their poor counterparts, reports in the British medical journal the Lancet have found. Researchers said these disparities appear to be worsened by the American health system itself, which relies on for-profit insurance companies, and is the most expensive in the world. Their conclusion? Treat healthcare as a human right. “Healthcare is not a commodity,” wrote US Senator Bernie Sanders in an opinion article introducing the issue of the journal, which is devoted to inequality in American healthcare. “The goal of a healthcare system should be to keep people well, not to make stockholders rich. The USA has the most expensive, bureaucratic, wasteful, and ineffective healthcare system in the world.” Sanders, like authors of the lead report, called for single-payer health insurance or what Americans might know as “Medicare for all”, a reference to an existing public health program for older Americans. “Making sure that every citizen has the right to childcare, healthcare, a college education, and secure retirement is not a radical idea. It is as American as apple pie,” he said. The Lancet studies looked at how the American health system affects inequality and structural racism, and how mass incarceration and the Affordable Care Act (ACA), also known as Obamacare, have changed public health. Among the studies’ key findings: the richest 1% live up to 15 years longer than the poorest 1%; the same gap in life expectancy widened in recent decades, making poverty a powerful indicator for death; more than one-third of low-income Americans avoid medical care because of costs (compared to 7% in Canada and 1% in the UK); the poorest fifth of Americans pay twice as much for healthcare as a share of income (6% for the poor, versus 3.2% for the rich); and life expectancy would have grown 51.1% more from 1983 to 2005 had mass incarceration not accelerated in the mid-1980s.The poorest Americans have suffered in particular, with life expectancies falling in some groups even while medicine has advanced. For example, researchers reported that the poorest fifth of women born between 1930 and 1960 statistically lived four years less than Americans in the top fifth of the socioeconomic spectrum.
The crackdown on opioid prescriptions is leaving chronic pain patients in limbo -- Jenny Rellick was born with spinal muscular atrophy, a degenerative disease that causes muscles to waste away. Eight years ago, she was facing pain so severe that her doctors put her on a high-dosage regimen of two different kinds of opioids. One is a long-acting, time-released opioid called Kadian that delivers 100 milligrams of morphine or its equivalent (MME) throughout the day. The other is a short-acting dose of oxycodone, which she takes in 15 MME increments as needed. Today Rellick, 46, takes anywhere from 175 to 190 MME of these painkillers daily. “Opioids give [her] the ability to think about something other than pain,’” “But that does not mean she is pain-free. Even on opioids, she is constantly in pain, but opioids reduce it enough that it’s not a constant thought.” But Rellick, who lives in Alexandria, Virginia, may no longer be able to get the medication she’s become dependent on. Recently, her primary care physician decided she would only write one-time prescriptions for opioids for up to 30 days. Other pain specialists Rellick has seen have said they would cut her daily dose in half. “If I have to cut down 50 percent, it won't help my pain enough to warrant the side effects,” Rellick told me in an email. Increasingly, chronic pain patients like Rellick who take high doses of opioids daily are confronting new restrictions on the strength of opioids or length of prescriptions that doctors can give. The aim of these new measures being implemented throughout the health care system is to curb the epidemic of opioid addiction and overdoses. (More than 22,000 overdose deaths in 2015 involved prescription opioids.) But they’re creating a new conundrum: what to do about patients like Rellick who could be hurt by big cuts in their dosage.
Saving lives is the first imperative in the opioid epidemic - America’s opioid problem has turned into a full-blown emergency now that illicit fentanyl and related synthetic drugs are turning up regularly on our streets. This fentanyl, made in China and trafficked through Mexico, is 25 to 50 times as potent as heroin. One derivation, carfentanil, is a tranquilizer for large animals that’s a staggering 1,000 to 5,000 times as powerful. Adding synthetic opioids to heroin is a cheap way to make it stronger—and more deadly. A user can die with the needle still in his arm, the syringe partly full. Traffickers also press these drugs into pills that they sell as OxyContin and Xanax. Most victims of synthetic opioids don’t even realize what they are taking. But they are driving the soaring rate of overdose—a total of 33,091 deaths in 2015, according to the Centers for Disease Control and Prevention. Hence the ascendance of a philosophy known as “harm reduction,” which puts first the goal of reducing opioid-related death and disease. Cutting drug use can come second, but only if the user desires it. As an addiction psychiatrist, I believe that harm reduction and outreach to addicts have a necessary place in addressing the opioid crisis. But as such policies proliferate—including some that used to be inconceivable, such as providing facilities where drug users can safely inject—Americans shouldn’t lose sight of the virtues of coerced treatment and accountability.
How upgrading humans will become the next billion-dollar industry -- Investors searching for the next transformative technology destined to turn a bunch of Ivy League dropouts into billionaires, and half the market into a loose slot machine, need only look in the mirror.“The greatest industry of the 21st century will probably be to upgrade human beings,” historian Yuval Harari, author of the fascinating new book “Homo Deus,” told MarketWatch. For all of humanity’s scientific, economic and artistic achievements, we have neglected this ultimate self-improvement project, Harari said. Our bodies and brains, after all, still run on the same hardware and software that evolved some 200,000 years ago. Google already has a unit devoted to overcoming death, Harari noted. And who can doubt that Apple AAPL, -0.06% will want to pick from this new tree of knowledge, as well, or that after conquering self-driving cars Uber, in spite of the antics of its CEO, will want to build an Übermensch? As new technologies yield humans with much longer battery lives, killer apps and godlike superpowers, within the next six decades, if Harari is right, even the finest human specimens of 2017 will in hindsight seem like flip phones. There is, of course, a catch. Many of us will remain flip phones, as the technology to upgrade humans to iPhones is likely to be costly, and regulated differently around the world. These advances will likely “lead to greater income inequality than ever before,” Harari said. “For the first time in history it will be possible to translate economic inequality into biological inequality.” Such a divide could give rise to a new version of “old racist ideologies that some races are naturally superior to others,” Harari said. “Except this time the biological differences will be real, something that is engineered and manufactured.”
Catastrophic Antibiotic Threat from Food -The greatly excessive use of antibiotics in food production in recent decades has made many bacteria more resistant to antibiotics. The United States Department of Agriculture (USDA) has estimated that antibiotic use in animal husbandry, poultry farming and aquaculture in the US is over four times USDA recommended levels. Meanwhile, the US Food and Drugs Administration (FDA) has estimated that 80 percent of all antibiotics sold in the USA are used on animals. Antibiotics are used to ensure better health and survival of animals bred for food, but they are also believed by many farmers to promote growth. As prices of antibiotics remain attractively low, they offer the prospect of higher earnings from greater output at low cost. Hence, there is little or no market incentive to reduce excessive, if not indiscriminate use, and hence abuse of antibiotics. The widespread use of antibiotics through food chains is thus becoming catastrophic. A review by the FAO explains how antibiotic-resistant bacteria in animals are infecting humans, through direct contact with animals or indirect transmission through the food we eat. Earlier, the spread of bacteria was popularly associated with international travel, but the threat posed by antibiotic-resistant bacteria in our food is now proving to be far more formidable. Ecologically minded activists have long been promoting agricultural recycling, often citing traditional agricultural practices. But adding antibiotics to animal feed has made this a threat to public health. The feed typically contains many drugs, including some only used by humans as antibiotics of last resort. Much of the antibiotics given to livestock and poultry passes un-degraded through their urine and faeces, directly affecting food from aquaculture. Thus, waste from pigpens flowing into fishponds exposes fish and shrimps to the high doses of antibiotics that livestock get, on top of the antibiotics added to the pond water to prevent or address aquatic diseases. Antibiotic resistant bacteria from this environment then passes to humans who consume such food.
KFC to Eliminate Human Medicine Antibiotics from Chicken: Kentucky Fried Chicken extended its food promise to customers, announcing that, by the end of 2018, all chicken purchased by KFC U.S. will be raised without antibiotics important to human medicine. This move marks the first time a major national quick service restaurant (QSR) chain in the U.S. has extended an antibiotics commitment beyond boneless chicken to its chicken-on-the-bone menu items. "We're constantly working to meet the changing preferences of our customers, while ensuring we deliver on the value they expect from KFC. Offering chicken raised without medically important antibiotics is the next step in that journey," said Kevin Hochman, president and chief concept officer for KFC U.S. "Making this change was complex and took a lot of planning. It required close collaboration with more than 2,000 farms, most of them family-owned and managed, in more than a dozen U.S. states where they raise our chickens." "KFC's new policy will be a game-changer for the fast food industry and public health," said Lena Brook, food policy advocate at NRDC. "The market is responding to consumer demand for better meat. This commitment from the nation's most iconic fast food chicken chain will have a major impact on the way the birds are raised in the U.S. and in the fight against the growing epidemic of drug-resistant infections."
Monsanto Sued for 'Misleading' Roundup Labeling -- Monsanto is staring down yet another lawsuit over its glyphosate -based product, Roundup . Two nonprofit groups allege that the agribusiness giant intentionally mislabels its weedkiller as "target[ing] an enzyme found in plants but not in people or pets." The lawsuit charges that Monsanto's statement is "false, deceptive and misleading" because glyphosate "in fact, is found in people and pets." Beyond Pesticides and the Organic Consumers Association , through their attorneys at Richman Law Group , filed the lawsuit in Washington, DC, court on Friday under the District of Columbia's Consumer Protection Procedures Act. The case is Beyond Pesticides et al v Monsanto Co. et al . "Monsanto aggressively markets Roundup as safe for humans and animals, despite newer studies indicating that glyphosate may be carcinogenic and affect human and animal cardiovascular, endocrine, nervous and reproductive systems," the complaint states. "Reasonable consumers must and do rely on Monsanto to report honestly Roundup's effects on humans and animals and whether the enzyme it targets is found in people and pets," it says. "No reasonable consumer seeing these representations would expect that Roundup targets a bacterial enzyme that is found in humans and animals and that affects their immune health." The plaintiffs claim that Monsanto knows its representations are false but profited monetarily off Roundup anyway.
Groups to Probe Why Pruitt Put ''Pesticide Industry Profits Ahead of Children's Health" - How is it that Environmental Protection Agency (EPA) Administrator Scott Pruitt came to the decision to reject his own agency's science and reject a ban the insecticide chlorpyrifos? Watchdog group American Oversight and advocacy organization Environmental Working Group (EWG) want to know, and are ready to sue to get to the bottom of the matter. Pruitt's March 29 decision to deny a 10-year-old petition brought forth by Pesticide Action Network and the Natural Resources Defense Council sparked outrage from public health advocates and environmentalists who say the move—which is what the chemical's maker, Dow, had wanted—was unacceptable in the face of studies linking the nerve agent to numerous adverse effects, from contaminating water to harming children's brain development. "Public health experts, pediatricians, and EPA scientists all agree that chlorpyrifos is unsafe for children at any level," said EWG senior vice president for government affairs Scott Faber. "That overwhelming and uniform agreement among experts should have been all the information Administrator Pruitt needed to protect kids from this notorious neurotoxin," Faber said. Pruitt's record as AG shows him "slowing environmental regulation, cutting enforcement, and siding with industry." As as Environment America's executive director Margie Alt, put it, "As attorney general he put dirty energy interests and other polluters ahead of protecting public health." Further, as Common Dreams noted last month, "Oklahoma, where Pruitt served as state senator until being elected AG in 2010, led the nation in pesticide-related illnesses and deaths from 2000-2010, according to data from the Centers for Disease Control and Prevention." With such factors in mind, American Oversight on Tuesday filed Freedom of Information Act requests with the Department of Agriculture and EPA to seek communications records between agency officials and groups including Dow who may have pushed for the ban to be rejected.
Farms could slash pesticide use without losses -- Virtually all farms could significantly cut their pesticide use while still producing as much food, according to a major new study. The research also shows chemical treatments could be cut without affecting farm profits on over three-quarters of farms. The scientists said that many farmers wanted to reduce pesticide use, partly due to concerns for their own health. But farmers do not have good access to information on alternatives, the researchers said, because much of their advice comes from representatives of companies that sell both seeds and pesticides.The work presents a serious challenge to the billion-dollar pesticide industry, which has long argued its products are vital to food production, especially with the world population set to grow to nine billion people by 2050. However, this was dismissed as a “myth” in March by UN food and pollution experts, who said pesticides cause “catastrophic impacts on the environment and human health” and accused pesticide manufacturers of a “systematic denial of harms”. In a further blow, the Guardian revealed in March that Europe is poised to ban the world’s most widely used insecticides from all fields. The new research, published in the peer-reviewed journal Nature Plants, analysed the pesticide use, productivity and profitability of almost 1,000 farms of all types across France. By comparing similar farms using high or low levels of pesticides, the scientists found that 94% of farms would lose no production if they cut pesticides and two-fifths of these would actually produce more. The results were most startling for insecticides: lower levels would result in more production in 86% of farms and no farms at all would lose production. The research also indicated that 78% of farms would be equally or more profitable when using less pesticide of all types.
Destructive weed threatens U.S. corn fields | Reuters: A U.S. government program designed to convert farmland to wildlife habitat has triggered the spread of a fast-growing weed that threatens to strangle crops in America's rural heartland. The weed is hard to kill and, if left unchecked, destroys as much as 91 percent of corn on infested land, according to the U.S. Department of Agriculture (USDA). It is spreading across Iowa, which accounts for nearly a fifth of U.S. corn production and in 2016 exported more than $1 billion of corn and soy. The federal Conservation Reserve Program pays farmers to remove land from production to improve water quality, prevent soil erosion and protect endangered species. The destructive weed - Palmer amaranth – has spread through seed sold to farmers in the conservation program, according to Iowa's top weeds scientist, Bob Hartzler, and the conservation group Pheasants Forever. "We are very confident that some of these seed mixes were contaminated," Hartzler said. Hartzler, an Iowa State University agronomy professor, said one seller was Allendan Seed Company, the state's largest producer of local grass and wildflower seeds for conservation land. In written responses to questions from Reuters, Allendan said it was "possible that pigweed seed ... was present in some mixes." Palmer amaranth is a type of pigweed. Allendan did not confirm it had found the seed in any of its supplies. It said outside labs that the firm hires to test seed quality had been unable to distinguish Palmer amaranath from other pigweeds.
Grains piled on runways, parking lots, fields amid global glut | Reuters: CHICAGO Iowa farmer Karl Fox is drowning in corn. Reluctant to sell his harvest at today's rock-bottom prices, he has stuffed storage bins at his property full and left more corn piled on the ground, covered with a tarp. He would rather risk potential crop damage from the elements than pay the exorbitant cost of storage elsewhere. "That's how poor people do it," said Fox, who has been farming for 28 years. "You do what you have to do." Farmers face similar problems across the globe. World stockpiles of corn and wheat are at record highs. From Iowa to China, years of bumper crops and low prices have overwhelmed storage capacity for basic foodstuffs. Global stocks of corn, wheat, rice and soybeans combined will hit a record 671.1 million tonnes going into the next harvest - the third straight year of historically high surplus, according to the U.S. Department of Agriculture (USDA). That's enough to cover demand from China for about a year. In the United States, farmers facing a fourth straight year of declining incomes and rising debts are hanging on to grain in the hope of higher prices later. They may be waiting a long time: Market fundamentals appear to be weakening as the world's top grain producers ponder what to do with so much food.The persistent glut is a striking contrast from the panic a decade ago, when severe droughts in Russia and the United States sent prices soaring. The shrinking supply forced big importers such as China to enact policies to encourage more domestic production and increase the volume of storage to improve food security. China abandoned that policy last year and is now selling off hundreds of millions of tonnes of old stocks. Russia, too, is looking at exporting from state-held stockpiles, with storage stuffed after a record harvest in 2016.
Agriculture is depleting world aquifers, new satellite measurements show -- Unsustainable pumping of groundwater for irrigated agriculture is acclerating rapidly around the world, according to new research that matches crop production statistics against high-tech measurements of aquifer drawdowns.Agriculture’s heavy demand on the world’s freshwater resources is well understood from the output end — of all water consumption for all uses, the United Nations estimates, 70 percent goes to produce food. But the problem has been more difficult at the sourcing end, which requires distinguishing between perpetually replenished surface water from lakes and streams on the one hand, and essentially nonrenewable underground reserves on the other.Quantifying the impact of withdrawals from aquifers has become a little easier since the introduction about 15 years ago of the satellite program known as GRACE, for Gravity Recovery and Climate Experiment, developed in a collaboration of the U.S. and German space programs. For a paper published last week in the prestigious journal Nature, an international team of researchers — led by scientists at the UK’s Institute for Sustainable Resources and NASA’s Goddard Institute for Space Studies — looked at the gap between the rapid rate at which water is being withdrawn from aquifers and the very slow pace at which it is returned, essentially via rainfall and surface water filtering down through soil. The team made what appears to be the first effort to overlay depletion data with country-by-country statistics on agricultural output, to see how much of the loss could be attributed to food production.They called the resulting measurement GWD — groundwater depletion for irrigation — and the numbers were rather grim in terms of the acceleration rate.In the year 2000, GWD was estimated at 19.47 cubic kilometers. By 2010, the endpoint of the analysis, it had risen to 24.14 km3 — an increase of 24 percent in just one decade. (If that volume measure seems unimpressively small, note that one cubic kilometer is 26.42 billion gallons.) Of course, agricultural depletion is not uniform across the globe. About two-thirds of the GWD calculated for 2010 was in just four countries: India (7.35 km3), Iran (3.33 km3), Pakistan (2.75 km3) and China (2.40 km3). Almost 85 percent occurred in 10 nations — the top four plus the United States (1.62 km3), Mexico (1.11 km3), Libya (.25 km3), Turkey (.20 km3), and Italy (.20 km3).
North America's freshwater lakes are getting saltier: Proximity to roads predicts escalating salinization --North America's freshwater lakes are getting saltier due to development and exposure to road salt. A study of 371 lakes published today in the Proceedings of the National Academy of Sciences reports that many Midwestern and Northeastern lakes are experiencing increasing chloride trends, with some 44% of lakes sampled in these regions undergoing long-term salinization. The study is the first large-scale analysis of chloride trends in freshwater lakes. It was conducted by a team of fifteen researchers as part of the Global Lake Ecological Observatory Network (GLEON) Fellowship Program, an initiative that seeks to train the next generation of freshwater scientists and practitioners. Lead author Hilary Dugan, a limnologist at the University of Wisconsin-Madison and former Cary Institute of Ecosystem Studies Postdoctoral Fellow, explains, "We compiled long-term data, and compared chloride concentrations in North American lakes and reservoirs to climate and land use patterns, with the goal of revealing whether, how, and why salinization is changing across broad geographic scales. The picture is sobering. For lakes, small amounts of shoreline development translate into big salinization risks." Chloride trends in 371 freshwater lakes were analyzed. Each lake was larger than 4 hectares in size with at least 10 years of recorded chloride data. The majority of the lakes (284) were located in a North American Lakes Region that includes Connecticut, Maine, Massachusetts, Michigan, Minnesota, New Hampshire, New York, Ontario, Rhode Island, Vermont, and Wisconsin.
Northern California gets its wettest winter in nearly a century - A series of late-season storms has vaulted this winter into the history books, making it the wettest winter for California’s northern Sierra Nevada in nearly a century of record-keeping, according to the California Department of Water Resources.As of Thursday, an astonishing 89.7 inches of precipitation across a zone of eight stations in the northern Sierra has been recorded since October. That breaks the record 88.5 inches that fell by the in the 1982-83 rainy season.Sierra Nevada precipitation is significant because the mountain range supplies l arge amounts of water to the rest of the state.“When we receive a record amount of rainfall in the north, that translates to everybody who benefits from water down the state,” said Doug Carlson, spokesman for the California Department of Water Resources.Carlson noted that California is only six months into the water year, and although the state doesn’t normally see much rainfall in the latter part of the year, rain and snow in months ahead could break other records.The San Joaquin index, which covers a zone of five stations, could also set a record this year. That region is tracking close to the 1982-83 record year.Experts and state water officials say California is seeing more of these intense weather swings as temperatures warm, making wet years wetter and dry years drier. “California is North America’s most variable climate,” said Jeffrey Mount, a water expert at the Public Policy Institute of California. “The year-to-year differences in precipitation are unmatched.” Still, Mount said, this is a “benign extreme wet year.”“What’s happening here is great for Southern California. This relieves pressure on and creates an opportunity for Southern California to store more of their water and groundwater,” he said. “It’s really nice to take some pressure off of everybody, including the environment.”
After 63 feet of snow, Northern California mountains break record for wettest water year -- A mind-boggling 751 inches of snow have pummeled the Sugar Bowl ski area near Lake Tahoe this winter. It’s emblematic of a record season for precipitation in California’s northern Sierra Nevada mountain range, and the abrupt end to a historic drought. As of Thursday morning, the northern Sierra had achieved its wettest water year in recorded history, the National Weather Service office in Sacramento announced. At eight representative weather stations in the northern Sierra, the average precipitation reached 89.7 inches (combining rain and melted snow), passing the previous record of 88.5 inches set in 1982-1983. And there’s plenty of time to add to this record, as the water year, which began Oct. 1, continues until Sept. 30. The precipitation has come practically nonstop since October. Every single month except November produced above-average amounts. Ryan Maue, a meteorologist for WeatherBell Analytics, calculated that the state of California has received the equivalent of 90-trillion gallons of water since October, the greatest volume on record. In a tweet Wednesday, the Western Regional Climate Center documented more than a dozen individual locations, mostly in the Northern Sierra, having their wettest water years: In Sacramento, more than 32 inches of rain has fallen this water year, the fourth most since 1877, with time to climb even higher. The Weather Service described high-elevation snows as “incredible,” with seasonal totals exceeding 600 inches in a number of locations. These amounts are equivalent to snow piling up to the height of a five- or six-story building. One to five feet of snow has buried the high country in the past week, and heavy snow was falling in the region again Thursday. A number of ski areas, including Squaw Valley and Mammoth Mountain, plan to remain open into July.
California’s Drought Is Over, but the Rest of the World’s Water Problems Are Just Beginning -- After California's wetter-than-normal winter—and the official end to its drought—you're probably not thinking much about water scarcity and the food supply. But our food-and-water woes go well beyond the Golden State's latest precipitation patterns, as this new Nature study from a global team of researchers—including two from the NASA Goddard Institute for Space Studies—shows. The paper notes that the globe's stores of underground water, known as groundwater—the stuff that accumulates over millennia in aquifers—is vanishing at an "alarming" rate, driven mainly by demand for irrigation to grow crops. You can think of such reserves as "fossil" water, since it takes thousands of years to replenish once it's pumped out. Once it's gone, some of the globe's key growing regions—the breadbaskets for much of Asia and the Middle East—will no longer be viable. Here in the United States, we rely heavily on California's Central Valley for fruit, vegetables, and nuts—which in turn relies on some of the globe's most stressed aquifers for irrigation. Tapped-out aquifers point to a future marked by high food prices and geopolitical strife. The Nature researchers found that the most severe depletion is concentrated "in a few regions that rely significantly on overexploited aquifers to grow crops, mainly the USA, Mexico, the Middle East and North Africa, India, Pakistan and China, including almost all the major breadbaskets and population centres of the planet." The group mapped global food trade flows from these areas with the most-stressed aquifers—places like the California Central Valley, the Midwest's High Plains (where farmers have for years been draining the Ogallala aquifer to grow corn and cotton), India's breadbasket, the Punjab, and China's main growing region, the North Plain. What the new paper adds to that chilling assessment isn't comforting to US eaters, or people who look at long-term geopolitical trends. They name the seven countries where farmers are drawing the most from overstressed aquifers: India, Iran, Pakistan, China, the United States, Mexico, and Saudi Arabia. Together, agriculture within these countries is responsible for about 85 percent of the globe's irrigation water taken from overdrawn aquifers.
Great Lakes water piped to Southwest 'our future,' says NASA scientist The idea is as old and dusty as the desert Southwest: Pipe abundant Great Lakes water to parched cities out West, such as Phoenix and Las Vegas. The idea's been dismissed for as long as it's been pitched, with adamant opposition from Great Lakes states, whose representatives crafted a pact with Canada just to stop such a thing.But the latest person to see large-scale Great Lakes water diversions as a future likelihood might make some in the Midwest do a double take — the chief water scientist at NASA's Jet Propulsion Laboratory in California. Jay Famiglietti, a hydrologist and senior water scientist at JPL, raised the possibility in an April 4 interview with ideastream.org, a nonprofit owner and operator of Cleveland public broadcasting stations. Famiglietti was in Ohio to speak as part of a lecture series at Case Western Reserve University. Because of the Great Lakes' abundance of potable, fresh water, "you might imagine that there's a giant bull's-eye that can be seen from space that's sitting above the Great Lakes — meaning it's a target area, in a sense, for the rest of the country," Famiglietti said."Because there's so much fresh water, you can imagine that 50 years from now ... there might actually be a pipeline that brings water from the Great Lakes to Phoenix. I think that that's part of our future."Those are fighting words around the Great Lakes."I don't think people in this region believe that is part of our future," said Liz Kirkwood, executive director of the nonprofit For Love of Water, or FLOW, which works to protect the Great Lakes. But the global water crisis "is far worse than most people imagine," Famiglietti told ideastream, adding that in terms of both global water quality and water supply issues, "I'm sorry to say it's almost an unsolvable problem."
Chemical Spill Closes Four Lake Michigan Beaches - A U.S. Steel plant in Portage, Indiana has spilled wastewater containing a potentially cancer -causing chemical into Burns Waterway, a tributary about 100 yards from Lake Michigan. The leak prompted the closure of four beaches and a riverwalk at the Indiana Dunes National Lakeshore, and Indiana American Water in Ogden Dunes—the nearest municipal water source—to shut down its water intake and switch to a reserve water supply, the U.S. Environmental Protection Agency (EPA), which is overseeing the spill, announced . U.S. Steel reported the leak on Tuesday morning. The company informed the EPA that its release has been stopped at the source. The amount of spilled wastewater is still unknown. The wastewater discharge, apparently caused by a pipe failure, contains hexavalent chromium (chromium-6), which is used for industrial processes. The toxic chemical was made famous by the environmental activist and 2000 movie of the same name, " Erin Brockovich ." Incidentally, as Chicago Tribune pointed out, President Donald Trump 's administration has proposed a budget that would quash efforts to crack down on the dangerous pollutant nationwide: "Trump's proposed budget would abolish the Integrated Risk Information System, the EPA office working on hexavalent chromium standards in drinking water, as well as sharply reduce funding for scientific reviews of toxic chemicals and cut back on the agency's enforcement of environmental laws." Low levels of the chemical were found in Lake Michigan near the mouth of Burns Waterway, Sam Borries, a branch chief for Region 5 of the EPA's emergency response program, told Chicago Tribune . Borries said that it is unclear whether or how far the chemical has spread down the shoreline. He added that officials have taken 100 samples along the waterway east and west of its entry point to the lake and results are expected Thursday.
Cancer-Causing Chemical Spill 100 Yards From Lake Michigan Closes Beaches - Multiple Indiana beaches have been shut down following a spill of wastewater containing hexavalent chromium, a highly toxic chemical linked to cancer. The United States Steel company reported the leak occurred on Tuesday due to equipment failure at its Portage, Indiana, plant, a lapse that “resulted in a chemical leak into the waterway that forced the shutdown of a drinking water intake along Lake Michigan and several nearby beaches,” the Northwest Indiana Times explained. Local outlet The Indy Channel also documented the circumstances, acknowledging the release of hexavalent chromium into the water:“The USS Midwest Plant reported that they had a spill into the Burns Waterway Tuesday afternoon. The Environmental Protection Agency says the spill contained hexavalent chromium from the US Steel facility in Portage, Indiana.” U.S. News reported that U.S. Steel said the leak was a result of a malfunctioning pipe, asserting “an expansion joint failed Tuesday in a pipe at its Portage, Indiana, facility, allowing wastewater from an electroplating treatment process that contains hexavalent chromium to flow into the wrong wastewater treatment plant at the complex.” The spill has led to the National Park Service’s closure of “West Beach and Portage Lakefront and Riverwalk at Indiana Dunes National Lakeshore and Ogden Dunes’ town beach.” On Wednesday, the service also shut down Cowles Bog Beach. Hexavalent chromium carries several health risks. The Occupation Safety and Health Administration warns of the risk of “lung cancer in workers who breathe airborne hexavalent chromium, irritation or damage to the nose, throat, and lung (respiratory tract) if hexavalent chromium is breathed at high levels, [and] irritation or damage to the eyes and skin if hexavalent chromium contacts these organs in high concentrations.” Skin contact with chromium can also cause dermatitis and skin ulcers, and the EPA cautionsthat ingesting it, particularly through drinking water, can also lead to dermatitis. It claims it is reviewing the results of a long-term 2008 study that “suggested that chromium-6 may be a human carcinogen if ingested.” It is difficult to estimate the spill’s potential health hazards, especially because the amount of wastewater leaked through the broken pipe has not yet been disclosed.
Green group, Dem lawmaker sue Trump to stop border wall | TheHill: An environmental group is suing the Trump administration, saying its proposed wall along the southern border violates environmental law. The Center for Biological Diversity filed the lawsuit along with Rep. Raúl Graijalva (D-Ariz.), saying the Department of Homeland Security is obligated to draft a new environmental review to examine the impacts of the wall and other border enforcement activities. “Trump’s border wall will divide and destroy the incredible communities and wild landscapes along the border,” Kierán Suckling, the group’s executive director, said in a Wednesday statement.“Endangered species like jaguars and ocelots don’t observe international boundaries and should not be sacrificed for unnecessary border militarization,” he added. “American environmental laws are some of the oldest and strongest in the world, and they should apply to the borderlands just as they do everywhere else,” said Grijalva, who is co-chairman of the Congressional Progressive Caucus and the top Democrat in the House Natural Resources Committee. “Trump’s wall — and his fanatical approach to our southern border — will do little more than perpetuate human suffering while irrevocably damaging our public lands and the wildlife that depend on them.” The green group says its lawsuit is the first against the border wall since President Trump signed an executive order in January to start building it. The wall, along with dramatically increased border security, was a key campaign promise from Trump, who pledged that Mexico would pay for it. The Mexican government has thus far refused.
Now we know Scott Pruitt isn't serious about fighting smog - Since the 1970s, the EPA has issued “National Ambient Air Quality Standards” that limit the permissible concentration of ozone in the air we breathe. The Clean Air Act requires the agency to set these standards at a level that protects public health with an “adequate margin of safety.” And because scientists’ understanding of pollutants’ health effects can evolve in response to new studies, the act also mandates that the EPA review and, if necessary, revise its standards every five years to ensure that they remain sufficiently protective. In 2015, the EPA tightened the 75-parts-per-billion ozone limit that had been set by the Bush administration in 2008 to a 70-parts-per-billion standard. The agency projected that, in 2025 alone, its new standard would prevent up to several hundred premature deaths, along with hundreds of heart attacks and asthma-related emergency room visits.A number of industry groups and state attorneys general — including Pruitt, who was then Oklahoma’s chief lawyer — promptly sued in the D.C. Circuit Court of Appeals, claiming that the new limit was unnecessarily stringent and impossible for some parts of the country to achieve. At the same time, a coalition of environmental and public-health organizations filed its own challenge, arguing that the standard was too weak to protect the public from ozone-related harm. And then — after all parties had filed their written briefs but before the court held oral argument on the case — Donald Trump was elected president and appointed Pruitt to run EPA. That left Pruitt with two options: (1) allow the agency to continue defending a rule he had, in his prior job, sought to destroy, or (2) ask the court to put the case on hold to give EPA time to craft a weaker replacement standard.Unfortunately, Pruitt chose Option 2. At the close of last week, the EPA asked the D.C. Circuit to indefinitely postpone oral argument (which had been scheduled for April 19) while “officials appointed by the new Administration … determine whether the Agency should reconsider the rule or some part of it.” On Tuesday night, the court granted the EPA’s motion.
Akron, Cleveland, Youngstown air pollution still is among Ohio's worst - Three metropolitan areas in Northeast Ohio were among 72 areas in the U.S. that suffered through more than 100 days of unhealthy air pollution in 2015, according to a report released today by the Environment America Research & Policy Center. The Akron area paced Northeast Ohio with 188 days of moderate to unhealthy levels of soot particles in the air, followed by Cleveland-Elyria with 175, and Youngstown-Warren-Boardman with 142. Although the Cleveland area ranks among the worst particulate-polluted cities in the U.S., a different report released last year had a silver lining as Cleveland marked its lowest particulate pollution data in history. The dirtiest air in the state was in the Ohio River cities of Steubenville-Weirton, W.Va., with 196 days of moderate to unhealthy soot air. That ranked as the ninth-worst in the country. Nationwide, the sootiest city in 2015 was Hilo, Hawaii, with 293 unhealthy days due to pollution from volcanic activity. It was followed closely by Riverside-San Bernardino-Ontario, Calif., with 272 days, and Pittsburgh, Pa., with 220 days.Particulate matter are the microscopic pieces of soot, smoke, dirt, dust and liquid in the air that are byproducts of burning fossil fuels at factories, power plants and in automobiles. They are considered the most harmful form of air pollution because they are able to bypass the body's defenses and be inhaled into the lungs. Soot increases the risks of early death and serious health problems such as asthma and cardiovascular disease, according to the American Lung Association. Northeast Ohio showed lower danger levels of smog pollution, or ground-level ozone, in 2015, according to the report.
The Youngstown-Warren-Boardman metropolitan area topped the region with 71 days of moderate to unhealthy smog readings, followed by Cleveland-Elyria with 68, Canton-Massillon with 55, Ashtabula with 42, and Akron with 22. Cincinnati had the smoggiest air in the state with 88 days. Columbus had 61. Nationally, seven of the top 10 smoggiest metro areas were in California, paced by Riverside-San Bernardino-Ontario, Calif., with 233 unhealthy days. Residents of 34 metropolitan areas suffered through more than 100 smoggy days in 2015.
Mortality from Diesel Car Pollution in the UK -- On Tuesday 4th April Channel 4 News in the UK carried a report on the impact of pollution from diesel cars upon UK mortality. It was claimed that pollution from diesel cars accounted for 40,000 excess deaths in the UK each year: 29,000 down to particulate matter (PM2.5) and 11,000 down to nitrogen oxides (NOx). The source of the statistics was a report from the Royal College of Physicians called Every breath we take: the lifelong impact of air pollution published in 2016. I decided to delve into the statistics and conclude that PM2.5 pollution from diesel cars may reduce life expectancy by between 2 and 22 days. Fake science and fake news is getting us into deep trouble. Every now and then the news and the way it is reported gets me mad. On Tuesday 4th April the Channel 4 News kicked off with the nasty story about civilians being attacked with chemical weapons in Syria where at least 80 are now known to have died. The following story covered air pollution in UK cities, in particular NOx (nitrogen oxides) and soot emissions from the engines of diesel cars, that was reported to be prematurely killing 40,000 UK citizens per year! This post will review what C4 said, the incentives provided by the UK government for citizens to buy diesels and what the science actually tells us about the culpability of diesels emissions contributing to 40,000 excess deaths per annum.
Despite efforts, clean water is scarce in India’s industrial Gujarat state -- April is gearing up be an historic month for India’s contaminated waterways. In late February, the country’s Supreme Court mandated that all polluting industries must ensure that waste water discharges meet quality standards by installing effective primary effluent treatment facilities by March 31 2017. River and lake pollution is a major problem across much of India, and regulatory inertia toward industrial waste water has exacerbated the situation. The court’s decision represents a watershed moment in the governance of natural resources. The issue is particularly salient in the drought-prone industrial state of Gujarat. Numerous efforts over the years have not stemmed widespread discharge of untreated effluents, which has reduced the biodiversity and regenerative capacity of its water bodies. Coastal areas in this western state have seen a 15% decline in high-value fish stocks, and many rivers are facing extinction of fish communities. In 2011, Down to Earth magazine reported an almost 50% decline in fish catch from the Damanganga river in the Daman district, situated near the Vapi industrial cluster in south Gujarat.Where industrial waste water is being used for irrigation, for example on farms located near industrial clusters, there is increasing evidence of crop contamination with heavy metals. Groundwater is also polluted as a result of indiscriminate industrial dumping, causing freshwater scarcity in the region. In Gujarat, even regions with otherwise plentiful surface water sources are affected as creeks and rivers turn into black cesspools thanks to increasing municipal waste and insufficient sewage treatment plants. In 2015, the Central Pollution Control Board of India reported that 74% of the state’s 27 monitored rivers, whose tributaries flow along 38 prominent industrial townships and urban centres, including the cities of Ahmedabad, Surat and Vadodara, are severely polluted.
Coca-Cola produces over 100 billion disposable plastic bottles, Greenpeace says - Coca-Cola is failing to combat the environmental damage caused by it producing over 100 billion throwaway plastic bottles each year, a new analysis by Greenpeace has revealed. Last March the fizzy drinks company came under fire for refusing to disclose how much plastic it produces in a survey of the top six global drinks manufacturers, conducted by Greenpeace. However, the environment group now claims it has uncovered what it calls the company’s “eye-popping” use of throwaway plastic.The charity looked at Coca-Cola’s annual sales figures of certain product lines and the proportion that they have represented in the company’s overall packaging mix since 2012. Using this method, Greenpeace concluded that Coca-Cola sells in the region of 108 to 128 billion plastic bottles each year. According to the research, the world’s biggest soft drinks company’s single-use plastic bottles now account for almost 60 per cent of the company’s global packaging – a number that has increased by 12 per cent from 2008 to 2015. Coca-Cola in 2013 set a target for its recovery and recycling rates in developed countries to rise to 75 per cent by 2020. However Greenpeace’s analysis of Coca-Cola’s available data from 2013 to 2015 revealed that this rate is actually declining. Greenpeace says that the rate fell from 63 per cent in 2013, to 61 per cent in 2014 and 59 per cent in 2015. “The rate at which Coca-Cola is pumping out single-use plastic bottles is just breath-taking,”said Louise Edge, senior oceans campaigner at Greenpeace UK. “In the absence of full disclosure from Coke, we’ve calculated that it produces over 100 billion throwaway plastic bottles every year – an eye-popping 3,400 a second – while refusing to take responsibility for its role in the plastic pollution crisis facing our oceans. Our oceans simply can’t stomach any more of Coca-Cola’s plastic,” she added.
Online database maps ocean pollution and its effect on animals - There is no away. Garbage trucks do not make trash disappear. They simply move it to a place where it can be conveniently forgotten. Unfortunately, our trash-generating habits are catching up with us, as the planet cannot continue to absorb it so rapidly. Garbage is now visible everywhere, on land and in the sea, and it’s affecting animals, too.Three scientists from the Alfred-Wegener Institute in Germany have created an online database called LITTERBASE, with the goal of centralizing scientific research on global ocean pollution. They have taken the results of 1,267 studies and turned them into interactive maps and infographics that make the information more accessible and searchable for the public.One map (above) illustrates litter and microplastic distribution and another (below) reveals the different kinds of interactions that animals have with trash, i.e. entanglement, colonization, ingestion. There are also infographics that show the global composition of litter (plastic is biggest by far) and what amounts are found on the seafloor, in the water column, on beaches and the sea surface.As people become more aware of the immense threat of plastic pollution and demand change, policy makers are paying closer attention and starting to make important decisions about how to mitigate the problem. Hence, LITTERBASE’s focus on making valuable scientific information accessible and easy to understand: “Knowledge is vital to increase public awareness of this environmental problem and to take appropriate counter-measures. However, this knowledge is not readily accessible when it is hidden in scientific literature. In addition, the sheer wealth of information renders it increasingly intangible. “[LITTERBASE] forms the basis of continuously updated maps and figures for policy makers, authorities, scientists, media and the general public on the global amount, distribution and composition of marine litter and its impacts on aquatic life. The portal conveys a broad, fact-based understanding of this environmental problem.”
'Tragedy' on the Great Barrier Reef as coral bleaching devastates for second straight year: Little of Australia's Great Barrier Reef has now been left unscathed by coral bleaching.A recent aerial survey by scientists at the ARC Centre of Excellence for Coral Reef Studies has found the phenomenon leaving vast stretches of corals bone-white for the second year in a row. A global bleaching event in 2016 saw an average of 67 percent of corals lost in the north of the reef, and scientists hoped 2017 would offer the delicate ecosystem a reprieve. The survey showed the opposite. Instead, scientists found the middle reef worst hit, leaving only its southern reaches now untouched. This means two thirds of the reef's corals have now been impacted by coral bleaching in a zone stretching for 1,500 km (900 miles). Bleaching occurs when coral is exposed to stresses such as increased water temperature, causing it to expel the colour and nutrient-giving algae that lives in its tissue. This leaves the skeleton exposed and vulnerable, making the coral more susceptible to heat, disease and pollution. The 2016 coral bleaching event was caused by hotter water temperatures due to man-caused global warming and a strong 2015-2016 El Niño. The 2017 bleaching has occurred without a similar El Niño effect, but in the opinion of Terry Hughes, director of the ARC Centre of Excellence for Coral Reef Studies, the link between coral bleaching and El Niño has been "overstated." "Bleaching occurs because of extreme water temperatures, which can occur with or without El Niño," he said. Only two of the reef's four recorded bleaching events have occurred in El Niño years, in 1998 and 2016. "It really comes down to the local temperatures," he explained. "In the east coast of Australia, we've had a warm winter and a hot summer — March was record breaking along the east coast."
Great Barrier Reef at 'terminal stage': scientists despair at latest coral bleaching data - Back-to-back severe bleaching events have affected two-thirds of Australia’s Great Barrier Reef, new aerial surveys have found. The findings have caused alarm among scientists, who say the proximity of the 2016 and 2017 bleaching events is unprecedented for the reef, and will give damaged coral little chance to recover. Scientists with the Australian Research Council’s Centre of Excellence for Coral Reef Studies last week completed aerial surveys of the world’s largest living structure, scoring bleaching at 800 individual coral reefs across 8,000km. The results show the two consecutive mass bleaching events have affected a 1,500km stretch, leaving only the reef’s southern third unscathed. Where last year’s bleaching was concentrated in the reef’s northern third, the 2017 event spread further south, and was most intense in the middle section of the Great Barrier Reef. This year’s mass bleaching, second in severity only to 2016, has occurred even in the absence of an El Niño event. Mass bleaching – a phenomenon caused by global warming-induced rises to sea surface temperatures – has occurred on the reef four times in recorded history. Prof Terry Hughes, who led the surveys, said the length of time coral needed to recover – about 10 years for fast-growing types – raised serious concerns about the increasing frequency of mass bleaching events. “The significance of bleaching this year is that it’s back to back, so there’s been zero time for recovery,” Hughes told the Guardian. “It’s too early yet to tell what the full death toll will be from this year’s bleaching, but clearly it will extend 500km south of last year’s bleaching.” Last year, in the worst-affected areas to the reef’s north, roughly two-thirds of shallow-water corals were lost. Hughes has warned Australia now faces a closing window to save the reef by taking decisive action on climate change. The 2017 bleaching is likely to be compounded by other stresses on the reef, including the destructive crown-of-thorns starfish and poor water quality. The category-four tropical cyclone Debbie came too late and too far south for its cooling effect to alleviate bleaching.
By 2030, half the world’s oceans could be reeling from climate change, scientists say -- More than half the world’s oceans could suffer multiple symptoms of climate change over the next 15 years, including rising temperatures, acidification, lower oxygen levels and decreasing food supplies, new research suggests. By mid-century, without significant efforts to reduce warming, more than 80% could be ailing — and the fragile Arctic, already among the most rapidly warming parts of the planet, may be one of the regions most severely hit.The study, published Tuesday in the journal Nature Communications uses computer models to examine how oceans would fare over the next century under a business-as-usual trajectory and a more moderate scenario in which the mitigation efforts promised under the Paris Agreement come into effect. In both scenarios, large swaths of the ocean will be altered by climate change.Nearly all of the open sea is acidifying because of greenhouse gas emissions. But the researchers found that cutting greenhouse gas emissions could significantly delay future changes, giving marine organisms more time to migrate or adapt.“Things that live in the ocean are used to regular variability in their environments,” said lead study author Stephanie Henson, a scientist at the National Oceanography Center at the University of Southampton in Britain. “It gets warm in the summer and it gets cold in the winter, and species survive that kind of range in temperature or other conditions perfectly well.”But she noted a warming climate could eventually cause changes in the ocean that have never happened before — hotter temperatures, lower pH or less oxygen than have ever naturally occurred. When this happens, some organisms may no longer be able to tolerate the changed conditions and will be forced to migrate, evolve as a species or face possible extinction. There’s a large degree of uncertainty in the scientific community about how organisms will react. But there’s evidence to suggest major challenges ahead. Mass coral bleaching events in the past few years have been largely attributed to unusually warm water temperatures. Large-scale coral death on the Great Barrier Reef last year is thought to be strongly linked to climate change.
War in the Gulf (No, Not That Gulf!): The U.S. Navy’s Anti-Environmental Broadside in the Gulf of Alaska -- It’s war in the Gulf and the U.S. Navy is on hand to protect us. No, not that Gulf! I’m talking about the Gulf of Alaska and it’s actually mock war — if, that is, you don’t happen to be a fin whale or a wild salmon. This May, the Navy will again sail its warships into the Gulf of Alaska. There, they will engage in military maneuvers and possibly drop bombs, launch torpedoes and missiles, and engage in activities that stand a significant chance of poisoning those once-pristine waters, while it prepares for future battles elsewhere on the planet. Think of it as a war against wildlife, an assault on the environment and local coastal communities. And call it irony or call it American life in 2017, but the U.S. military’s Alaska Command has branded Emily Stolarcyk “a troublemaker” for insistently pointing this out. In a state where such a phrase is the equivalent of an obscenity, some have bluntly called her “anti-military.” The office of Republican Senator Lisa Murkowski has termed her a “rabble-rouser,” while a Kodiak Assembly member labeled some of what she’s been saying about the Navy “just silly.” As a resident of the tiny fishing town of Cordova, Alaska, the most radical rabble-rousing thing about Stolarcyk may be the passion with which she loves this region of the planet in all its majesty. It’s why she’s taken a fierce and unwavering stand for years now against the ongoing training exercises the Navy carries out in the Gulf of Alaska during one of the largest migrations of birds and marine life on Earth. These exercises, which inject tons of toxic materials into the Gulf and use significant explosive ordnance, are once again scheduled to take place just as Alaska’s commercial fishing season opens. Located in the state’s massive Chugach National Forest, coastal Cordova is nestled between the glacial-clad Chugach Mountains, Prince William Sound, and the Copper River. Fishing is the heart and soul of the town, as well as the foundation of its economy. A rough and tumble place, it regularly lands on lists of the top 10 American fishing ports, whether measured in pounds of fish caught annually or their value. “What we have in Cordova is one of the last wild places left in the world, and one of the last places on Earth where we still have healthy salmon runs,”
Greenhouse gas effect caused by mangrove forest conversion is quite significant -- Clear-cutting of tropical mangrove forests to create shrimp ponds and cattle pastures contributes significantly to the greenhouse gas effect, one of the leading causes of global warming, new research suggests. A seven-year study, led by Oregon State University and the Center for International Forestry Research, spanned five countries across the topics from Indonesia to the Dominican Republic. The researchers concluded that mangrove conversion to agricultural uses resulted in a land-use carbon footprint of 1,440 pounds of carbon dioxide released into the atmosphere for the production of every pound of beef; and 1,603 pounds of released carbon dioxide for every pound of shrimp."On a personal scale, this means a typical steak and shrimp cocktail dinner produced through mangrove conversion would burden the atmosphere with 1,795 pounds of carbon dioxide," said J. Boone Kauffman, an ecologist at Oregon State University who led the study."This is approximately the same amount of greenhouse gases produced by driving a fuel-efficient automobile from Los Angeles to New York City." The findings are published online today in the journal Frontiers in Ecology and the Environment. The results were derived by the researchers through development of a new measurement - the land-use carbon footprint - by measuring the amount of carbon stored in the intact mangrove forest, the greenhouse gas emissions rising from conversion, and the quantity of the shrimp or beef produced over the life of the land use.
March Was Second Hottest on Record Globally - The exceptional global heat of the past few years continued last month, with March ranking as the second hottest on record for the planet. It followed the second hottest February and third hottest January, showing just how much Earth has warmed from the continued buildup of heat-trapping greenhouse gases in the atmosphere. March was 2.02°F (1.12°C) warmer than the 1951-1980 average, according to NASA data released Friday. It ranks behind only March 2016, which was 2.29°F (1.27°C) above that same average. NASA’s global temperature records extend back 137 years.While global temperatures in 2016 received a small boost from an exceptionally strong El Niño — which features warmer-than normal ocean waters in the eastern tropical Pacific — the majority of the temperature rise is due to human-caused global warming. Current levels of carbon dioxide — the main greenhouse gas driving up global temperatures — are unprecedented in human history, and if they continued unabated, could reach a level not seen in the atmosphere in 50 million years, according to a recent study.
2017 hurricane forecasts based on chances El Niño will appear -- AccuWeather released its 2017 hurricane forecast Wednesday, which also called for a below-average storm season. Hurricane season runs June 1 through November.Both AccuWeather and CSU are basing their forecasts on early predictions that El Niño may reappear this year. The global climate pattern, marked by a warming of the equatorial Pacific Ocean, works against hurricanes. Its west-to-east wind pattern can shred storms as they develop in the Atlantic basin.Led by hurricane researcher Phil Klotzbach, CSU is predicting 11 named storms, four hurricanes and two major hurricanes of Category 3 strength or higher.AccuWeather’s forecast includes 10 named storms, five hurricanes and three major hurricanes.An average hurricane season based on 30 years of climatology consists of 12 named storms, six hurricanes and two major hurricanes.Klotzbach said early forecasts are always difficult, but that this year is especially tricky because of the El Niño wildcard.“April predictions are never super confident, but this year I’m a little less confident given the El Niño issue,” said Klotzbach, who released the report at the National Tropical Weather Conference in South Padre Island, Texas. “If El Niño does ramp up, that will make for a more quiet hurricane season.” Computer models have hinted at an El Niño since at least December, but its appearance would be unusual because it would be on the heels of the strong El Niño that occurred in 2015-2016.
It's like it never left: another El Nino may be on the way -- Less than a year after one of the strongest El Niños on record, forecasters see an increasing possibility that another will begin later this year.There is no word yet on how strong a new El Niño might be, but even a mild one could affect weather patterns around the world. Among the potential effects are wetter conditions across the southern United States, including Southern California; a drier Midwest; and drought in parts of Africa, Asia and South America.An El Niño can also influence global temperatures that are already rising because of greenhouse gas emissions. The strong El Niño of 2015-16 contributed to those years’ being the two warmest on record.An El Niño occurs when warm water in the equatorial Pacific shifts, creating an immense warm zone in the central and eastern Pacific. This adds heat and moisture to the air, releasing energy that affects the high-altitude winds known as jet streams that circle the planet.During the 2015-16 event, surface water temperatures in the Pacific were as much as 4 degrees Fahrenheit above normal. The warmth gradually dissipated and the ocean became cooler than normal, a condition known as La Niña, which persisted through much of last year.In their latest forecast, released Thursday, scientists from the National Oceanic and Atmospheric Administration and other organizations said that conditions were currently neutral, with normal sea-surface temperatures. But there is now about a 50 percent chance of El Niño in the second half of the year, they said. Mike Halpert, deputy director of NOAA’s Climate Prediction Center in College Park, Md., said that since climate scientists have been studying the phenomenon, a swing from El Niño to La Niña and back to El Niño in such a short time — about three years — has happened only once, in the 1960s.
Early heat wave bakes India, sign of what’s to come - Temperatures across northern India, including the capital New Delhi, are set to soar well above 100°F (37.8°C) through the weekend and into next week thanks to a pre-monsoon heat wave that has set in somewhat earlier than normal. Such heat waves are expected to become both more common and more intense as the world warms from the continued buildup of heat-trapping greenhouse gases, in India and elsewhere, posing a threat to public health. Studies have suggested that India will be a particular hotspot for populations stressed by the combination of extreme heat and humidity. Heat waves in recent years and the high number of deaths associated with them have served as wake-up calls for several Indian cities, prompting them to institute “heat-action plans” to better warn their citizens of the potential impacts of extreme heat. Heat waves typically set in across India during the period from April to June, before the cooling monsoon rains arrive. But the heat this year began a bit earlier than normal, with New Delhi recording it hottest March in seven years, Steven Bowen, director of impact forecasting at the reinsurance company Aon Benfield, said. A few spots in the western state of Gujarat had their hottest temperatures ever recorded in April, all at or above 112°F (44.6°C) on April 13.
Northern Hemisphere jet streams stumble as the world warms - Researchers have once again linked a sequence of devastating climate events to global warming fuelled by prodigal human use of fossil fuels. And this time, they believe they have identified the agency behind the blazing summers that have claimed lives and destroyed livelihoods repeatedly during this century.They argue in the journal Scientific Reports that human impact on the climate now reaches high into the stratosphere, to influence the behaviour patterns of the giant jet streams that carry heat and moisture around the Northern Hemisphere and keep the weather on the move.Warming driven by carbon dioxide emissions from car exhausts and power stations, they argue, tends to make these giant oscillating waves stall in their journey around the hemisphere – to create enduring episodes of high and low pressure and lingering hazards of drought and flood.“The unprecedented 2016 California drought, the 2011 US heatwave and 2010 Pakistan flood as well as the 2003 European hot spell all belong to a most worrying series of extremes,” says Michael Mann from Pennsylvania State University in the US. “The increased incidence of these events exceeds what we would expect from the direct effects of global warming alone, so there must be an additional climate change effect. In data from computer simulations as well as observations, we identify changes that favour unusually persistent, extreme meanders of the jet stream that support such extreme weather events. “Human activity has been suspected of contributing to this pattern before, but now we uncover a clear fingerprint of human activity.”
New study links carbon pollution to extreme weather - It was only a few weeks ago that I wrote about changes to extreme weather in a warming world. That prior article dealt with the increase of extreme precipitation events as the Earth warms. I termed the relationship a thermodynamic one; it was driven by local thermodynamic processes. But extreme weather can also occur because of large-scale changes to the atmosphere and oceans. This issue is the topic of another just-published paper that makes a convincing case for a whole new type of influence of humans on extreme weather. In a certain sense, this study confirms what was previously reported here and here. The Polar Jet separates two different temperature air regions. Typically, if you are north of the jet stream, you are in a colder zone whereas if you are south of the stream, it is warmer. Sometimes, the jet streams undulate as they encircle the planet and these undulations move. So, sometimes you happen to be in a position north and sometimes south of the stream, even though your location is fixed. The interface between warm and cold temperatures creates a lot of weather-pattern changes. In addition, if the undulations of the streams become fixed, it means your weather patterns will get stuck. For instance, you could find yourself in an upward undulation for weeks or longer and experience warm and potentially dry weather. Alternatively, if your location is north of a stuck jet undulation, you may experience persistent cold weather. Perhaps even more importantly, these stuck waves can become larger in their magnitude. Interestingly, this pattern of a stuck jet stream would occur when the number of undulations was between six and eight. When these circumstances all lined up, according to study co-author Stefan Rahmstorf: the same weather persists for weeks on end in one region, then sunny days can turn into a serious heat wave and drought, and lasting rains can lead to flooding And this is also how humans come into the story. As humans emit greenhouse gases, the planet warms. However, the warming is not uniform. The Arctic, for instance, is warming more rapidly than the rest of the planet. As a result, the temperature difference between the Arctic and the rest of the world is reducing. It is this temperature difference that maintains the jet stream patterns.
New study shows worrisome signs for Greenland ice - As humans put more heat-trapping gases into the atmosphere, like carbon dioxide, ice around the planet melts. This melting can be a problem, particularly if the melting ice starts its life on land. That’s because the melt water flows into the oceans, contributing to rising sea levels. Right now there are three main reasons that sea levels are rising. First, as ocean waters heat, they expand. Second, melting of ice in Antarctica flows into the ocean. Third, melting of ice on Greenland flows into the ocean. There is other melting, like mountain glaciers, but they are minor factors. Okay, so how much is melting of Greenland contributing to sea level rise? Estimates are that about 270 gigatons of water per year are melting. The melting of an ice sheet like that atop Greenland can occur from the surface as air temperatures and sunlight warm the upper layer of ice. It can also occur from the edges as ice shelves collapse and fall into the oceans in large chunks. For ice-shelf collapse, there’s a complex process that occurs at the bottom of the ice. Part of the ice is floating out over water and part of it is grounded on land. Warm water can get underneath the ice, lift it up, and melt the ice from below. The bedrock underneath the ice sheet is not flat or gradually changing. There are undulations that rise and fall and change the water-ice-ground connection. Topology called “retrograde” can make it easier for ice to melt and can increase the rate of ice shelf collapse. So, scientists have a real interest in learning about the topology of the land underneath ice sheets so they can better predict ice collapse and sea level rise. This brings us to a new study published by the American Geophysical Union in a journal called Geophysical Letters Review. The scientists use gravitometry to obtain a high-quality picture of the land underneath a very fast moving part of Greenland ice called the Jacobshavn Isbrae. Basically, the scientists flew gravity sensors across the ice at low altitudes and low velocity. The measurements of the gravity allowed them to attain the local height of the subsurface with greater accuracy than previously known. They found that the trough underneath the ice was not symmetrically shaped; the northern part of the trough was deeper than the southern part.
Another Record Low Month for Sea Ice -- Climate change continues its rapid reshaping of the Arctic as yet another month saw sea ice set a record-low mark. March data just released by the National Snow and Ice Data Center marks six months in a row of near-record or record-low sea ice for the region. It’s a story that’s been reported so often recently, it risks feeling almost normal. But make no mistake. There has never been a run like this in nearly 40 years of satellite data. Sea ice was missing from a 452,000-square-mile area it usually covers in March. That’s an area roughly the size of Sweden. Warm weather was yet again a major culprit in the case of the missing ice. Temperatures were up to 13°F above normal along Russia’s coastal seas. Incidentally, those areas — particularly the Barents Sea and Sea of Okhotsk — were home to some of the largest sea ice anomalies. Sea ice thickness is an even more important indicator for the melt season, which is underway after setting a record-low peak in early March (for the third year running, no less). Just as extent has set a record low in March, so too has thickness, according to data from the University of Washington’s Polar Science Center. NSIDC also reported that ice thinner than 6 feet “covers a much larger region and extends much farther north than it used to — well north of 80°N latitude on the Atlantic side of the Arctic.” Thin — and generally younger — sea ice is more susceptible to melt than its older, thicker counterpart. Yet young, thin ice is making up an increasingly large portion of Arctic ice pack as climate change whittles away at stores of old ice.
Permafrost bigger than Australia to melt if climate targets missed - scientists | Reuters: - If nations fail to achieve targets set by a global agreement on climate change, a chunk of frozen soil bigger than Australia would melt, sending planet-warming gases into the atmosphere, British scientists said Monday. Permafrost - soil that has been frozen for at least two years - is more sensitive and susceptible to global warming than previously thought, the scientists found, in the first study to quantify how much permafrost could be lost due to climate change. "The amount of permafrost that thaws under global warming is going to be very large, and this is the first time we've really put numbers on it," said Sarah Chadburn, the lead author of the study and a research fellow at the University of Exeter. Permafrost, mostly found in high-latitude regions like the Arctic, stores large quantities of carbon dioxide and methane, which are released into the atmosphere if the soil melts and decomposes, according to the researchers from Exeter, the University of Leeds, and Britain's official weather service, known as the Met Office. Their study, published in the journal Nature Climate Change, found that for every degree the world warms, 4 million sq km (1.5 million sq miles) of permafrost would be lost. An increase in global warming by 2 degrees Celsius would thaw more than 40 percent of the earth's permafrost, according to the study. The 2015 Paris Agreement on climate change aims to limit this, by using the cooperation of almost 200 countries to attempt to keep the global temperature increase "well below" 2 degrees Celsius above pre-industrial levels. But at the current level of warming, Chadburn said, "you could lose almost all of the permafrost".
Next 50 years will determine humanity's outcome "for 10,000 years" - The extent to which countries cut their emissions over the next 50 years will determine the conditions of people's life on earth for at least the next 10,000 years, the head of the Stockholm Resilience Centre at Stockholm University says. Continued use of oil, natural gas and coal at the current rate will likely raise global temperatures to 2 or 2.5 degrees Celsius above pre-industrial levels, creating conditions that would make life "difficult to manage", said Johan Rockström. Even more worryingly, this temperature rise may trigger natural events that would take the planet from 2 degrees Celsius to 6 degrees, which would be "catastrophic", he said. "What happens in the coming 50 years will certainly determine the outcome for humanity 10,000 years and beyond," Rockström said, adding that the last 50 years of human activity has "pushed us away from the stability we've been in for the past 12,000 years". Rockström is one of a group of scientists proposing that the world halves its carbon dioxide emissions every decade from 2020, by issuing penalties on carbon emitters. If temperatures approach 2 or 3 degrees Celsius, sea levels are likely to rise at least 7 or 8 meters (23-26 feet), and droughts and floods increase to a frequency and severity not seen before. There are also likely to be many more catastrophic weather events such as hurricanes and "massive" heat waves, he said. Tropical areas of the earth will "very rapidly" move north, and tropical diseases will spread to other latitudes. This temperature rise may also cause additional trigger events that will warm the planet further, he said. These include permafrost in Siberia thawing and releasing potent greenhouse gases, forests dying and releasing carbon dioxide, and ice melting which would leave the planet with a darker surface that absorbs the sun's heat instead of reflecting it. "These are the kind of domino effects that we are concerned about and where we could end up in a very dangerous situation," Rockström told the Thomson Reuters Foundation. If temperatures rise 4 degrees Celsius or more, it will be the first time this has happened in 4 million years - since before modern humans existed, he said.
CO2 levels heading back to days of dinosaurs --Scientists predict that continued burning of fossil fuels could return CO2 levels and temperatures to heights not seen in hundreds of millions of years. – If humans burn all the fossil fuels at their disposal – and this could happen in the next two centuries – researchers predict that the planetary atmosphere would match the one that witnessed the days of the dinosaurs at the dawn of the Jurassic period, around 200 million years ago.By the 23rd century, planetary temperatures would be as high as those at the end of the Silurian, 420 million years ago. In this baking environment, plants had yet to begin to colonize the land, and almost all life was concentrated in the oceans.This torrid forecast is not based on any one piece of research: it is the outcome of an analysis of 1,200 estimates of ancient atmospheres, based on evidence of fossilised plants and shells, over a timespan of almost half a billion years.The consequence is that, if humans exhaust the resources of coal, oil and natural gas, conditions will follow that have no precedent in 420 million years of evolution.And the agency at work is the ratio of carbon dioxide in the atmosphere, which has hovered at around 280 parts per million (ppm) for almost all human history. Carbon dioxide is a greenhouse gas that was once present in the atmosphere at far greater levels. Once humans started to burn coal and oil – based on plant material sequestered during the Carboniferous era – they also started to return ancient CO2 to the atmosphere, to create a heat trap. Carbon dioxide ratios have risen to more than 400 ppm, and planetary average temperatures have risen by almost 1 °C.The latest research, published in the journal Nature Communications, contains a grim warning for humankind – but it was driven at least in part by curiosity about the coupling of atmosphere and evolution during the emergence of complex life. “In this study, we compiled all the available published data from several different types of proxy to produce a continuous record of ancient CO2 levels.” During the half billion years, planetary temperatures alternated between extended cold snaps with low CO2 levels, and intense “greenhouse” temperatures at which CO2 levels rose to 3,000 ppm.
U.S. energy-related CO2 emissions fell 1.7% in 2016 - U.S. energy-related carbon dioxide (CO2) emissions in 2016 totaled 5,170 million metric tons (MMmt), 1.7% below their 2015 levels, after dropping 2.7% between 2014 and 2015. These recent decreases are consistent with a decade-long trend, with energy-related CO2 emissions 14% below the 2005 level in 2016. As noted in a recent article on energy use, both oil and natural gas consumption were higher in 2016 than in 2015, while coal consumption was significantly lower. Consistent with changes in fuel consumption, energy-related CO2 emissions in 2016 from petroleum and natural gas increased 1.1% and 0.9%, respectively, while coal-related emissions decreased 8.6%. There are several ways to assess CO2 emissions trends within the context of measures of economic activity. Carbon intensity is a measure that relates CO2 emissions to economic output. Early estimates indicate that gross domestic product (GDP) grew at a rate of 1.6% in 2016, down from 2.6% in 2015. Taken together with a 1.7% decline in energy-related CO2, the 1.6% estimate of economic growth implies a 3.3% decline in the carbon intensity of the U.S. economy. In 2015, carbon intensity of the economy had decreased by 5.3%. The U.S. transportation sector was the only consumption sector where CO2 emissions increased in 2016. CO2 emissions from the transportation sector increased by 1.9%, largely reflecting emissions from motor gasoline, which increased 1.8% in 2016. Emissions from the transportation sector surpassed those from the power sector during 2016—a trend that persists through at least 2040 in the Reference case projections in EIA’s 2017 Annual Energy Outlook. CO2 emissions from the electric power sector fell by 4.9% in 2016. A significant reduction in coal use for electricity generation was offset by increased generation from natural gas and renewable sources. Renewables do not emit CO2, and a shift towards natural gas from coal lowers CO2 because natural gas has lower emissions per unit of energy than coal and because natural gas generators typically use less energy than coal plants to generate each kilowatthour of electricity. Overall, the data indicate about a 5% decline in the carbon intensity of the power sector, a rate that was also realized in 2015. Since 1973, no two consecutive years have seen a decline of this magnitude, and only one other year (2009) has seen a similar decline.
Falling Growth Rate for Atmospheric CO2 - In January 2017, the trailing year average of the year-over-year change in atmospheric CO2 concentrations peaked at 3.47 parts per million, representing the fastest rate at which carbon dioxide was added to the Earth's atmosphere since Janauary 1960. Since then, that rate of change has fallen to 3.28 parts per million for data reported by the Mauna Loa Observatory through March 2017. The chart shows that change, along with how that correlates with periods where human activities provide some explanation for the rate at which the concentration of carbon dioxide in the Earth's air changes. Normally, when the year over year change in the concentration of atmospheric carbon dioxide falls, it represents a negative turning point for the Earth's economy. In this case however, it represents a more positive development: the dissipation of additional carbon dioxide that was put into the Earth's atmosphere by widespread wildfires in Indonesia back in 2015. That additional contribution peaked in the Mauna Loa Observatory's measurements of atmospheric CO2 concentration back in April 2016, so we should see a more rapid dropoff in the trailing year average for this data beginning next month. The decline will be similar to that observed in 1999 following 1997's larger Indonesian wildfires. The two events are connected by having occurred in especially strong El Niño years, which created conditions conducive to the outbreak of wildfires in Indonsesia. That's something that can then produce an outsized effect with respect to atmospheric CO2 levels because of that region's large deposits of carbon-rich peat. We should also note that the interpolated CO2 concentration data that provides the raw data for the trailing twelve month average values presented in the chart above has gone through a substantial revision, where most of the previously reported data for the period between May 1974 and December 2014 was modified sometime between 22 December 2016 and 5 April 2017.
The difficulty, and importance, of tracking US methane emissions - Atmospheric researchers say accurately measuring methane as required under the Paris climate agreement remains challenging and requires more frequent, regular sampling, as well as more satellite observations and international scientific cooperation. The latest findings contrast with a study from just last year that suggested U.S. methane emissions from oil and gas production had been increasing at a rate of 20 percent annually. New analyses of methane’s chemical signatures suggest the spike in global methane readings since 2007 comes from agriculture and other organic sources mainly in the tropics, rather than from oil and gas production. Global warming is speeding up the metabolism of microbes that produce methane as they digest dead plants. Wildfire emissions are also a factor, and, in the last few years, scientists have identified freshwater reservoirs as big methane sources; changing water levels flood large areas of vegetation, which in turn produce methane and other greenhouse gases as they decompose. (Scientists can distinguish these sources of methane emissions by studying the ratios of various isotopes associated with different sources.) The level of methane emissions from oil and gas production in the U.S. has implications for the Paris climate agreement’s target of limiting global warming to less than two degrees Celsius, as well as for the nation’s energy policies, which during the Trump administration are expected to favor continued use of fossil fuels, including natural gas. Domestic fracking and oil drilling may not be the main cause of the recent sharp increase in global methane levels, but, overall, they’re still a significant source. NOAA scientist Lori Bruhwiler, who led the international team of researchers in the new study, says they couldn’t find any evidence of a surge in methane from U.S. oil and gas. Pinpointing emission sources is important in the context of short-term climate goals. “The Paris Agreement asks us to look at emissions every five years. This study shows we need to measure much more frequently. If we want to keep close tabs on emissions within a five-year period, we have to invest in more sampling,” Bruhwiler says.
California isn’t accounting for this major emitter - California Gov. Jerry Brown’s commitment to fighting climate change seems real, and under his leadership, his state has engaged in numerous greenhouse-gas reduction plans. But there’s another issue that California needs to address, and that’s methane emissions from hydropower, particularly at Hoover Dam, the source of a significant portion of Los Angeles’ electricity. Twenty-five years ago, a small team of scientists in Brazil started measuring the methane produced at hydropower dams and reservoirs. Led by Philip Fearnside, the scientists found surprising results, indicating that hydropower dams and reservoirs in tropical countries like Brazil emit high levels of methane, sometimes equivalent to as much as a coal-fired power plant. Fearnside referred to these hydropower producers as “methane factories.” The studies have multiplied over the last two decades, and in 2006, the Intergovernmental Panel on Climate Change included calculations for measuring “Methane Emissions From Flooded Land” in making national greenhouse gas inventories. Since 2006, study after study has confirmed high levels of methane emissions from dams and reservoirs, and when the Environmental Protection Agency measured methane emissions from a reservoir in the Midwestern United States in 2016, the emissions detected were as high as those measured in the Brazilian hydropower plants. Further, another study, published in September 2016 by a team of Swiss scientists, used previous measurements at dams and reservoirs around the world to create a model that estimated methane emissions from nearly 1,500 hydropower plants and other dams and reservoirs across the planet. The study’s conclusions further rocked the climate change world: Climate change emissions from Hoover Dam and Lake Mead on the Colorado River near Las Vegas were found to be about equal to those of coal-fired power plants that produced the same amount of electricity.
Climate change could spur "brain drain" from developing world - researcher : - People who are driven to migrate by floods, droughts and other disasters linked to climate change come overwhelmingly from middle-income countries, not the poorest parts of the world, as is commonly believed, new research finds. And those who move abroad due to natural disasters are likely to be highly educated, suggesting climate change could exacerbate "brain drain" from developing countries, according to Linguere Mously Mbaye, a consultant for the African Development Bank. Very poor people cannot afford to migrate and the richest have other ways of coping such as accessing social services in the wake of disasters, she found. There are no reliable estimates of the number of people who have migrated or will do so due to environmental changes. But forecasts range from 25 million to 1 billion globally by 2050, according to the International Organization for Migration. The issue has garnered political attention amid a global refugee crisis, and led to growing calls to give people fleeing climate-linked disasters similar protections to political refugees under international law. But the reality of climate migration is often misunderstood, said Mbaye, whose research was recently published by online database IZA World of Labor. "People think we'll have a whole bunch of people coming to rich countries due to climate change, but they overestimate (this)," she told the Thomson Reuters Foundation. "If you look at the literature, it's not that straightforward."
US delays G7 climate statement | TheHill: Nations attending a G7 summit could not release a joint climate statement at the end of a meeting this week because the Trump administration is reviewing its policies. Energy Secretary Rick Perry attended the G7 energy summit in Rome this weekend. But Italian officials said the U.S. was not able to sign a joint declaration about shared economic goals. “The United States is in the process of reviewing many of its policies. This includes a review of policies relating to climate change and the Paris agreement," Italian Industry Minister Carlo Calenda said, Reuters reported Monday. “While this is under way, the United States reserves its position on these key priorities. ... It was not possible to sign a joint declaration since it would not cover the whole range of topics in the agenda.” The Energy Department did not immediately return a request for comment. Trump and his administration are reassessing the commitments former President Barack ObamaBarack Obama No Trump-Pope Francis meeting planned during trip to Italy: report US working alongside its Arab allies should promote moderate forms of Islam Court strikes down Bush-era pollution exemption for farms MORE made via international climate agreements during his administration, including the U.S.’s involvement in the landmark Paris climate deal reached in 2015. European officials told the Financial Times that they had hoped to include language related to the G7’s involvement in the Paris deal as part of the group’s joint declaration, but that the U.S. delegation objected.
U.S. scuppers G7 bid to find joint stance on energy and climate | Reuters: The U.S. administration of Donald Trump on Monday scuppered efforts by the Group of Seven industrialized countries to reach a common stance on energy when it asked for more time to work out its policies on climate change. Trump signed an order in March to undo climate change regulations drawn up under his predecessor Barack Obama, calling into question U.S. support for an international deal to fight global warming. The order's main target was Obama's Clean Power Plan, requiring states to slash carbon emissions from power plants - a key factor in U.S. ability to meet commitments under a climate change accord reached by nearly 200 countries in Paris in 2015. At a news conference wrapping up the G7 Energy meeting in Rome, Italian industry and energy minister Carlo Calenda said the United States was reviewing its strategy on climate change and the Paris Agreement. "While this is under way, the United States reserves its position on these key priorities," he said. "It was not possible to sign a joint declaration since it would not cover the whole range of topics in the agenda." Calenda, who chaired the G7 meeting, said all other European Union countries remained strongly committed to the Paris accord to curb greenhouse gas emissions. Speaking from Madrid later on Monday, Italian Prime Minister Paolo Gentiloni said Europe would "respect everyone's opinion on the matter but it would not accept making any steps backward with respect to the strategic choices made on climate change".Gentiloni is due to meet Trump at a G7 summit Italy will host in Sicily next month, with Italy anxious to get public backing from all leaders on the Paris accords. A source close to the G7 talks said the inability of U.S. Energy Secretary Rick Perry to commit showed the isolation of the United States at the ministerial meeting. "The U.S. also wanted to include references to coal and fossil fuels,"
Is it time to boycott America? - The catastrophic outcome of last November’s U.S. presidential election is now clear. With the exception of launching a nuclear war, it is hard to think of anything a U.S. president could do that is liable to harm more people than last month’s order canceling rules issued under former President Barack Obama to freeze the construction of new coal-fired power plants and shut down many old ones. Trump’s order followed his pledge to rescind stricter fuel-efficiency standards for cars and trucks, and his announcement that he wants to slash spending on climate science. Although Trump did not announce the withdrawal of the U.S. from the Paris climate agreement, his actions are likely to prove incompatible with the U.S. government’s pledge to reduce greenhouse gas emissions to 26 percent below 2005 levels by 2025. The Paris Agreement, signed by 195 countries, is our last real chance of keeping global warming to less than 2 degrees Celsius above pre-industrial levels. Even 2 degrees is too much for the inhabitants of low-lying island states. Many of these states were pleading for a 1.5-degree limit — without which some will disappear beneath the ocean. The Paris Agreement has no mechanism for sanctioning countries that fail to fulfill their pledges. The idea is that such countries will be “named and shamed.” Well before Trump was elected president, however, when the notorious video in which he boasted of groping women became public, it was obvious that he is immune to shame. What, then, can other countries, and individuals, whether in the U.S. or beyond its borders, do about the fact that Trump is jeopardizing the future of us all, for many generations to come? If the U.S. uses the cheapest available fuels to produce energy, irrespective of the harm that burning those fuels does to others, it is giving its companies an unfair advantage over those elsewhere that are making a good-faith effort to reduce their greenhouse-gas emissions and meet their Paris pledges. That should be enough for the World Trade Organization to allow other countries to erect trade barriers against U.S. goods. If, however, the WTO is not brave enough to take that step, the remedy is in the hands of foreign consumers, who should show the Trump administration what they think of its policies by choosing not to buy American. A boycott is a blunt instrument that would, regrettably, harm many U.S. workers who did not vote for Trump and are in no way responsible for his policies. But with so much at stake, and such limited means of changing Trump’s policies, what else is there to do?
EPA may seek to repeal Obama ozone pollution rule | TheHill: The Trump administration told an appeals court late Friday that it is considering whether it wants to repeal former President Obama’s 2015 ozone pollution rule. Justice Department attorneys are asking the Court of Appeals for the District of Columbia to delay oral arguments scheduled for later this month in a lawsuit challenging the Obama rule, while the Environmental Protection Agency (EPA) reviews the regulation and its position on it. “EPA intends to closely review the 2015 rule, and the prior positions taken by the agency with respect to the 2015 rule may not necessarily reflect its ultimate conclusions after that review is complete,” the attorneys wrote. Under the Obama administration, attorneys were defending the pollution rule against a coalition of business groups and conservative states, led by the U.S. Chamber of Commerce. The regulation lowered the allowable concentration of ozone to 70 parts per billion, from the previous 75. Ozone is a byproduct of pollutants from burning fossil fuels and a component in smog. It is linked to respiratory ailments like asthma attacks. The Trump administration has not stated where it stands on the rule. But it is widely opposed by Republicans, the business community and fossil fuel interests, since states would likely have to crack down on fossil fuels to meet the stricter air quality standards. EPA administrator Scott Pruitt was a leading challenger of the rule before his federal position, when he was Oklahoma’s attorney general.
EPA shutting down climate adaptation program | TheHill: The Environmental Protection Agency (EPA) is shutting down a program at its headquarters that helps states and localities adapt to the effects of climate change, such as rising sea levels. An EPA official said a team of four staffers within the EPA’s policy office who had worked on the adaptation responsibilities are being reassigned. But the official stressed that regional offices will continue their climate adaptation efforts. It’s part of the EPA’s shift away from climate change programs, which President Trump previewed last month in his first budget request. Trump proposed eliminating major climate programs as part of a 31 percent cut to the EPA’s budget, though those changes would not be effective until later this year, if Congress approved them. Mick Mulvaney, director of the White House’s Office of Management and Budget, told reporters last month that Trump does not believe climate is a worthwhile cause for federal spending. “I think the president was fairly straightforward — we’re not spending money on that anymore; we consider that to be a waste of your money to go out and do that,” he said. Bloomberg BNA first reported the news about shutting down the EPA’s adaptation programs Friday. The official said regional offices in areas especially susceptible to the effects of climate change, like the South, have always taken the lead on adaptation and will continue to do so.
The Trump administration isn’t finished rolling back environmental regulations - The Trump administration is asking a federal court to delay moving forward on three Obama-era environmental regulations while the administration decides if and how it wants to repeal or rework those rules. On Friday, the administration asked the U.S. Court of Appeals for the District of Columbia Circuit to delay arguments on both the Obama-administration’s 2015 ozone rule and 2016 methane regulations for new oil and gas operations.The Trump administration already promised to review the 2016 methane rule, which would have required new oil and gas operations to check for and repair methane leaks, in its executive order released in late March. But on Friday, the administration also signaled that it might be reviewing the Obama administration’s 2015 rule that lowered allowable concentration of ozone from 75 parts per billion to 70 parts per billion, and asked the D.C. Circuit to delay oral arguments in a lawsuit challenging the rule, which were scheduled for later this month. Both the methane rule and the ozone rule garnered criticism from Republican lawmakers as well as the fossil fuel industry, which argued that the rules would require fossil fuel producers to cut down on production in order to meet stricter air quality and production standards. The EPA, under Administrator Scott Pruitt, already announced that it would no longer ask existing oil and gas operations to report methane emissions data to the agency after industry stakeholders petitioned Pruitt to reverse the Obama-era data gathering. The Trump administration has also asked the D.C. Circuit Court not to issue a ruling on a pending case regarding the Clean Power Plan, the Obama-administration’s policy regulating carbon emissions from power plants. Twenty-six states had filed a lawsuit against the plan, which has been under a temporary stay from the Supreme Court while the lawsuit made its way through lower appeals courts. The D.C. Circuit Court had already heard arguments from both sides and had been prepared to issue a ruling any day — but given the fact that the Trump administration has directed the EPA to review and rewrite the rule, the Justice Department is now arguing that the EPA should have the opportunity to review the rule before a court ruling is issued.
The Trump transition team seems to have asked NASA about mining on the moon - Donald Trump's transition team asked NASA for details on its for-profit partnerships, and sought information about the potential to mine resources on the moon, according to a trove of internal documents obtained by Motherboard. According to the documents, the questions from Trump's Agency Review Team (ART) largely focused on the interests of commercial space companies and NASA's potential help them turn profits. The documents also included a slideshow with details about the potential for mining operations on the moon. One of the challenges of lunar mining, NASA pointed out, is that it's difficult to locate deposits of useful minerals from space. A ground-based prospecting mission would likely be necessary. NASA explained that the US, along with Taiwan, is developing a concept for a lunar "prospector" mission. There are a number of other resources on the moon, including rare earth metals, that could be of interest to commercial companies. But, as Motherboard points out, strip-mining the moon for profit could put the US at risk of violating the 1967 Outer Space Treaty, which forbids unilateral private use of space resources. Whether Trump will actually push for mining on the moon remains to be seen, of course. But the arm of NASA that deals with human spaceflight is one of the few scientific sectors of the non-military government that isn't facing major cuts in the White House's budget proposal.
'First Protest in Space' Slams Trump With Astronaut's Famous Quote -- As President Donald Trump takes aim at Earth science with his proposed NASA cuts , the Autonomous Space Agency Network (ASAN) has launched the "first protest in space." The independent space agency, which advocates for DIY space exploration, launched a weather balloon 90,000 feet above Earth carrying a rude tweet directed at Trump's frequently used Twitter handle, literally taking the act of protesting the president to new heights: "@realDonaldTrump LOOK AT THAT, YOU SON OF A BITCH" The balloon lifted off on April 12, or Yuri's Night, named for Yuri Gagarin, the first human to launch into space. The missive was in reference to the words of the late Edgar Mitchell, NASA astronaut and sixth person to walk on the moon, who once said about his humbling experience in space: "From out there on the Moon, international politics look so petty. You want to grab a politician by the scruff of the neck and drag him a quarter of a million miles out and say, 'Look at that, you son of a bitch.'" ASAN's feat was also in solidarity with the upcoming March for Science on April 22, Earth Day. In case you are wondering, it does not actually cost that much to send a tweet to space. The whole operation only set back ASAN $750 for two helium tanks, 160 cubic feet of helium, a camera and a balloon. Trump's reaction, if he were to see the suborbital slam, is sure to be priceless. Watch the whole execution here:
EPA Chief: U.S. Should 'Exit' Paris Climate Deal - The Trump administration has already taken steps to undo landmark climate regulations, such as the executive order President Donald Trump signed last month that called for repealing former President Barack Obama's Clean Power Plan, which requires states to slash emissions and was a central component of the U.S.'s plan to meet its Paris goals. Pruitt said adhering to the global climate treaty would cost American jobs, a claim which environmentalists—and, increasingly, even fossil fuel companies —say is wrong. Nathaniel Keohane, the Environmental Defense Fund's vice president on global climate, told InsideClimate News that "[p]ulling out of the Paris climate accord would damage the U.S. more than it damages the Paris agreement or climate action globally." "American leadership on climate is the key to attracting jobs and investment in the industries and sectors that will define the 21st century," Keohane said. Tiernen Sittenfeld, senior vice president for government affairs for the League of Conservation Voters, added, "Even for Scott Pruitt, this is outrageous and beyond the pale." "The U.S. helped to lead the world on this treaty and it's clear that other countries are moving ahead because they see the incredible opportunities it offers," Sittenfeld said. Kim Glas, executive director of the BlueGreen Alliance, a coalition of labor and environmental groups, also said Thursday, "Administrator Pruitt's statements are unsurprising. He just can't seem to grasp what the vast majority of Americans and scientists have already figured out: climate change is real, it is happening now and human activities are causing it." The Paris agreement "is a good deal for America," Glas said. "It will help ensure that America leads the way globally in creating quality jobs designing, manufacturing, and installing the clean energy technologies needed to reduce the carbon pollution that is driving climate change."
EPA Head Scott Pruitt Requests a 24/7 Security Detail as He Prepares to Gut the Agency - Environmental Protection Agency head Scott Pruitt, who wants to ensure the US doesn’t invest a single dollar in protecting humanity from climate change, nonetheless wants to use the agency’s limited funds to protect himself from other humans. Last month, President Trump released a draft federal spending budget requesting $2.3 billion in cuts to the EPA. Under Trump’s budget, climate change research would be obliterated, funding for the clean up of hazardous sites would be slashed by 45 percent, environmental justice programs would be phased out, and a projected 3,200 jobs would be eliminated. But as the New York Times reports, there is one EPA activity that could see an uptick in funding: personal protection for its fearless leader.One enforcement activity that could be set for an increase: security for Scott Pruitt, the new E.P.A. administrator. The agency has asked for 10 additional full-time staff members for a round-the-clock security detail — a first for an E.P.A. chief, who usually has only door-to-door protection — and more than doubling the agency’s infrastructure and operations staff.According to E.E. News, former EPA head Gina McCarthy’s security detail normally consisted of six to eight personnel who assisted only during international travel and public appearances. But as Myron Ebell, who headed Trump’s transition team for the EPA, explained to E.E. News, Pruitt sees the extra protection as necessary not just because of protestors, but of his own staffers. “I think it’s prudent given the continuing activities by the left to foment hatred, and the reported hostility within the agency from some unprofessional activists,” Ebell told the site.
Free Your Mind. Let the EPA Go, and Good Riddance. -- Free your mind, if it needs freeing, from stale faith in the regulatory ideology. At best (and I stress, only at best; most positions are worse) to still repose faith in the regulatory model like that incarnated in the EPA assumes the primacy of corporate rule and corporate poisonism, and indeed the continued dominance of productionism and consumptionism. This faith merely still clings to the fantasy that there can be meaningful “management” of such things as cancer agents, according to technocratic “risk-benefit” equations and other numerological “assessments”, and that certain “tolerance” levels for cancer, birth defects, etc. can be established, along with a certain baseline for how much of the overall ecology can be sacrificed and destroyed. But in reality the ecology is one irreducible whole, and you can’t sacrifice any significant part of it without severely harming the whole. And this is emblematic of the pathology of the whole EPA-type mindset, that in all these ways humanity and the Earth can “co-exist” (to use the biotech sector’s preferred term) with corporate psychopathy. The EPA of course is a capitalist organization and was designed to augment capitalist action, never to hinder it. So faith in the EPA is identical to faith in the essential goodness of corporate rule. It’s a transmuted form of this faith, but it remains the same faith. The EPA has compiled a history of nearly fifty years, while the paradigm of “regulation” it represents goes back much further. Those who know the history (E. Vallianatos’ Poison Spring is a good place to start) know why the EPA was established in the first place (under duress and largely for political misdirection purposes), how it was originally staffed (largely by ex-USDA cadres bringing the desired pro-corporate ideology, lest the few “idealists” get the wrong idea), how it commenced action (helping to cover up PCB and dioxin pollution and running political interference on behalf of the polluters), and how throughout its subsequent history it has consistently done all it can to assist the corporate poisoners, cover up the evidence of corporate atrocities, and discourage grassroots political action among the people. That’s the EPA’s record. But the pro-regulation cultists remain willfully ignorant of this history, just like every kind of fundamentalist dodges knowledge of every kind of history – because the history always disproves their faith.
Legendary Climate Scientist Likes a GOP Proposal on Global Warming -- Pres. Donald Trump issued a major executive order last week that, if successful, could undercut the nation’s fight against global warming. In particular, the order kicks off an attempt to dismantle the Clean Power Plan, which regulates carbon emissions from the power sector. While Trump’s move represents a big blow to U.S. climate efforts, the renowned scientist James Hansen sees a different—and, he argues, better—way forward on global warming. “The problem is the Clean Power Plan is really not that effective,” says Hansen, former director of NASA Goddard Institute for Space Studies and adjunct professor at Columbia University’s Earth Institute, who brought climate change to the U.S. public’s attention in his famed 1988 congressional testimony. “It’s a tragedy that [the Obama administration] continued to pursue a regulatory approach.” The solution Hansen believes will work best is one recently advocated by a group of Republican statesmen: a “carbon fee and dividend.” Although it is not a tax, the approach would put a price on carbon—a step Hansen thinks is absolutely essential for cutting back greenhouse gas emissions. Hansen, who has been called the father of climate change awareness, recently spoke about the issue along with Earth Institute director Jeffrey Sachs, a leading expert on economic development, at the New York Society for Ethical Culture. Scientific American followed up with Hansen, also director of the Climate Science, Awareness and Solutions program at Columbia, to discuss this strategy and how he thinks it will help the U.S. turn the tide on global warming. [An edited transcript of the interview follows.]
Scott Pruitt Faces Anger From Right Over E.P.A. Finding He Won’t Fight - When President Trump chose the Oklahoma attorney general, Scott Pruitt, to lead the Environmental Protection Agency, his mission was clear: Carry out Mr. Trump’s campaign vows to radically reduce the size and scope of the agency and take apart President Barack Obama’s ambitious climate change policies.In his first weeks on the job, Mr. Pruitt drew glowing praise from foes of Mr. Obama’s agenda against global warming, as he moved to roll back its centerpiece, known as the Clean Power Plan, and expressed agreement with those who said the E.P.A. should be eliminated. His actions and statements have galvanized protests from environmentalists and others on the left. But now a growing chorus of critics on the other end of the political spectrum say Mr. Pruitt has not gone far enough. In particular, they are angry that he has refused to challenge a landmark agency determination known as the endangerment finding, which provides the legal basis for Mr. Obama’s Clean Power Plan and other global warming policies. These critics say that Mr. Pruitt is hacking only at the branches of current climate policy. They want him to pull it out by the roots. “The endangerment finding must be redone, or all of this is for naught,” said Steven J. Milloy, who runs a website, JunkScience.com, aimed at debunking the established science of human-caused climate change, and who worked on the Trump administration’s E.P.A. transition team. “If you get rid of the endangerment finding, the rest of the climate regulations just sweep themselves away. But if they don’t get rid of it, the environmentalists can sue, and then there’s going to have to be a Trump Clean Power Plan,” said Mr. Milloy, who is also a former policy director for Murray Energy, a major coal company whose chief executive, Robert E. Murray, was a backer of Mr. Trump’s campaign and his push to undo climate change policy.
Automakers hope to reach U.S. deal on 2025 vehicle emissions | Reuters: A trade group for automakers said on Tuesday it hopes to reach a deal with California and the Trump administration over vehicle fuel efficiency standards. Mitch Bainwol, chief executive of the Alliance of Automobile Manufacturers, a trade group representing General Motors, Toyota, and others, said at a forum ahead of the New York auto show that automakers were not seeking a rollback of existing standards. “What we want is rational, predictable, stable policy," he said. Automakers hope "that over time responsible parties will come together and have an honest conversation about what the data is." In March, President Donald Trump ordered a review of U.S. vehicle fuel-efficiency standards from 2022-2025 put in place by the Obama administration, saying they were too tough on the auto industry. But California opposed weakening the rules, threatened to pursue tougher standards unilaterally and could mount a legal challenge. New York has also threatened a fight. The White House plans to hold negotiations with car companies and California. A deal would remove uncertainty for automakers, who need years of lead time to engineer future models and want uniform rules across all 50 states. The Obama administration's rules, negotiated with automakers in 2011, were aimed at doubling average fleet-wide fuel efficiency to 54.5 miles per gallon by 2025. Under the 2011 deal, the 2022-2025 model year rules must be finalized by April 2018.
Your fridge may get Washington's next regulatory-rollback -- Appliance makers want Congress to ease energy efficiency standards that they say are unrealistic and costly for air conditioners, refrigerators and other equipment -- even allowing for future rollbacks. The industry is lobbying to amend a decades old conservation law that sets minimum efficiency standards for many household and commercial appliances and bars them from being weakened. Manufacturers say regulators should be required to negotiate requirements with them and that some set by the Obama administration are too costly and will drive up prices. "We thought they went too far in pushing the efficiency too high and not looking at the economic costs for the consumers," said Stephen Yurek, president of the Air-Conditioning, Heating, and Refrigeration Institute, which represents companies such as Ingersoll-Rand Plc, which makes air conditioners and heaters. "I think we are going to see a dial back. There is a different philosophy and that is very clear." The effort on appliance efficiency, which has long enjoyed bipartisan support, is the latest example of industry working with Republicans to try to rewrite or rescind one of the nation’s bedrock environmental laws. The Clean Air Act, endangered species law, and the National Environmental Policy Act are all facing pressure from business sectors for amendments or updates. The move has also been fueled by President Donald Trump’s order to federal agencies to identify regulations to repeal. The Energy Department requirements set detailed prescriptions for a wide range of appliances, from specifying the types of doors and insulation for commercial walk-in freezers to how much electricity the clock on a microwave can use. But they add up to significant energy savings, environmentalists say.
California’s cap-and-trade program survives legal battle - A cornerstone of California’s battle against climate change was upheld on Thursday by a state appeals court that ruled the cap-and-trade program does not constitute an unconstitutional tax, as some business groups had claimed. The court case began four years ago and has been a cloud over the state’s efforts to fight global warming. California has pointed to its cap-and-trade program as an international example of how financial incentives can be used to reduce emissions. Nine states on the East Coast have a similar system, but it applies only to power plants, while California’s program affects nearly its entire economy. The program has also been an important source of revenue for the state, with billions of dollars generated by auctioning off pollution permits. The money is required to be used on projects that reduce emissions, and Gov. Jerry Brown is counting on some of it to help finance the bullet train from Los Angeles to San Francisco.
Rising solar generation in California coincides with negative wholesale electricity prices - On March 11, utility-scale solar generation in the territory of the California Independent System Operator (CAISO) accounted for almost 40% of net grid power produced during the hours of 11:00 a.m. to 2:00 p.m. This is the first time CAISO has achieved these levels, reflecting an almost 50% growth in utility-scale solar photovoltaic installed capacity in 2016. The large and growing amount of solar generation has occasionally driven power prices on the CAISO power exchange during late winter and early spring daylight hours to very low, and sometimes negative, prices. However, consumers in California continue to pay average retail electricity prices that are among the highest in the nation. Utility-scale solar generation includes solar photovoltaic (PV) systems as well as a few solar thermal plants. Additional generation from customer-sited solar generators installed in California (such as those on residential and commercial rooftops) further adds to the total solar share of mid-day electricity generation, while displacing demand for power from the grid. As of December 2016, utilities in CAISO reported 5.4 gigawatts (GW) of net-metered distributed solar capacity. (EIA reports installed electric capacity data in alternating current terms, which are typically 10% to 30% lower than the direct current capacities sometimes reported for PV systems.) EIA estimates that this capacity would have generated approximately 4 million kilowatthours (kWh) during the peak solar hours on March 11. This level of electricity reduced the metered demand on the grid by about the same amount, suggesting that the total solar share of gross demand probably exceeded 50% during the mid-day hours. Total solar capacity in California (including both distributed and utility-scale systems) has grown from less than 1 GW in 2007 to nearly 14 GW by the end of 2016. Solar generation follows daily and seasonal sunlight patterns, peaking during the long summer days and reaching its annual minimum during the winter. Electricity demand in California also tends to peak during the summer months. However, in late winter and early spring, demand is at its annual minimum, but solar output, while not at its highest, is increasing as the days grow longer and the sun gets higher in the sky.
The dream of 100% renewables assessed by Heard et al -- Before the world can transition from fossil fuels to 100% renewables it must come up with a transition plan that has some realistic chance of working. So far Energy Matters has evaluated a few such plans, including ADEME and the Centre for Alternative Technology and most recently Lappenranta, and has concluded that none of them does. There are, however, a large number we haven’t looked at. Now a recent study evaluates 24 of these plans and reaches the same conclusions. It finds that none of them meets the criteria necessary to provide a reasonable guarantee of success, or even comes close, and questions whether a 100% renewable electricity system is in fact feasible. The study in question is the 2017 paper entitled Burden of proof: A comprehensive review of the feasibility of 100% renewable-electricity systems by Heard, Brook, Wigley and Bradshaw (hereafter Heard et al., link to the full paper kindly supplied by Ben Heard.) And the most remarkable thing about the study isn’t what it says but who wrote it. The authors are not, as one might expect, climate change skeptics, but firm believers in the threat that climate change allegedly poses and the need to do something constructive about it, as the following statement attests: With the fate of modern society and global environments at stake, effective action on climate change demands credible, evidence-based plans ….. The authors are also not nonentities. Barry Brook is a leading environmental scientist with hundreds of publications to his credit, Tom Wigley is “one of the world’s foremost experts on climate change and one of the most highly cited scientists in the discipline” and Corey Bradshaw has co-authored books with Paul Ehrlich. So why was the study done? It’s always dangerous to ascribe motives to others and in this case I’m not going to. But it is noteworthy that Heard et al. reads more like an indictment than a review: Of the 24 studies we assessed, the maximum score accrued was four out of a possible seven …. Four scenarios scored zero (i.e., they did not meet a single feasibility criterion). Eight of the 24 scenarios did not do any form of integrated simulation to verify the reliability of the proposed renewable electricity system. Twelve of the 24 relied on unrealistic energy-demand scenarios ….. Only four of the studies articulated the necessary transmission requirements for the system to operate, and only two …. addressed how ancillary services might be maintained in modified electricity-supply systems. No studies addressed the distribution-level infrastructure that would be required to accommodate increased embedded generation.
The De-Electrification of the U.S. Economy - For more than a century after the advent of commercial electrical power in the late 1800s, electricity use in the U.S. rose and rose and rose. Sure, there were pauses during recessions, but the general trajectory was up. Until 2007, it appears: The initial drop in electricity use in 2008 and 2009 could be attributed partly to the economic downturn. But the economy grew again in 2010, and every year since. Electricity use in the U.S., meanwhile, is still below its 2007 level, and seemingly flatlining. The change is even more dramatic if you measure on a per-capita basis: Per-capita electricity use has fallen for six years in a row. We're now back to the levels of the mid-1990s, and seemingly headed lower. This is a really big deal! For one thing, it's yet another explanation -- along with tighter federal emissions rules, the natural gas fracking boom, and the rise of solar and wind power -- for why the past few years have been so tough on coal miners. It means that even a big pro-coal policy shift from Washington may not result in higher demand for thermal coal. For another, it seems to settle a turn-of-the-millennium debate about the electricity demands of the digital economy. Businessman and technology analyst Mark P. Mills, now a senior fellow at the right-leaning Manhattan Institute, kicked things off in 1999 with a report stating that computers and the internet were already responsible for 13 percent of U.S. electricity demand and would be consuming 30 percent to 50 percent within two decades. A group of scientists at Lawrence Berkeley National Laboratory who studied energy use were dubious of these claims, and published a series of reports calling them into question. One 2003 paper concluded that direct power use by computers and other office and network equipment accounted for just 2 percent of electricity consumption in 1999 -- 3 percent if you counted the energy used in manufacturing them. Since then, the digital takeover of the economy has continued apace. But it hasn't translated into an explosion in electricity demand. Instead, per-capita electricity use more or less stopped growing after then. Now it is falling.
What Do You Do With Half a Million Rigged VWs? - Volkswagen AG is making progress settling U.S. legal claims from its emission-cheating scandal, but one challenge looms unresolved: What to do with the hundreds of thousands of diesel cars it is being forced to buy back? The German automaker agreed last year to buy back about 500,000 diesels that it rigged to pass U.S. emissions tests if it can’t figure out a way to fix them. Except for a handful of 2015 models, VW dealers can’t sell the cars until — and unless — the company comes up with repairs to satisfy regulators. The costs for buying back or scrapping tainted diesel cars are part of the 22.6 billion euros ($23.9 billion) VW earmarked for expenses related to the scandal so far. VW Chief Executive Officer Matthias Mueller told journalists last month he's not aware of any further significant charges. In the meantime, the company is hauling them to storage lots, such as ones at an abandoned NFL stadium outside Detroit, the Port of Baltimore and a decommissioned Air Force base in California. “This could get drawn out for a long time,” said Dave Sullivan, an analyst with industry consulting firm AutoPacific Inc. “The question is how long will it take for VW to say ‘I give up?’” The buyback — a costly logistical headache — is part of the penance for Volkswagen’s years-long scheme to circumvent U.S. emissions regulations. The automaker sold half a million diesel vehicles with software that activated stronger emissions controls during government lab tests but were inactive in the real world, when nitrogen oxide emissions surged to as much as 40 percent above legal limits. Six VW executives have been indicted and the company has set aside more than $10 billion to buy back vehicles in the U.S. About 15,000 VW owners are showing up at dealerships each week now to sell their Jettas, Golfs, Passats, Beetles and Audi A3s to the carmaker in exchange for payments of as much as $40,000. The agreement dictates that the cars can’t be put back on the road without being brought into environmental compliance, something that is almost certainly impractical for most of them. Even exporting them to countries with lesser emissions standards is forbidden.
If you thought lithium was exciting, try cobalt: Andy Home | Reuters: Lithium was the super-hot metals story of 2016. A spectacular price rally propelled lithium out of the metallic shadows onto the global investment stage. This year it is the turn of cobalt. The price of cobalt traded on the London Metal Exchange (LME) has exploded from $33,000 per tonne to $55,000 since the start of January. This time last year, the price was bombed out at multi-year lows below $25,000 per tonne. As with lithium, cobalt's story is all about batteries and the green technology revolution. The lithium-cobalt battery is already standard in many electronic applications and both metals are expected to see usage accelerate thanks to the rapidly evolving electric vehicle and grid storage sectors. And as with lithium, stellar demand projections have led to increased scrutiny of the supply chain. Which is where cobalt may turn out to be even more of a rollercoaster market than lithium.The scale and speed of the cobalt price surge over the last few months reflects a scramble for units. The cobalt market has been transitioning over the last year or so from a state of oversupply to one of shortfall, with most analysts forecasting a supply deficit in 2017. That expectation coupled with all the excitement surrounding the lithium story seems to have led to several high-profile funds such as Switzerland's Pala Investments and China's Shanghai Chaos Investment buying up physical stocks of cobalt. Which in turn seems to have triggered panic buying by cobalt users along the manufacturing chain. The cumulative effect has been a near straight-line price rally since the fourth quarter of last year.
How one power plant is turning away from coal to embrace wood pellets and straw: Something of a biomass revolution is taking place in Denmark. Earlier this year Danish energy company, DONG Energy, announced it would stop "all use of coal" by 2023 and look to focus on sustainable biomass instead. At the Avedøre Power Station, on the outskirts of Copenhagen, a transformation has taken place: between 2015 and 2016 Avedøre 1, one of its power station units, was converted to use wood pellets rather than coal. The Avedøre 2 unit uses natural gas, oil, straw and wood pellets. DONG Energy says the biomass system has a capacity of 45 megawatts and is able to take 25 tonnes of straw every hour. Today, according to DONG Energy, the Avedøre facility is "able to run 100 percent on sustainable biomass." The impact on the environment is being keenly felt. "When we look at the life cycle assessment of the green energy that we are using, the wood pellets and the straw, we are reducing the CO2 emissions by approximately 90 percent compared to when we were using coal," Ole Thomsen, senior vice president at Avedøre Power Station, told CNBC's Sustainable Energy. Thomsen went on to explain that most of the biomass being used was sourced from Baltic countries that are home to a big timber industry. While the environmental benefits may be clear, cost was still something to be considered, although legislation is helping to smooth the transition. "Coal is still a cheaper fuel than wood pellets," Thomsen said. "But when you're using coal for heat production there is a CO2 tax on it, when you're using wood pellets for heat production there is no CO2 tax."
EPA’s Pruitt to coal miners: ‘Regulatory assault is over’ | TheHill: The head of the Environmental Protection Agency (EPA) visited a coal mine Thursday, where he declared that the Trump administration is ending the “regulatory assault” against fossil fuels. Pruitt spoke briefly at a portal building for the Harvey Mine in southwestern Pennsylvania, owned by Consol Energy Inc., before touring a piece of North America’s largest underground coal-mining complex in operation. He slammed the Obama administration’s environmental policies, calling them a “war on coal,” and accused President Trump’s predecessor of falsely forcing Americans to choose between environmental protection and economic growth, according to the Pittsburgh Tribune-Review. “It's sad that a regulatory body, the federal government of the United States, would declare a war on our energy industry,” Pruitt told a few dozen miners. “The regulatory assault is over,” he continued, eliciting applause according to the Associated Press. “We’re going to partner together with you.” Pruitt’s speech is part of a new public relations campaign the EPA is launching, gathering together the Trump administration’s EPA priorities into an effort called “Back 2 Basics.” It is meant to bring the EPA more in line with what the administration says is the agency’s original purpose: returning authority to states and focusing on regulating air and water pollutants that are not greenhouse gases, as well as repealing major Obama-era regulations. Pruitt's appearance comes two weeks after Trump signed a wide-ranging executive order directing the EPA to start the process of rolling back President Obama’s climate regulations including the Clean Power Plan, a rule limiting greenhouse gas emissions from power plants that would likely have significantly reduced the use of coal.
Trump administration halts Obama-era rule aimed at curbing toxic wastewater from coal plants - The Trump administration has hit the pause button on an Obama-era regulation aimed at limiting the dumping of toxic metals such as arsenic and mercury by the nation’s power plants into public waterways. “I have decided that it is appropriate and in the public interest to reconsider the rule,” Scott Pruitt, head of the Environmental Protection Agency, wrote this week in a letter to groups that had petitioned the agency to revisit the rule, which was finalized in 2015. Beginning in 2018, power plants would have had to begin showing that they were using the most up-to-date technology to remove heavy metals — including lead, arsenic, mercury and other pollutants — from their wastewater. Pruitt wrote that the EPA plans to postpone compliance deadlines for the regulation, which is also being challenged in a federal court. On Thursday, the EPA said the rule would cost the industry hundreds of millions of dollars a year to comply with. “This action is another example of EPA implementing President Trump’s vision of being good stewards of our natural resources, while not developing regulations that hurt our economy and kill jobs,” Pruitt said in a statement. “Some of our nation’s largest job producers have objected to this rule, saying the requirements set by the Obama administration are not economically or technologically feasible within the prescribed time frame.” The move drew immediate condemnation from environmental groups, which called it a gift to the energy industry. They insisted that the Trump administration focused only on potential costs of the rule while ignoring its benefits, and that delays in compliance will endanger wildlife and pose health threats to families that live near coal plants, as exposure to heavy metals can cause problems with cognitive development in children, among other problems.
Coal ash pollution threatens groundwater at western KY power plant - The plume of polluted water was black. In the satellite images, it snaked from the coal ash landfill at the D.B. Wilson Power Plant in Western Kentucky, about 40 minutes south of Owensboro. The water went through a ditch, until it reached a sediment pond. There, the images showed the black plume spreading through the murky green water, before it dissipated. The black water — which state regulators described as having a “very pronounced unpleasant odor” — had arsenic levels that exceed the federal standard by nearly a thousand times. Regulators say it’s possible the pollution has been seeping from the landfill for more than a decade, eventually making its way into the Green River and potentially contaminating the groundwater. Big Rivers Electric — the utility that owns the power plant — hasbeen cited for some of the pollution, and the Kentucky Department for Environmental Protection is still investigating the extent of the problem. The DEP declined a request for an interview but said in an email the department is continuing to work with the utility to address the concerns.And as the Kentucky Energy and Environment Cabinet works to weaken the state’s oversight of coal ash, there are unanswered questions about how sites like this will be dealt with. During a routine inspection last October, Division of Waste Management geologists noticed black, smelly water seeping from the perimeter of the coal ash landfill at the D.B. Wilson Plant into an unlined ditch. From there, the polluted plume flowed into a sediment pond that eventually releases water into the Green River.“It was a one-time event,” said Big Rivers spokeswoman Jennifer Keach. “We are working with the state to develop a remediation plan and Big Rivers is in compliance with all permits.” But photos suggest the pollution has been ongoing for years. The plume is so dark it’s visible on Google Earth and has been captured in the site’s historic images for years. Regulators say the pollution could have begun as early as 2003.Aside from being unpleasant and unsightly, testing revealed the black water was a veritable chemical soup. It contained high levels of chemicals like antimony, chlorides and molybdenum.But the most striking problem was the amount of arsenic in the black water. Regulators from the Kentucky Division of Waste Management found it contained more than 980 times the federal standard.
Ky. miners paying with their lungs - At a time when the coal industry is being promised less regulation, the resurgence of black lung among Kentucky coal miners is even worse than previously thought.A federal epidemiologist recently said that Pike County is “the epicenter of one of the largest industrial medicine disasters that the United States has ever seen.” Dr. Scott Laney, who spoke recently to medical students at Pikeville University, co-authored a study published last December that identified a large cluster of the most severe form of black lung, known as progressive massive fibrosis, in Southeastern Kentucky. Laney works for the National Institute of Occupational Safety and Health, which was alerted to the cluster by a Kentucky radiologist who diagnosed 60 cases in 20 months in Floyd, Knott, Letcher and Pike counties. By comparison, just 31 cases of progressive massive fibrosis were identified nationally from 1990 to 1999.The rate of black lung among coal miners with at least 25 years underground in Kentucky, Virginia and West Virginia is at an all-time high. About 1 in 20 will develop severe black lung compared with 1 in 30 in 1970. Exposure to dust generated by mining causes black lung. Experts think that as miners must cut through more rock to reach ever thinner coal seams in Appalachia, they are exposed to more quartz dust, or silica, in addition to coal dust, and that this, in part, explains the disease’s upsurge. President Donald Trump, who promised to protect miner’s jobs, has signed an order that will make it harder to protect their lives by requiring that for every new rule, two existing rules must be identified for elimination. An update of the rule on silica exposure would have to be offset by, say, getting rid of precautions against explosions or roof falls. In Kentucky, lawmakers recently reduced required mine inspections, opting instead for “safety analysis.” With fewer inspections, there’s less likelihood a mine will be cited for violating its ventilation plan and allowing excessive dust.
EU energy companies pledge no new coal plants after 2020 - Europe’s energy utilities have rung a death knell for coal, with a historic pledge that no new coal-fired plants will be built in the EU after 2020. National energy companies from every EU nation – except Poland and Greece – have signed up to the initiative, which will overhaul the bloc’s energy-generating future. A press release from Eurelectric, which represents 3,500 utilities with a combined value of over €200bn, reaffirmed a pledge to deliver on the Paris climate agreement, and vowed a moratorium on new investments in coal plants after 2020. “26 of 28 member states have stated that they will not invest in new coal plants after 2020” said Kristian Ruby, Eurelectric’s secretary-general. “History will judge this message we are bringing here today. It is a clear message that speaks for itself, and should be seen in close relation to the Paris agreement and our commitment to provide 100% carbon-neutral electricity by 2050.”
Europe’s Utilities ‘locked-in to fossil fuels until 2050’ - Europe’s biggest utilities could be locked into high emissions from fossil fuel power plants until 2050. That’s according to a new CDP report, which analyses 14 of Europe’s major utilities, worth a total of €256 billion (£218.17bn). Verbund, Iberdrola, Fortum and Enel are rated as being the least carbon intensive, with RWE, CEZ, Endesa and EnBW with the highest carbon use among those who disclose to CDP. CDP says fossil fuels are currently responsible for 43% of the electricity generation from these firms and states almost half are producing more than 20% of their power from coal. It suggests up to €14 billion (£11.93bn) of earnings could be at risk unless these firms rapidly respond to the climate goals laid out in the Paris Agreement. CDP claims the companies are jointly set to exceed the carbon budget required to keep temperature rises below 2°C by 14% or 1.3 billion tonnes of greenhouse gases, despite the EU target to provide 45% of electricity from renewables by 2030. Short term turnarounds are restricted due to the long term capital investment in fossil fuel power plants.
Trump officials meet with tribal leaders to save coal plant | TheHill: Trump administration officials met with Navajo Nation and Hopi leaders Wednesday to discuss what the government could do to stop a major coal plant on the Navajo reservation from closing. The meeting at Interior Department headquarters in Washington, D.C., included Interior Secretary Ryan Zinke and officials from Interior and its Bureau of Reclamation, who have said that the Trump administration wants to save the coal-fired power plant from its planned closure by 2019, likely by finding a buyer.“We held extensive discussions regarding the ongoing operation of [the plant] through 2019 — with hopes of economically extending operations beyond 2019,” David Palumbo, deputy commissioner for operations at the Bureau of Reclamation, said in a statement. “We maintain our commitment to support these productive and constructive talks and have proposed to participate in the coming weeks,” Palumbo said. “At the same time, we recognize this is a difficult task among the stakeholders and therefore are exploring ways to minimize negative impacts should the plant close.” Zinke tweeted that he heard from stakeholders “about challenges & opportunities” for the plant and is “looking for solutions.” Navajo President Russell Begaye said in his own statement that his tribe wants to keep the plant open until 2029. But if the plant must close before then, he’s asking Interior for access to the agency’s transmission lines to enable the tribe to generate wind, solar and other renewable energy sources. “To shut down prematurely will create a devastating impact for Navajo, as over 40 percent of our entire budget and infrastructure is tied to revenues generating from both [the plant] as well as the Kayenta mine,” he said.
U.S. coal to get export boost, but it's Debbie not Trump - Reuters: One of the big hopes for a revival of the U.S. coal industry since the election of President Donald Trump is increasing exports. Right on cue, it looks likely that more of the fuel will be shipped to foreign buyers. But this is a short-term boost and will benefit only a few U.S. coal miners, with the rest having to deal with domestic demand trending lower. The grim reality is that they can't compete with exports from lower cost producers around the globe. While Trump may have declared an end to what he termed the "war on coal" of his predecessor Barack Obama, the U.S. coal sector is unlikely to export its way back to robust health. This is simply because U.S. coal producers are too expensive to compete on global markets, especially in Asia, the region where coal demand is growing fastest and likely to remain the only bright spot in a world increasingly trying to move away from the polluting fuel. The short-term boost to U.S. coal exports is virtually all down to Cyclone Debbie, a category four storm that closed mines and damaged infrastructure in eastern Australia's Queensland and New South Wales states, when it made landfall on March 28. Queensland accounts for about 60 percent of Australia's exports, including the majority of coking coal, the higher-quality fuel used mainly in steelmaking. Australia is the world's largest exporter of coking coal and second to Indonesia in thermal coal, used mainly in power plants to generate electricity. While the majority of mines were able to restart operations fairly quickly, it's taking time for the rail infrastructure to be repaired, meaning there is a shortage of coal for export. This has sent prices soaring, with coking coal futures in Singapore - priced off the spot assessments for free-on-board Australian cargoes - soaring 77 percent from the day Debbie struck to a peak of $275 a tonne on April 6.
Australian coking coal trains start slow roll to port | Reuters: The first coal train from an Australian mining area devastated by a cyclone reached port in the northern state of Queensland on Tuesday, sparking a race by major miners including BHP Billiton to secure spare capacity on the only operating line. The reopening of the Blackwater line will allow Australian mines to start replenishing world coking coal supplies, with Thomson Reuters Eikon data showing 38 bulk cargo ships at anchor near Gladstone, most of them waiting to load coal. Coking coal prices in China spiked last week on news of the disruption, but have since eased on a fall in local steel prices and as a resumption of shipments nears. Just before 8 a.m. local time (2200 GMT) the first coal train arrived at Gladstone port for loading on the Aqua Bonanza, which will head for China on Wednesday, said shipping agent John Parks. Rail operator Aurizon said trains are running at reduced speeds. However, the majority of coal in the region travels on Aurizon's Goonyella line further north, which was cut by large landslides. Aurizon expects the line to be closed until May, leaving miners on that line chasing capacity on Blackwater and the most northern line, Newlands. "We are all clamoring to fit into a queue," said one miner on the Goonyella line who requested anonymity. "It helps if you have mines on the other lines. If you don't already have reserved capacity on the other lines you are at a big disadvantage."
Barbaric': Adani's giant coal mine granted unlimited water licence for 60 years -The proposed Adani coal mine, which will be Australia's biggest, has been granted unlimited access to groundwater by the Queensland government in a move farmers fear will drain huge amounts of water from the Great Artesian Basin.According to a copy of Adani's water licence signed last Wednesday and obtained by Fairfax Media, the $16 billion Carmichael mine merely needs to monitor and report the amount of water it extracts under a permit that runs until 2077.The mine – one of nine proposed for the Galilee Basin west of Rockhampton – can conduct its own review of its groundwater model without independent or government oversight.There are also no impact levels specified that will trigger a halt to mining, and the company is able to offset any significant water loss elsewhere, the licence shows."It's bloody-minded and barbaric," said Bruce Currie, a grazier who lives in the region and has joined legal action against Galilee mines. "This is going to definitely impact on the integrity of [the Great Artesian Basin]." According to a supplementary environmental impact statement, the mine will draw 26 million litres of water a day from its pits by 2029 as it ramps out annual production to as much as 60 million tonnes.
South Australia says 90 firms interested in supplying grid-scale batteries --Dozens of companies from 10 countries are vying with Elon Musk’s Tesla Inc to install Australia’s largest grid-scale battery to help keep the lights on in the country’s most wind-dependent state. The South Australian state government said on Monday it had received 90 expressions of interest to set up a battery by December with about 100 megawatts of capacity to store wind and solar power. Grid stability has become a hot-button political issue in Australia since a state-wide blackout in South Australia paralysed industry for up to two weeks last September, and outages during a severe heatwave over the past summer. If successful, the storage project could deliver a political windfall to South Australia’s government, vindicating their investment in renewables, and give Tesla a high-profile platform to demonstrate their product. Musk was first to say he could supply 100 MW of battery storage for the state at $250 per kilowatt hour, in a social media exchange with the co-founder of Australian software firm Atlassian Corp, Mike Cannon-Brookes.
Turnbull talks up coal in Delhi, despite India's aim to stop imports - Malcolm Turnbull is adamant that Australian coal will play “a very big role” in powering India’s future despite a glut in the local market and clear signals from Delhi that it aims to eliminate imports of the fossil fuel as soon as possible. The prime minister touched down in New Delhi on Monday for his first official visit to the south Asian giant. Selling Australia as an attractive destination for Indian students and reviving negotiations over a free-trade agreement are high on the agenda as the government vies for a slice of the world’s fastest growing major economy. On Monday Turnbull met Gautam Adani, the mining magnate whose company will soon decide whether to begin building the world’s largest coalmine in Queensland’s Galilee basin. As well as concerns over its environmental impact, the $16bn Carmichael project has been dogged by questions over its economic viability, as worldwide demand for the fossil fuel stalls and Asian economies boost their commitments to renewable energy.Turnbull said in Delhi on Monday that India had an “enormous need for more electrification” which the Galilee basin mine, as well as Australian solar technology, would help to meet. But that assessment clashes with the forecasts of Indian power agencies and the latest data on the country’s energy use. After decades of importing coal, India’s domestic output is now surging: last year, for the first time, the country produced enough to become an energy exporter, shipping up to 3m tonnes of thermal coal to neighbouring Bangladesh. And although about 300 million Indians still lack access to electricity, the country’s energy demand has been much less than forecast. In December, India’s draft national electricity plan predicted that on the current trajectory, there would be no need to build more thermal coal-fired power stations until at least 2027.
China to create 10 'mega' coal companies through M&As: report | Reuters: China aims to create 10 "mega" coal producers by the end of the decade as part of its drive to consolidate the industry and tackle overcapacity, the official China Daily reported on Friday, citing an energy official. Wang Xiaolin, deputy director of the National Energy Administration, said China was preparing guidelines to create 10 new industry giants each with annual production capacity of more than 100 million tonnes. The report said China already has six firms with production capacity above 100 million tonnes. According to the China Coal Trade and Distribution Association, the new guidelines will compel coal mining regions to consolidate smaller mines over the next two years, and close those that are not restructured. The association said large-scale state miners, including the Shenhua Group, China's biggest coal producer, are also set to undergo restructuring. China is in the middle of a program aimed at tackling price-sapping supply gluts in the coal sector, and aims to shut at least 500 million tonnes of production capacity by the end of the decade, with smaller mines shut or consolidated. China aims to shut at least 150 million tonnes of coal production capacity this year alone, and the campaign has helped drive up coal prices by more than a quarter since the beginning of the year.
World’s first floating nuclear plant to be built in Russian Far East - Construction of a floating nuclear power plant in the northernmost port of Russia – Pevek located in the Chukotka region – has been included in a special “Far East section” of the state program titled “Development of Nuclear Power Industry Complex”, RIA VladNews reports with the reference to the Ministry’s press office. The floating nuclear power plant with a generation power of 70 MW is planned to be commissioned in 2019. The power plant will include a floating nuclear power unit “Academician Lomonosov”, as well as a coastal and hydraulic engineering infrastructure. Electrical and thermal energy will be transported to the shore. “A unique facility is being created, which has never had analogs in the world’s practice. “Academician Lomonosov” is scheduled to arrive in Pevek and to replace Bilibino nuclear power plant and Chaun thermal power station, which are already technologically obsolete”, – the head of the Ministry for Development of Russian Far East, Alexander Galushka, said.
Russia’s Nuclear Diplomacy -Russia stands to benefit most from the developing world’s increasing appetite for nuclear power. Rosatom currently has export orders valued at more than $300 billion—60 percent of the overall market—for 34 plants in 13 countries. Russia’s share of the global nuclear export market will increase as long as the Kremlin considers it a matter of state policy. Rosatom’s dominance is explained, in part, by its business model. The firm operates on a Build, Own, and Operate scheme–that is, Rosatom constructs the reactor, retains ownership of it, and offers the full range of services from initial financing to fuel disposal. And, in part, because of generous state funding, Rosatom is able to offer cheap financing and sell reactors at far lower costs than its international competitors. In 2010, for example, the development and construction cost of a nuclear plant in Russia was 20 to 50 percent less than Western equivalents. At the same time, Russia is racing ahead with plans to deploy the world’s first two Generation IV reactors domestically by 2025. In the absence of serious rival suppliers, the combination of favorable financing and advanced technology will sustain Russia’s competitive edge for decades to come.
Americans deploy nuclear sniffer plane to Okinawa- Japan and the U.S. are strengthening their guard against North Korea by stationing an American observation aircraft in Okinawa to detect a possible nuclear weapons test by the Kim Jong Un regime, according to a senior Japan Self-Defense Forces official. The U.S. Air Force's Constant Phoenix WC-135 can detect telltale radioactive debris released into the atmosphere by the detonation of a nuclear device. The aircraft was deployed to Kadena Air Base on Okinawa earlier this month, the official said. Japan's Self-Defense Forces also are increasing their own surveillance and intelligence gathering. The U.S. has sent a strike group led by the nuclear-powered aircraft carrier USS Carl Vinson to the waters off the Korean Peninsula. Japan has also readied ships equipped with the Aegis missile defense system in preparation for a possible North Korean missile launch. Japanese forces have been under shootdown orders since August and are prepared to intercept a missile at any time, the government says. The allies are closely sharing intelligence about possible North Korean moves ahead of several milestones that could bring new provocations. Saturday marks 105 years since the birth of Kim Il Sung, founder of the communist state, and April 25 will be the 85th anniversary of the Korean People's Army's founding. The North Koreans might attempt a nuclear test or missile launch on those dates.
SCANA CEO: Abandoning South Carolina nuke project an option — The head of a South Carolina utility that co-owns two nuclear reactors being built in the Midlands told regulators that its options following a contractor's bankruptcy include abandoning the $14 billion project. SCANA Corp. CEO Kevin Marsh, speaking to the S.C. Public Service Commission on Wednesday, said a total shutdown of the project at the V.C. Summer Nuclear Station is last on his list of choices, which also includes continuing one or both reactors. Marsh reiterated remarks that he made to financial analysts last month, after Westinghouse Electric Co. filed for bankruptcy protection. The company is the contractor building the two new reactors designed to extend the life of the aging Fairfield County nuclear plant. SCANA's South Carolina Electric & Gas business owns 55 percent of the expansion. For years, its customers have been funding the new reactors through a series of rate hikes approved by the commission. State-owned utility Santee Cooper owns the other 45 percent of the V.C. Summer project. SCE&G has been conducting a review since the bankruptcy filing to determine what the next move will be. The impact on ratepayers is unclear. The latest projection shows it would cost about $14 billion to complete the work, up more than 20 percent from the original estimate. Westinghouse, the U.S. nuclear unit of Japan's Toshiba Corp., filed for bankruptcy protection last month, calling into question the future of a number of multibillion-dollar nuclear projects, including the South Carolina site and a similar project at Plant Vogtle in eastern Georgia. Such projects are rare. Along with the two additional Westinghouse AP1000 reactors being constructed at Plant Vogtle, the South Carolina reactors are the first of their kind to be built in the U.S. SCANA executive Steve Byrne said Wednesday that about 34 percent of construction at the South Carolina site is completed.
Ohio nuclear bill could clash with federal law, conceals info from public | Midwest Energy News: A bill to subsidize FirstEnergy’s Davis-Besse and Perry nuclear plants presents potential conflicts under Ohio and federal law. Senate Bill 128 would implement FirstEnergy’s zero-emission nuclear, or ZEN, program to have its Ohio utilities’ two million distribution customers pay above-market prices for as much as $57 per year for up to 16 years. That charge of about $5 per month would be in addition to a rider the company started collecting this year of nearly $4 per residential customer per month in order to prop up FirstEnergy’s credit rating. Critics say the nuclear ZEN bill would conflict with federal law by improperly interfering with electricity markets. Questions have also been raised about the fact that one of the bill’s two sponsors, state Sen. John Eklund, is also an antitrust and trade attorney with the firm of Calfee, Halter & Griswold, whose list of government relations clients includes FirstEnergy. The Legislative Inspector General’s database of lobbyists confirms that two attorneys in the firm’s Columbus office are identified as registered on behalf of the energy company. “The coziness that there is between the legislature and this public utility…doesn’t smell good,” said Dick Munson of the Environmental Defense Fund. When asked if there was an ethical problem in his sponsorship of the bill or whether he might need to abstain from voting on it, Eklund said, “the short answer is no.” As he understands it, an earlier opinion from Ohio’s Joint Legislative Ethics Committee would apply to the situation. “I’m not doing this for FirstEnergy,” Eklund continued. “I’m elected to represent my district, which as you know includes the Perry Nuclear Power plant, and I have deep, deep concerns about what the possible closure, shuttering of that facility, would do to the communities that it’s in and that surround it, and the entire northeast Ohio area.”
Amid Fracking And Trump Pennsylvania Faces Water Protection Questions - A Pennsylvania state law requiring that public water systems were informed of nearby gas drilling spills saw its downfall late last month.The state’s Supreme Court had given the legislature six months to implement a notification requirement for private wells in September 2016. If the legislature did not comply, it would “see that portion of Act 13, the law governing Pennsylvania's shale industry, disappear,” according to Pennlive.com. The Republican leadership existing in both chambers thought over the choice given to them by the court. However, the state Department of Environmental Protection (DEP) “plans to continue its notifications of public water systems, despite losing the statutory mandate.” “We need to have a formal statutory obligation," Sen. John Yudichak, Democrat of Luzerne County, told Pennlive. "Administrations change. Department secretaries change. We want to make sure that provision is in there."Senate Minority Leader Jay Costa, Democrat from Allegheny County, said that discussions focused on how to restore the water notification requirement were presently happening."I need to go back and take the temperature of our caucus again," he said.According to Philly.com, “President Trump's proposal to slash 31 percent of the U.S. EPA’s budget could eventually be magnified in a sort of double whammy to clean air and water safeguards in Pennsylvania and New Jersey.”
Shell’s Appalachian ethylene complex construction set for late 2017 - Oil & Gas Journal: Royal Dutch Shell PLC subsidiary Shell Chemical Appalachia LLC is nearing completion of the early works program in preparation for a targeted late-2017 start of construction on its long-planned grassroots petrochemical complex along the Ohio River in Potter Township, Beaver County, Pa., about 30 miles northwest of Pittsburgh ((OGJ Online, June 6, 2011). The early works program, including site preparation and detailed design and engineering work, has been progressing safely, efficiently, and to the highest standards of engineering, with main site construction on track to begin later this year, Shell said. To date, completed works include installation of 4,200 steel pilings for the foundations of several permanent structures, relocation of an existing state highway, and improvements to interchanges intended to benefit area motorists as well as accommodate trucks working on the main construction phase, the company said. To further reduce road traffic during construction, Shell also finished building two large river docks for the delivery of large equipment via barge. Alongside ongoing removal of preexisting foundations and associated environmental remediation work at the site, the company also recently began laying concrete to complete foundations for permanent structures. Designed to produce ethylene and polyethylene (PE) from nearby supplies of low-cost Marcellus and Utica shale ethane, Shell’s Appalachian petrochemical complex will include an ethane cracker with an average ethylene production capacity of about 1.5 million tonnes/year, three PE units with a combined production of 1.6 million tpy, as well as associated installations for power and steam generation, storage, logistics, cooling water and water treatment, emergency flare, and offices (OGJ Online, June 7, 2016).
Cuomo Denies Permit for Northern Access Pipeline - New York State blocked the Northern Access Project on March 7, a pipeline that would have carried fracked gas from Pennsylvania to Canada via New York. This is a huge victory not just for New Yorkers but for the entire planet. The New York State Department of Environmental Conservation (DEC), after a careful and exhaustive study, exercised its right under Section 401 of the federal Clean Water Act to deny certification to the proposed 24-inch diameter, 99-mile pipeline. Without 401 certification, the natural gas pipeline cannot go forward within the state. Gov. Cuomo and DEC Commissioner Basil Seggos have shown exceptional leadership in denying the permit. This project was a serious threat to water quality, wildlife, trout streams and other habitats, as well as to air quality in the North Country and Western New York. The pipeline would have directly harmed 192 streams, 600 acres of forests and more than 17 acres of wetlands in the state and would have crossed one sole source aquifer—the Cattaraugus Creek Basin Aquifer System—the sole source of drinking water for 20,000 residents in Cattaraugus, Erie and Wyoming counties in New York. DEC's decision to deny 401 certification for the pipeline is not the first time that Gov. Cuomo has taken bold action to protect the environment. In 2015, New York State was the first state with natural gas resources to ban fracking in the U.S. and in 2016, the State denied a 401 certification to Constitution pipeline, another natural gas pipeline that could have significantly harmed state water quality. This decision may not have happened but for widespread opposition from the environmental community across the state. On March 27, hundreds of people from across New York State rallied in Albany to express their outrage over the proposed pipeline, demonstrating statewide opposition to this dangerous project. That same day, 143 organizations, businesses and faith communities representing thousands of New Yorkers signed on to a letter asking DEC to deny 401 certification to Northern Access.
Will an oil pipeline proposed for tribal lands destroy the Ramapough Lenape Nation, or will it be the catalyst that once again unites the tribe? - For the Ramapoughs, a group of indigenous people native to the highlands around Mahwah, N.J., life has often been a series of excruciating struggles over rights and resources. The tribe has an embattled history marked by colonial occupation, environmental degradation, discrimination, and clashes with politicians and real estate developers. Over the years, they have been left greatly diminished, a proud tribe working to stave off eradication and invisibility. But the Ramapoughs have experienced something of an awakening in recent months. After a developer proposed an oil pipeline that would run through their native land — and potentially threaten the region’s water supply — the tribe began a wave of protests that has drawn together its dwindling members. They were galvanized further by the election of President Trump, whom they see as an enemy to the environment and indigenous life at large — and an old foe of the tribe in particular. Now this small and beleaguered community is preparing for battle with forces both local and national. For Mr. Perry, the stakes are nothing short of the existence of the Ramapoughs. “We’ll either last another thousand years,” Mr. Perry said, “or get wiped out entirely.” Since he became chief in 2006, Mr. Perry has often found it challenging to mobilize the tribe in times of need. But recently he has fastened on to an issue that has alarmed his people. In 2014, Pilgrim Pipeline Holdings released plans to construct a pair of oil pipelines that would pass through Ramapough territory. According to the proposal, the pipelines would each stretch 178 miles underground, running from Albany to Linden, N.J. Heading south, the channel would carry 200,000 barrels each day of crude Bakken shale, a volatile variety of oil from Montana and North Dakota. Gasoline and aviation fuel would flow north.
Enviro groups appeal NJ gas pipeline approval- Two environmental groups are appealing the approval of a hotly contested natural gas pipeline through the ecologically sensitive New Jersey Pinelands region by the state agency created to protect the area. The Sierra Club and Environment New Jersey filed the appeal Monday of a Feb. 24 decision by the New Jersey Pinelands Commission to approve a pipeline through the federally protected reserve. The pipeline is designed to help a power plant in southern New Jersey switch from coal to gas. But Jeff Tittel, director of the New Jersey Sierra Club, says the commission failed to follow its own guidelines that require any project in the Pinelands to primarily benefit people living there. The gas plant, he says, is largely outside the Pinelands preserve. "We are going to court to do the job the Pinelands Commission is supposed to do, which is to protect the Pinelands," Tittel said. "The Pinelands Commission have sold out the Pinelands and the environment by approving the South Jersey Gas pipeline." The commission declined to comment. It was the most emotionally charged jobs-versus-environment clash in recent New Jersey history and was closely watched by environmental and energy groups around the nation, particularly with a new presidential administration seen as more supportive of the energy industry. South Jersey Gas plans to run the pipeline mostly under or alongside existing roads. The company says it already operates over 1,400 miles of gas mains and 133 miles of elevated pressure lines within the Pinelands without harming the environment.
Maryland Bans Fracking, As Activists Fight 9000 Miles of New Pipelines - Maryland is the third state to ban fracking, after New York and Vermont did a couple of years ago. In a rare case of bipartisanship, Maryland’s Republican Governor, Larry Hogan, signed a bill passed overwhelmingly by the Democratically controlled legislature. He says, “The possible environmental risks of fracking simply outweigh any potential benefits. Protecting our clean water supply and our natural resources is critically important to Marylanders and we simply cannot allow the door to be open for fracking in our state.” Activists have been pushing for a ban since 2012. Food & Water Watch talks about how it came to fruition. After lots of rallies and knocking on doors, they say: “In March of 2013, we helped pass a ban on fracking wastewater in the Baltimore City Council, and in 2014, we worked with Montgomery County to ban fracking there. When the state legislature passed a fracking moratorium in 2015, things really started to pick up steam. Working with partners, we passed fracking bans in Prince George’s County, Anne Arundel County, Baltimore City and Friendsville in Garrett County. We also passed fracking resolutions in Frederick County and about a dozen other jurisdictions across the state. These local actions brought thousands of people into the anti-fracking movement, and set us up to win big at the state level.”138 communities in the US have banned fracking, including Los Angeles, Mendocino, San Benito, Santa Cruz and Butte counties in California and Cincinnati and Athens in Ohio. Colorado has been at outlier, suing towns that have passed bans.In the past, Hogan called fracking an economic goldmine, so we’re not sure what changed his mine – especially since he vetoed a bill to expand renewable energy in Maryland. Democrats overrode the veto, raising the state’s Renewable Portfolio Standard to 25% renewables by 2020, up from 20% by 2022. A bill to expand energy efficiency – utilities must cut electricity demand 2% a year by 2020 – became law without the Governor’s signature.
Virginia pipelines will be subject to Department of Environment Quality water-quality review - richmond.com: The Atlantic Coast and Mountain Valley natural gas pipeline projects, proposed to cross hundreds of streams and wetland areas across Virginia, will be required to submit detailed information to state regulators on how they will comply with state erosion control and sediment runoff regulations to protect water quality. The Virginia Department of Environmental Quality announced Thursday that it would require water quality certifications under Section 401 of the federal Clean Water Act for each segment of both projects that crosses or potentially affects water bodies. The decision will require extensive review of hundreds of affected waterways, potentially delaying the construction of the two proposed multibillion-dollar projects. “These certifications will ensure that Virginia water quality standards are maintained in all areas affected by the projects,” the DEQ said in a statement. “The public will have an opportunity to review and comment on these certifications and the conditions required to protect water quality.” The department had been weighing whether to permit the crossings solely under the “blanket” rules in the U.S. Army Corps of Engineers Nationwide Permit 12 process, which pipeline opponents have criticized as too limited and general to protect Virginia waterways. “We could have done that but that would have been less involved on each piece of the pipeline,” DEQ spokesman Bill Hayden said. “It really came about partially from the public interest that’s been expressed and partly from DEQ’s own concerns that the pipeline construction be done properly to protect water quality. They’re big projects, both of them, and we wanted to make sure they can be done right.”
Trump to seek offshore drilling expansion | TheHill: President Trump is preparing an executive order to start undoing former President Obama’s restrictions on offshore drilling. Interior Secretary Ryan Zinke, who oversees offshore drilling, told an industry conference about the upcoming order Thursday, Bloomberg News reported, citing sources in attendance. The order would direct the Interior Department to rewrite Obama’s five-year schedule for lease sales between 2017 and 2022, which left out any drilling in the Arctic or Atlantic oceans, and to add some sales in those areas. It would also begin the process of undoing Obama’s actions to indefinitely block drilling in certain areas of the Arctic and Atlantic, Bloomberg reported. The former president used a little-known provision in law to do that last year, and his administration argued that the action could not be undone by Trump. The actions would fit within Trump’s pledges on the campaign trail and since taking office to increase domestic energy production, particularly of fossil fuels. He signed a wide-ranging executive order last week to undo nearly all of Obama’s climate policies. That order also directed Interior and other agencies to find policies that inhibit domestic energy production and use and to work to undo them. Rewriting the five-year plan would require an extensive Interior Department process with multiple steps that could take years. It took the Obama administration about two years to write its five-year plan, which included 10 leases in the Gulf of Mexico but left other areas out completely.
Trump moves to open Atlantic coast to oil drilling for first time in more than 30 years - The White House is taking steps that could open up new areas of the Atlantic and Arctic oceans to offshore oil and gas drilling, according to multiple individuals briefed on the proposal. The White House is considering an executive order instructing the Interior Department to reverse President Barack Obama’s withdrawal of hundreds of millions of offshore acres from future drilling in December. The executive order — which could come out in the next few weeks — represents President Trump’s latest attempt to promote domestic energy exploration by rolling back restrictions put in place by previous administrations, though it would take considerable time for Interior to carry out aspects of the proposed directive. Interior Secretary Ryan Zinke on Thursday, in an address to the annual meeting of the National Ocean Industries Association, confirmed that there was an executive order addressing offshore, “on the way … likely next week,” according to Nicolette Nye, a spokeswoman for the group. However, Interior spokeswoman Heather Swift said that Zinke was alluding to the executive order Trump signed last week and that the department was “reviewing our offshore policies and regulations.”Other oil industry officials, participants at the NOIA meeting, and a GOP lawmaker from an affected state said that they had not been briefed and that the order might not be issued any earlier than May. People familiar with the planned order spoke on the condition of anonymity because it has not been formally announced yet. Zinke’s comments highlighted the extent to which Trump’s March 28 executive order is already reverberating throughout the federal government. That directive instructed the heads of all agencies to “review all existing regulations, orders, guidance documents, policies, and any other similar agency actions (collectively, agency actions) that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.” Legal experts and others are just beginning to understand how the order could affect “almost every environmental regulation that affects energy in any way” as well as many non-environmental rules.
Gulf of Mexico crude oil production, already at annual high, expected to keep increasing -- U.S. crude oil production in the Federal Gulf of Mexico (GOM) set an annual high of 1.6 million barrels per day (b/d) in 2016, surpassing the previous high set in 2009 by 44,000 b/d. In January 2017, GOM crude oil production increased for the fourth consecutive month, reaching 1.7 million b/d. On an annual basis, oil production in the GOM is expected to continue increasing through 2018, based on forecasts in EIA’s latest Short-Term Energy Outlook (STEO). In 2016, eight projects came online in the GOM, contributing to the high production levels. Another seven projects are anticipated to come online by the end of 2018. Based on anticipated production levels at these new fields and existing fields, annual crude oil production in the GOM is expected to increase to an average of 1.7 million b/d in 2017 and 1.9 million b/d in 2018. Because of the length of time needed to complete large offshore projects, oil production in the GOM is less sensitive to short-term oil price movements than onshore production in the Lower 48 states. Recent crude oil price increases have not had a significant impact on operations in the GOM. Rotary rig counts in the GOM—including both gas- and oil-directed rigs—have actually declined since crude oil prices increased following the November 2016 Organization for the Petroleum Exporting Countries (OPEC) announcement to cut production. However, long-term trends also affect GOM oil production. The number of rotary rigs operating in the GOM decreased from an average of 55 in 2014, when the Brent crude oil spot price began dropping, to 22 in 2016. The number of development and exploratory wells has fallen in each year since 2012. Although the number of operating rotary rigs in the GOM increased from 2012 to 2014, falling crude oil prices in 2014, along with drilling delays caused by the 2013 discovery of faulty rig safety equipment, led to decreasing drilling activity in that period.
Three US-based LNG terminal projects report delays to operational start dates - Three US-based LNG export projects have delayed the planned start of their commercial operations, according to company updates on the US Department of Energy's website. LNG terminal developers must provide semi-annual progress reports for their facilities in April and October, as required by the department. Some projects have not yet posted April reports. April updates published on the department's website report later start dates for three projects: the Lake Charles Exports terminal in Louisiana, with a capacity of 16.2 million mt/year; Commonwealth LNG's Cameron Parish, Louisiana, facility, with planned exports of 169 MMcf/d and 190 MMcf/d to free trade and non-free trade nations, respectively; and Strom's Crystal River, Florida, facility, with export capacity of 80 MMcf/d. Lake Charles now anticipates that the first of its three trains will be operational in 2022.Trains 2 and 3 are scheduled for completion in six-month increments after the first train, the April report stated. Last October, the company said only that the first train was expected to be operational in 2021. Commonwealth LNG expects to start commercial operations by the second quarter of 2022, the company said. In October 2016, it set a start date of the fourth quarter of 2021. Strom said it was proposing to start operations in the second quarter of 2019, providing market conditions remain stable. Previously, it reported a start date in the fourth quarter of 2018. Earlier this week, six other projects reported delayed operational start dates: SCT&E LNG's export terminal in Cameron Parish, Louisiana; SeaOne Gulfport's CGL terminal at Gulfport, Mississippi; Texas LNG Brownsville's terminal in Brownsville, Texas; Gulf LNG Liquefaction's terminal at Pascagoula, Mississippi; Freeport-McMoRan's Main Pass Energy Hub Deepwater facility off the Louisiana coast; and the Venture Global Calcasieu Pass export project in Cameron Parish, Louisiana.
Trump administration moving ahead with ending Jones Act exemptions - The Trump administration appears to be moving ahead with an Obama administration proposal aimed at reversing long-standing Jones Act exemptions and is not considering weakening its criteria for waivers from the maritime law, a US Customs and Border Protection spokeswoman said. Those waivers "may only be granted if necessary in the interest of national defense," as they traditionally have been, Katrina Skinner, the CBP spokeswoman, said in a statement to S&P Global Platts on Monday. The issue centers on a change CBP proposed on January 18, just two days before the Obama administration ended, that would revoke decades of rulings allowing foreign-built vessels to transport certain equipment, such as repair pipe, between US ports and oil and gas operations in US waters. The change, which is backed by the US maritime industry and a bipartisan swath of Congress, would represent a significant strengthening of the federal government's enforcement of the Jones Act. The 100-year-old Jones Act requires vessels transporting goods between US ports to be US-flagged, US-built and majority US-owned.The proposed change is opposed by drilling and marine contractors and the American Petroleum Institute, which last week released a study claiming the change could reduce oil and natural gas production in the US Gulf of Mexico by about 500,000 b/d over the next 13 years. In her statement, CBP's Skinner said the agency was accepting comments on the proposed change through April 18 and is expected to issue a decision on the potential change by mid-May. While Skinner declined to comment further, sources said the Trump administration has indicated that it plans to go forward with the proposed change and will likely oppose any efforts seen as weakening the Jones Act.
Crude storage and docks near, but not in, the Houston Ship Channel - The build-out of Houston-area crude oil storage and marine terminal capacity continues, and as it does, ship congestion in the Houston Ship Channel worsens. Which raises the question, why not develop more crude storage and marine docks outside the Ship Channel that still offers strong pipeline connectivity to crude production areas, the Cushing hub and Houston-area refineries—plus easier access to the open waters of the Gulf of Mexico? That’s a key premise behind Oiltanking’s first major Gulf Coast expansion since the February 2015 sale of most of Oiltanking’s assets in the region to Enterprise Products Partners. Today we discuss Oiltanking’s plan to add crude storage and a marine terminal in Texas City, TX. The greater Houston area is a magnet for crude oil. Houston remains the capital of North American refining. It has 10 refineries with a combined distillation capacity of about 2.5 MMb/d; more than 50 MMbbl of storage capacity; and port facilities capable of both receiving large volumes of oil (imported and domestic) and sending out large volumes of crude (to other U.S. ports, to Canada and—since the ban on oil exports was lifted in December 2015—to the rest of the world). Houston also is the hub of an extraordinary pipeline and storage network, much of it developed or repurposed over the past four or five years, that can receive light crude and condensate from the Permian Basin and the Eagle Ford, light crude from the Bakken and other U.S. shale regions, and heavy crude from western Canada. Parts of this same pipeline/storage network can receive imported crude from Houston-area docks, or shuttle oil east to refineries in Port Arthur, TX, Lake Charles, LA and farther up the East Coast.
EPP to build NGL pipeline linking Permian to Mont Belvieu - Enterprise Products Partners LP (EPP) plans to build a 571-mile pipeline to transport natural gas liquids from the Permian basin to the firm’s NGL fractionation and storage complex in Mont Belvieu, Tex. The Shin Oak NGL pipeline will originate at EPP’s Hobbs NGL fractionation and storage facility in Gaines County, Tex. The 24-in. OD pipeline will have an initial design capacity of 250,000 b/d, expandable to 600,000 b/d. The project is supported by long-term customer commitments and is expected to be in service in second-quarter 2019. In addition to mixed NGL supplies aggregated at the Hobbs facility, the Shin Oak pipeline will provide takeaway capacity for mixed NGLs extracted at gas processing plants in the Permian region, including two EPP facilities that began service in 2016 and the Orla I plant that is scheduled to begin operations in second-quarter 2018. In tandem with EPP’s existing NGL pipelines, the pipeline will also increase the company’s capacity to transport purity NGL products from Hobbs to Mont Belvieu. EPP’s Mont Belvieu NGL complex has 130 million bbl of underground storage capacity and 670,000 b/d of NGL fractionation capability. The firm is building a ninth fractionator at Mont Belvieu that will increase NGL fractionation capacity by 85,000 b/d following its expected completion in second-quarter 2018. Mont Belvieu is pipeline-connected to the US petrochemical industry on the Gulf Coast and EPP’s LPG and ethane deepwater marine export terminals on the Houston Ship Channel. “The Shin Oak pipeline project is part of [EPP’s] larger plans in the Permian to leverage our integrated midstream assets to link supplies of cost-advantaged US hydrocarbons to the largest domestic and global NGL markets,” said AJ Teague, chief executive officer of EPP’s general partner.
Shale Hotspot Draws In Another Big Oil Player -- The oil price crash that destroyed a lot of smaller oil producers has not spared the finances of even the oldest and largest oil companies. Trying to keep the precious dividends intact and growing, Big Oil is focusing on cost control and cash preservation, and has effectively deferred investments in new ultra-expensive drilling ventures.One of the biggest companies, U.S. Chevron, is now planning to capitalize on its vast acreage holdings in the Permian. Investments in new mega projects, at least over the next few years, are not currently on the table, chief executive John Watson told Reuters in an interview published this week.Chevron is now betting big on the Permian; the star shale play straddling West Texas and New Mexico that has seen most of the resurgence since oil prices started steadily recovering in the fourth quarter last year.Unlike some other (and smaller) producers who have just recently rushed to secure holdings in the shale play, Chevron is not a newcomer to the Permian – the group and its legacy companies have held acreage in the area since the early 1920s.Now the new oil order is causing the company to shift strategies away from mega drilling projects to secure steady returns in more conservative projects in order to protect dividends and keep them growing.Chevron reported earnings of $0.22 per share for the fourth quarter of 2016, compared with a loss of $0.31 per share for the fourth quarter of 2015, in line with analyst expectations that it would return to profit, but still missing the EPS estimates by a wide margin. Full-year 2016 results showed a loss of $497 million compared with earnings of $4.6 billion in 2015, which was the first annual loss Chevron has booked since 1980. Despite the first annual loss in a generation, Chevron increased the 2016 annual dividend payout for the 29th consecutive year.This year, Chevron plans to spend around $2.5 billion on shale and tight investments, the majority of which is slated for the Permian Basin, a 67-percent increase over last year. In the upstream investments for 2017, the funds for the Permian are second only to the $3-billion investment in the expansion of the Tengiz field in Kazakhstan. Chevron’s production in the Permian was 90,000 net barrels of crude oil per day in 2016.
Sand mining industry grows in Texas amid drilling needs | The Herald: In a deepening pit in this small town southeast of Waco, workers aim a high-pressure water cannon that reduces small hills of clay-like sand into a watery slurry that is filtered, processed, dried into fine particles, and loaded onto trucks bound for hydraulic fracturing operations across Texas. It will take up to 1,000 trucks to haul enough of this sand to frac a single large well. The Houston Chronicle (http://bit.ly/2o3mAc3 ) reports as drilling has recovered in recent months, particularly in West Texas' Permian Basin, the sand mining industry has exploded. It is producing more than ever to meet the demand of an oil and gas sector that is using up to 20 times more sand per well than it did during peak of the last energy boom. Across the state, already home to nearly 10 frac sand mines, operators are moving to expand quickly, setting the stage for Texas to become a bigger player — and competitor — in an industry long dominated by purer Wisconsin and Minnesota sands. At the same time, the growth of sand mining is opening a new front in the battle between the energy industry and environmentalists, who argue the mines despoil pristine land and create health hazards by kicking up silica dust, which has been linked to lung cancer, tuberculosis and other lung diseases when inhaled. In Atascosa County, south of San Antonio, residents are fighting a 300-acre sand mine proposed by Preferred Sands of Radnor, Pennsylvania, citing health risks, potential well water contamination, truck traffic and potential damage to the site of the 1813 Battle of Medina, a bloody fight in the early years of Mexico's long war for independence. "What's more important? Breathing or having water to drink?"
Oklahoma Drinking Water Poisoned By Fracking, Claims New Report - A new report from the Clean Water Fund claims that drinking water supplies in Oklahoma are at risk from several oil and gas wastewater wells. Many private wells could also be affected by wastewater disposal wells permitted by the Oklahoma Corporation Commission (OCC). “It’s disturbing that the OCC may have permitted oil and gas wells to inject directly into potential drinking water sources and that the agency can’t accurately point to where the drinking water is located,” said John Noël, lead author of the report. He is also the national oil and gas campaign coordinator for Clean Water Action. “That’s fundamental to the OCC’s job. It is the agency that is supposed to protect Oklahomans’ drinking water from the impacts of oil and gas activities. Without proper information, the OCC cannot assure that the state’s many thousands of injection wells have all been permitted safely.” Speaking with ThinkProgress, Noël would not say whether there are specific drinking water reserves that have been contaminated. Instead he pointed out that OCC’s publicly available data is “wildly flawed,” outdated, and unreliable. “They are admitting there is flawed data publicly available and that’s what we are basing our analysis on,” Noël said. “How are they able to safely permit oil and gas wells?” Oklahoma is home to Scott Pruitt, the man taking a hatchet to the EPA under Trump. As attorney general of Oklahoma, he was famous for suing the EPA. Trump’s primary environmental policy initiatives are based on the premise that states have all the money and manpower they need to protect their own environments. An OCC spokesperson denied there are any wastewater injection wells that are going into drinking water sources. “The study is based on faulty data that we warned the group about in February when they presented their draft findings and we saw what data they were using,” Matt Skinner told ThinkProgress via email.
Nebraska law enforcement, Keystone XL pipeline foes prepare for possible protests | Nebraska | omaha.com: What began as a couple of small protest camps on the Standing Rock Indian Reservation eventually swelled into an international incident. Now the sheriff thinks Nebraska will be next for a similar mega demonstration. With the recent resurrection of the Keystone XL pipeline project by President Donald Trump, the group that led the opposition to the pipeline, Bold Nebraska, has pledged to renew its fight. On its website, the grass-roots group is not only asking pipeline opponents to write letters and attend rallies and court hearings, but also to risk arrest. “I pledge to participate in peaceful direct action that may result in my arrest, should construction begin on the Keystone XL pipeline,” it states. Jane Kleeb, who launched Bold Nebraska, said she doesn’t envision Nebraska having the massive and violent protests that erupted over the now-finished Dakota Access pipeline. Thousands of Native Americans and environmentalists poured in to protest there. Nearly 700 people have been arrested, and about $40 million has been spent, to date, on law enforcement costs. But Kleeb said her group wants to be ready if the pipeline is eventually approved in the state. “We’re certainly not setting up a big protest camp like at Standing Rock — we’ve made that clear to partners. But we do have supporters, including land owners, who want that option to participate in civil disobedience,” Kleeb said.
Six Teenagers Win Court Appeal In Colorado Fracking Case - The Colorado Court of Appeals has recently ruled 2-1 in favor of six teenage activists who had petitioned the Colorado Oil and Gas Conservation Commission to consider a rule that places public health and environment before oil and gas development instead of seeking a ‘balance’ between resources development and people’s health. Although the appeals court ruling can be further challenged at Colorado’s Supreme Court, it gives environmentalists and green activists a reason to rejoice in this victory and potentially a new tool in seeking to oppose fracking in Colorado, which has been a battleground state for activists and counties opposing oil and gas drilling. On the other hand, the recent appeals court decision just remands the case of the proposed rule to the Colorado Oil and Gas Conservation Commission, which now has to consider it again in light of the appeals court ruling.The court saga began in November 2013, when the teen activists petitioned the Commission to consider a rule that it “not issue any permits for the drilling of a well for oil and gas unless the best available science demonstrates—and an independent, third party organization confirms, that drilling can occur in a manner that does not cumulatively, with other actions, impair Colorado’s atmosphere, water, wildlife, and land resources, does not adversely impact human health and does not contribute to climate change.”In April 2014, the Commission denied the petition, saying that “the Proposed Rule, if adopted, would have required the Commission to readjust the balance crafted by the General Assembly under the Act, and is therefore beyond the Commission’s limited grant of statutory authority.”The district court later upheld the Commission’s denial of the petition, saying that the Commission lacked authority to consider such a proposal. Now the appeals court agrees with the petitioners and says that the district court and the Commission erroneously interpreted the Oil and Gas Conservation Act. It has reversed the district court ruling and returned the petition to the Commission for further examination. The appeals court found that a section in the Act “supports the conclusion that the Commission has authority to promulgate rules regulating oil and gas development in the interest of protecting public health, safety, and welfare.”
Lawsuit claims new oil and gas wells will be too close to Colorado school - Denver Business Journal: Environmental advocacy groups and the NAACP’s Colorado chapter have filed a suit over an oil and gas site they say is too close to a school near Greeley that has a large population of poor and minority students. The suite was filed Tuesday in Denver District Court against the Colorado Oil and Gas Conservation Commission (COGCC) by Weld Air and Water, the Sierra Club, the NAACP’s Colorado chapter and Wall of Women, a group that described itself in the lawsuit as a grassroots environmental advocacy group advocating to protect the earth for future generations.The suit claims the COGCC erred in granting approval to Denver’s Extraction Oil & Gas Inc. (NASDAQ: XOG) to put a 24-well site, called the Vetting 15-H Well Pad and Vetting Facility, 1,350 feet from the walls of Bella Romero Middle School in Weld County, just outside the Greeley city boundary. The groups said they believe the site is too close to the school itself as well as the playgrounds and athletic fields — which are between the school and the wellsite. But Extraction, in a statement, defended the location, saying it was chosen in part because it allows the company to use pipelines — rather than trucks — to remove oil and natural gas from the site, and also allows access to electricity to drive a quiet drilling rig and other production facilities. The company also said the Vetting site is about 1,343 from the nearest school and “well outside 1,200 feet from the playground.”
TransCanada shuts down Keystone after oil seeps to surface - Alberta-based TransCanada Corp has shut down its Keystone pipeline after crews spotted oil near a pump station in South Dakota, the company said in a statement on Monday. The company, Canada's second largest pipeline operator, said the "potential incident" was first reported on Saturday afternoon. "TransCanada immediately began the process to shut down the pipeline, activate its emergency response procedures and dispatch ground crews to assess the situation," said the company in a statement. "Crews initially found visible signs of oil on a small surface area." News of the oil seeping to the surface could be inconvenient for TransCanada, which is now trying to convince communities across Canada to accept its proposal for a gigantic new pipeline infrastructure project — the 4,600-kilometre Energy East pipeline. Leak discovered by passerby The chairman of the South Dakota watchdog, Chris Nelson, confirmed that there was a spill from Keystone, and that state environmental officials were overseeing the cleanup. In a brief phone interview, he told National Observer that a member of the public may have been the one that discovered the spill. "My understanding is that it was a passerby that observed it and called the company," said Nelson, chairman of the South Dakota Public Utilities Commission. If confirmed, this would mean that the company's leak detection system failed to identify the incident.
Dakota Access Pipeline to start interstate service May 14 | Reuters: The controversial Dakota Access Pipeline will begin interstate crude oil delivery on May 14, according to a filing with the U.S. Federal Energy Regulatory Commission. Energy Transfer Partners LP on Thursday filed what is known as a tariff, which lays out details about the line and the oil to be delivered. The 1,172-mile (1,885-km) Dakota Access line runs from western North Dakota to Patoka, Illinois. The $3.8 billion project became a focus of international attention, drawing protesters from around the world, after a Native American tribe sued to block completion of the final link of the pipeline through a remote part of North Dakota. The Standing Rock Sioux tribe said the pipeline would desecrate a sacred burial ground and that any oil leak would poison the tribe's water supply. Thousands of protesters demonstrated in North Dakota and Washington, D.C., many staying to support the tribe in a makeshift camp near the pipeline's construction site last fall. Many opponents also said reliance on the pipeline and the petroleum it was intended to carry would exacerbate climate change. The outgoing administration of Democratic President Barack Obama said it would reconsider the permits issued for the pipeline's route near tribal lands, delaying the project by several months. But that move was quickly reversed after the inauguration of Republican President Donald Trump in January.
Company Behind Dakota Access Pipeline Wins Legal Right To Keep Spill Risks From the Public | Colorlines: Last month, unknown offenders allegedly damaged the Dakota Access Pipeline, using a torch to burn holes into both fenced and unfenced segments of the line. A federal judge cited this act of protest as the reason why the company that owns the pipeline can legally withhold certain information from the public in order to protect the infrastructure from further damage, The Associated Press reported yesterday (April 12). Pipeline developer Energy Transfer Partners can keep secret what points along the 1,172-mile route are more likely to spill. However, information on how the company would handle such spills should be public knowledge, U.S. District Judge James Boasberg ruled on April 7. The company is currently in a legal dispute with the Standing Rock Sioux and Cheyenne River Sioux tribes. The tribes were hoping that information on where the pipeline faces spill risks would help make their case that the project needs further environmental study. Other details the judge ruled Energy Transfer can withhold from the public include pipeline maps at certain crossings, more maps of spill scenarios, graphs that measure spill risks along the pipeline, predictions on spill oil volume and how to detect and shut down spills. “The asserted interest in limiting intentionally inflicted harm outweighs the tribes' generalized interests in public disclosure and scrutiny,” said Boasberg.
Snipers and Infiltrators at Standing Rock: Quashing Protests at Taxpayer Expense -- The inner-workings and cost of the government’s militant and violent crackdown on peaceful Standing Rock protesters have been trickling in these past few months, yet it hasn’t received the headlines it all deserves. In March, MUCKROCK was provided with an unredacted look at Indiana’s Department of Homeland Security’s EMAC (Emergency Management Assistance Compact) operation at Standing Rock, and just this week files and photos obtained by journalist Mike Best from Ohio’s State Highway Patrol confirm that at least one sniper was deployed on a nearby hill, overlooking the protests. First, here’s a look at Indiana’s EMAC, which was asked to join North Dakota’s efforts to silence Standing Rock protests at taxpayer expense. For 18 days, from October to November of last year, 37 officers from Indianapolis PD were sent to North Dakota’s Morton County. Estimates of the cost of sending these cops, including their equipment, transport and commodities, exceeded $725,000. Wisconsin’s Dane County Sheriff’s Office also sent 13 deputies, with a total cost of $91,166 per day for an eight day stint. Here’s a list and cost breakdown provided by MUCKROCK of the weapons and materials Indiana sent along with their forces to Standing Rock.
42 “sidearms” (judging from the individual officer’s paperwork, these are various Glock models): $16,464
37 (one for each officer!) Bushmaster AR-15’s: $14,504
16 outfits of riot gear: $9,408
23 shotguns: $9,016
21 pairs of Gen III night vision goggles: $8,232
37 seemingly department issued cell phones: $6,160
21 pairs of binoculars: $1,029
10 spotting scopes (possibly used as part of a sniper team): $490
2 tear gas launchers of different sizes: $784
1 TAC 700 pepper ball launcher: $392
1 thermal imaging camera: $784
The official police photos below come from Mike Best’s request from the Ohio State Highway Patrol. While it is widely known that pepper spray and dogs were used to intimidate and terrorize Standing Rock activists, these new photos give us an inside look at government efforts to quash the uprising against the Dakota Access Pipeline. The photos show that at least one sniper had his sights set on #NoDAPL activists below, they also indicate that the protest itself was likely infiltrated by law enforcement personnel. No doubt all of this is just the tip of the iceberg.
Montana lawmakers seek to change fracking disclosure rules | The Fresno Bee: Energy companies would have to justify claims that the chemicals they use in the hydraulic fracturing process to drill for oil and gas are trade secrets that must be kept from the public, under a bill that advanced Monday in the Montana Legislature. The companies would submit their requests for confidentiality and a $25 fee to the Montana Oil and Gas Conservation Board, which would make the determination. The board would not be allowed to release chemical information considered confidential unless a court orders it to do so, according to the bill. The measure, which is a vote away from passing the Montana Legislature, comes after an environmental organization and landowners filed a lawsuit in January over the current Montana rule that allows companies to conceal the ingredients of the chemicals they use during hydraulic fracturing, or fracking. Under the current rule, companies don't have to offer any proof that the chemicals are protected trade secrets or disclose them to the oil and gas board. Republican state Sen. Tom Richmond, of Billings, a former administrator of the board, said he is sponsoring the bill in response to the public interest in disclosing the chemicals, though he disagrees with concerns that the chemicals could harm groundwater beneath adjacent properties. "The public right to know is a strong right in our constitution," Richmond told a House committee late last month. "This lets the board keep trade secrets confidential unless ordered by the court to release them." The measure is based on disclosure rules in Wyoming. It is supported by the Montana Petroleum Association, whose executive director, Alan Olson, told lawmakers it will allow the board to make a determination over a trade secret claim while protecting companies' proprietary information.
Huge risk, no gain: Fracking is a lose-lose for Nevada … Hydraulic fracturing — more commonly known as fracking — is a significant threat to our state’s scarce water supplies. Under current federal law, certain methods of fracking are exempt from a number of environmental protection laws, most importantly the Clean Water Act and the Safe Drinking Water Act. Due to these federal regulation exemptions, fracking is largely regulated at the state level, with states varying widely in their ability and commitment to govern this practice. The potential threat that fracking poses to our water supplies is grounded in reality. The longstanding drought that occurred throughout much of the West and Southwest saw fracking wastewater in California rerouted to farmlands for the purposes of livestock drinking water and the irrigation of crops in 2014. According to a report by Physicians for Social Responsibility, “[i]nvestigative reports in 2015 revealed that Chevron Corporation piped 21 million gallons of recycled oil and gas wastewater per day to farmers for crop irrigation. Tests showed the presence of several volatile organic compounds, including acetone, which is linked, in lab studies, to kidney, liver and nerve damage.”The investigative report is an eye-opening look into the fracking practice, but in fact, further investigations and testing revealed that “more than one-third of the 173 chemicals used in the hydraulic fracturing process are classified as trade secrets and their identities are therefore unknown to the public. Of the remainder, 10 are classified as either carcinogenic or possibly carcinogenic in humans, 22 are classified by the state of California as toxic air contaminants, and 14 had no ecotoxicity or mammalian toxicity data available.” Nevada must learn from the issues uncovered in California. Nevada is the most arid state in the nation, with a codified public policy for protecting water resources above all others. Nevada is frequently susceptible to droughts, making our water supplies a very precious resource. Once a groundwater basin is contaminated, it is nearly impossible to remediate.
Fracking is ruining one of the last truly dark places in the US, and astronomers are on edge – Quartz - On a near-cloudless night in mid-March, atop a mountain in the Davis range of the Chihuahuan desert in West Texas, hundreds of families sat on blankets in the pitch-dark, looking up at the starry sky while an astronomer pointed with a laser beam at the constellations of Taurus and Orion, Cassiopeia, and Ursa Minor. Then he pointed to a hazy cloud of light emanating up from one segment of the horizon. Not a star could be seen. Farther above it, where the sky darkened again, a few brighter stars peeked out. But in the bright glow around the horizon, the night sky was completely washed out. That’s hydraulic fracturing, the astronomer explained. Astronomy is in the business of darkness. The darker the night sky, the more there is to observe. For most of its existence, since it opened in 1933, the University of Texas’ McDonald Observatory in Fort Davis sat beneath some of the darkest skies in the continental US. But over the last 10 years that’s changed, thanks to the West Texas oil and gas drilling boom. The night sky has its own natural “background” brightness, even in places absent of human light pollution. But since the drilling boom began, “we’re up 10 to 15% above background,” says Bill Wren, a veteran astronomer and the Observatory’s authority on dark skies, says. “It’s [still] as dark as any other major observatory in the world. It used to be extremely dark, the darkest, but it’s not anymore.” Over the last decade, the number of gas flares and brightly-lit drilling facilities near the Observatory have increased, particularly in the Permian Basin, the largest oil field in the state, that sits northeast of the Observatory. Wren told The Daily Texan he has data showing the sky beginning to brighten—even before it was visually brighter—around 2009, right around the start of the boom. Last year, fracking company Apache Corp announced what may be the biggest oil and gas find yet in the Permian Basin—located in the Alpine High region, just 25 miles from the Observatory. “We’re concerned,” Wren says. He’s currently working with oil and gas companies to make adjustments to their operations, like shielding and aiming their light fixtures so the light is kept pointed towards the ground and out of the sky. So far, Wren says the drilling companies have been open to his suggestions.
Report: Fracking lights causing major headaches for UT 'McDonald -- It's a no-brainer that studying the night sky works best when the lights are out.That's why scientists at The University of Texas' McDonald Observatory in Fort Davis are concerned by encroaching and well-lit oil and gas facilities, according to Quartz. Thanks to an oil boom in West Texas, since 2009, more and more brightly-lit fracking operations have popped up around the observatory, causing what astronomers call "background brightness" to be more intrusive on their work."We're up 10 to 15 percent above background," Bill Wren, an astronomer at the observatory told Quartz. "It's [still] as dark as any other major observatory in the world. It used to be extremely dark, the darkest, but it's not anymore." To help combat brighter skies, the McDonald Observatory recently teamed up with Permian Basin Petroleum Association to deliver dimmer lighting recommendations for seven counties that surround the observatory. The recommendations include suggestions on the direction and color of lights, as well as the minimization of unnecessary and permanent lighting.
Alaska senators push bill to allow Arctic drilling | TheHill: Alaska’s two Republican senators have introduced a bill that would repeal Obama administration restrictions on off-shore drilling and allow for oil production in the Arctic Ocean. The bill, from Sens. Lisa Murkowski and Dan Sullivan, would undo Obama’s December decision to withdraw sections of the Outer Continental Shelf from the U.S.’s offshore drilling program. It would also require, as part of federal five-year drilling plans, a minimum of three drilling lease sales in each of the Beaufort, Chukchi and Cook Inlet planning areas off the northern coast of Alaska.SEMENT“After years of regulatory restrictions and burdens imposed by the Obama administration, this bill charts a much better course for responsible energy production in our Beaufort and Chukchi seas that actually reflects the views of the vast majority of Alaskans,” Murkowski, the chair of the Energy and Natural Resources Committee, said in a statement. “These areas contain prolific resources that can be safely developed to create jobs, reduce our deficits, keep energy affordable and strengthen national security.” Obama in December formally removed waters in the Chukchi Sea and most of its Beaufort Sea from the federal drilling program, one month after he finalized a five-year drilling plan that didn’t include Arctic lease sales. Environmentalists praised the decision has a major victory in their fight against Arctic drilling. But the fossil fuel industry and its congressional supporters vowed to fight the decision. The White House is crafting an executive action to kick off the process of rewriting that leasing plan, officials said this week. That process could take years to finalize.
Leak Raises Concerns About Aging Alaska Seafloor Pipelines (AP) — Alaska's picturesque Cook Inlet is home to endangered beluga whales and wild salmon — and a spider web of oil and natural gas pipelines on the sea floor, many of them placed there five decades ago. Cook Inlet's petroleum production is often overshadowed by Alaska's giant North Slope oil fields, but the inlet is in the spotlight as millions of cubic feet of natural gas spew from an underwater pipeline owned by the inlet's largest petroleum producer, Hilcorp Alaska LLC. The federal agency that oversees pipeline safety has "strongly recommended" that Hilcorp develop a safety management system for its pipelines. Environmental advocates are demanding immediate pipeline inspections by federal authorities, not Hilcorp, in the area with earthquakes and some of the world's strongest tides. "The age of the pipelines significantly increased the risk of failure, especially when coupled with the harsh offshore Cook Inlet environment," Kristen Monsell, an attorney for the Center for Biological Diversity, wrote in a letter to the federal Pipeline and Hazardous Material Safety Administration. Hilcorp has not said whether it will craft the safety management system but insists the age of its pipeline system does not pose a threat and would not affect maintenance and inspection requirements already enforced by state and federal regulators.Besides earthquakes that periodically rattle Cook Inlet, tides fluctuate more than 25 feet (7.6 meters) and are so strong that they move car-size boulders along the sea floor, said Lynda Giguere, spokeswoman for the Cook Inlet Regional Citizens Advisory Council, set up after the Exxon Valdez oil spill to promote environmentally safe marine transportation. Hilcorp entered the Alaska market in 2012 and owns 15 of the 17 Cook Inlet petroleum platforms. The gas leak is in a pipeline carrying processed natural gas from shore to four platforms, where it's burned to provide electricity.
Fracking Comes To Alaska, Triggering New Oil Boom -- Hydraulic fracturing is coming to Alaska, and one professor thinks it could change global politics in favor of U.S. interests. Companies have discovered in the last year at least 5 billion barrels of recoverable oil on Alaska’s North Slope — a 14 percent increase in U.S. proven reserves. These finds could significantly increase U.S. oil production, changing the global energy game in the U.S.’s favor. “If these new discoveries become producing fields, the Alaskan Arctic will write a new chapter in the U.S. oil industry’s dramatic ascent,” Dr. Scott L. Montgomery, a professor of international relations at the University of Washington, wrote in an op-ed for The Conversation. “It will increase our leverage over [Organization of Petroleum Exporting Countries] OPEC and may help to counter Russia’s geopolitical influence.” “This prospect raises a new question: How will we will use our clout as the world’s most important new oil power?” Montgomery wrote. Montgomery argued fracking for Alaskan oil will make the U.S. a major oil exporter. Montgomery says Alaskan oil will be sold to Asia and undercut OPEC’s share of that market. “Oil remains our one unreplaceable energy source,” Montgomery wrote. “Global mobility and a modern military are, as yet, inconceivable without it. Growth in global demand, centered in developing Asia, will continue for some time, as it did even from 2010 through 2014 when prices were above $90 per barrel.” The U.S. is the world’s largest and fastest-growing producer of oil and natural gas, surpassing both Russia and Saudi Arabia. U.S. oil production grew 80 percent higher than it was in 2008. Companies recently found massive untapped oil deposits in Alaska that could be access through fracking. Major oil companies like Conoco are purchasing Alaskan land and developing cost effective methods of fracking in remote regions. Fracking in Alaska could accelerate as oil prices rise. Fracked Alaskan oil could be profitable to drill at $50 a barrel, which is just under current crude prices.
Fracking Comes to the Alaskan Arctic - Despite opposition from environmental groups and President Obama's 2016 ban on drilling in federal Arctic waters , exploration in Alaska has revealed massive new volumes of oil. This comes at a time of low oil prices, when many observers felt the Arctic would remain off limits. Alaska has proved precisely the opposite. Although it has gone largely unnoticed outside the industry, foreign firms are partnering with American companies to pursue these new possibilities. I expect this new wave of Arctic development will help increase U.S. oil production and influence in world oil markets for at least the next several decades. This is a global story, spurred by continued growth in world oil demand, especially in Asia; the dynamism of the oil industry; and the fact that the U.S. has become a major new petroleum exporter, something that would have seemed impossible only a few years ago. Such realities imply that decisions made in Washington, DC are far from the only forces shaping U.S. energy and climate change policy. Over the past year, oil companies have discovered volumes on Alaska's North Slope totaling as much as five billion barrels or more of recoverable oil. This is a 14 percent increase in U.S. proven reserves, based on recent estimates , which is no small thing. One discovery, "Horseshoe," made this year by the Spanish company Repsol in partnership with Denver-based Armstrong Oil and Gas, is the largest new U.S. find in more than 30 years . It is estimated at 1.2 billion barrels and comes just after a find by ConocoPhillips in January, called "Willow," evaluated at 300 million barrels. Both of these are dwarfed by "Tulimaniq," a spectacular discovery drilled by Dallas-based Caelus Energy in the shallow state waters of Smith Bay, about 120 miles northwest of Prudhoe Bay, in October 2016. Caelus has confirmed a total accumulation of as much as 10 billion barrels of light, mobile oil, with 3-4 billion barrels possibly recoverable at current prices of about US$50 per barrel.
Dem warns Russia may gain control of US oil company | TheHill: Sen. Bob Menendez (D-N.J.) is sounding an alarm over the possibility that Russia’s government could gain control of a major United States oil company. Menendez formally asked Treasury Secretary Steve Mnuchin to “proactively monitor” a loan that Rosneft, an oil company majority-owned by the Russian government, has provided to Citgo Petroleum Corp.’s parent company. “Given Russia’s interference in the U.S. election and ongoing meddling in European elections, not to mention its habit of invading and bullying its neighbors, the last thing the United States should be doing is handing the Kremlin a significant ownership share in a major U.S. energy supplier,” Menendez said in a statement. Petróleos de Venezuela, Venezuela’s state-owned oil company, used 49.9 percent of Citgo’s shares as collateral for a loan. If Venezuela’s economic crisis continues and the company defaults, Menendez said Rosneft may take control of the shares, which would combine with the Russian company’s other interests in the company to give it majority control. “This could leave Rosneft, a Russian company controlled by oligarchs with close ties to [Russian President] Vladimir Putin, in control of critical energy infrastructure in the United States,” Menendez told Mnuchin in a letter. Mnuchin serves as chairman of the Committee on Foreign Investment in the United States, which has the power to review certain foreign investment actions and recommend that President Trump block them. “We ask that you proactively monitor the situation and that your staff keep our offices briefed on your efforts and any informal review process of Rosneft’s potential acquisition of Citgo,” the Democrat said. Mnuchin could only initiate a formal investigation if Rosneft took formal action to take control of the company.
Energy Employment Surges With U.S. Shale Production - A major bright spot in the March 2017 American jobs report was the apparent recovery of the mining sector, the employment area associated with oil and gas. The report indicated that 11,000 new jobs were added in the month of March, a further sign that the years-long hemorrhaging of jobs in the energy sector has come to an end. This report comes after February jobs’ numbers indicating oil and gas employment increased by about 1 percent. The Bureau of Labor Statistics reported that 178,700 people were employed in oil and gas in February 2017. This is the largest number recorded since May 2016, though it is still far off from the industry peak in October 2014, when over 200,000 people were employed in oil and gas. Since October, thirty-five thousand new mining sector jobs have been added to the U.S. economy. This time last year, the sector was shedding jobs at a rate of eighteen-thousand per month. The turn-around comes as prices slowly edge above $50 a barrel. There are hopes that federal changes to environmental regulations, the opening up of federal land and improving price forecasts will all support a new boom in oil and gas production within the United States.This news may help to mitigate negative reactions to reports that some industry CEOs took big pay-days during the energy downturn that hit the U.S. oil and gas industry hard between 2014 and 2016. As their companies filed for bankruptcy, the chief executives of Ultra Petroleum, Seventy Seven Energy and other firms have taken large stock packages and significant pay-offs. Still, the jobs report is good news for the domestic energy sector. Hiring in oil field services is ticking up, as Houston-based Halliburton announced plans to hire two-thousand workers for pressure pumping and cementing in the U.S. The Houston Chronicle has reported an increase in job postings tied to energy and manufacturing. The increase is tied to the growing activity in the Permian Basin and the rising U.S. rig count, now at 943 according to Baker Hughes. The Bakken shale field, which has suffered from a drop in investment and some concerns about long-term viability, has recovered as hiring increases and employers search to fill openings. A
Oil-weighted E&Ps anticipating surge in capital spending in 2017. -- The 21 oil-focused U.S. exploration and production companies examined in our Piranha! market study are planning an average 47% increase in their 2017 capital expenditures and expecting a 7% increase in production. The 47% boost in capex is huge, but due to draconian cuts in 2015 and 2016 this year’s total is still off 58% from 2014’s—an indication of the big hole the sector is still climbing out of. The Permian Basin continues to attract more capital—no surprise there—but capex in the Bakken is also on the rise after a few lean years. Today we continue our Piranha! series on upstream spending in the oil and natural gas sector, this time zeroing in on E&Ps that focus on crude. We examine this ongoing transformation in Piranha!, our new market study of 43 representative U.S. E&Ps; of that total universe of companies, 21 focus on oil (60%+ liquids reserves), nine are gas-weighted producers (60%+ natural gas reserves) and 13 are diversified producers. All of the major U.S. shale/unconventional plays are represented in the combined portfolios of these firms. In Very Particular Places to Go, we discussed Piranha!’s purpose and organization. The first part of the four-part market study examines the strategies that companies are adopting to thrive in a $50/bbl world, breaking down merger and acquisition (M&A) activity by basin to show where these firms are selling and where they are buying. The second part considers the E&P sector’s 2017 capital spending plans and production expectations as a whole, while the third delves into what these company’s have been doing to maintain and improve their financial health. The fourth and final section of Piranha!, which accounts for more than 120 of the report’s 150-plus pages, examines each company in our universe of 43 firms at a granular level, looking at their financial condition, capex plans, geographic focus, M&A strategies and a general assessment of the company’s position in today’s U.S. E&P industry.
Did The Banks Just Give U.S. Shale A Carte Blanche? -- Twice a year, in April and in October, banks review the creditworthiness of oil and gas companies in what is known as a borrowing base redetermination. Ahead of this year’s spring review, both banks and U.S. oil companies are showing improved outlook for the industry, with cautious optimism seeping in through more oil and gas producers, oilfield services companies, lenders, and private equity firms. According to Haynes and Boone’s ‘Borrowing Base Redeterminations Survey’: Spring 2017, the majority of polled banks and oil and gas companies expect borrowing bases to increase, and nearly all survey respondents see U.S. exploration and production companies raising their capital expenditure budgets this year compared to 2016.Haynes and Boone’s spring 2017 survey shows a brighter picture compared to last year’s spring survey and to the fall 2016 survey.Judging from the results of this spring’s poll, lenders and U.S. companies alike are dispelling fears that last month’s slide in oil prices – when WTI traded below $50 for the better part of two weeks – could make banks revise downwards their borrowing base redeterminations, and potentially stall the resurgence of the U.S. oil patch. The timing of last month’s slide in oil prices could not have been worse, just weeks before banks and oil firms sit down to review how much explorers and producers could borrow. But with leaner, fitter, and highly selective producers focusing on cheaper and profitable plays, optimism has grown ahead of this season’s credit reviews. In addition, U.S. onshore producers have been increasingly hedging production to mitigate risks from possible significant oil price drops. In a sign that companies are growing optimistic as the worst of the downturn is now over, U.S. firms started increasing their investments in the fourth quarter last year. Respondents in Haynes and Boone’s spring 2017 survey believe that 76 percent of U.S. producers will have their borrowing bases raised slightly or remain unchanged compared to the borrowing bases in the fall of 2016. To compare, in the fall 2016 survey respondents expected 59 percent of companies to see their borrowing bases increase or remain unchanged. Furthermore, a total of 89 percent of the latest survey respondents reckon that the capex budgets of the drillers will rise this year compared to 2016, with 45 percent expecting a 20-percent increase in capex, another 12 percent of respondents projecting a 30-percent increase, and 6 percent expecting capex rises of more than 30 percent. Just 3 percent of respondents think capex budgets would decrease by 10 percent this year.
Oil Surplus Or Scarcity? Shale Makes It Even Harder To Predict (Reuters) - The shale oil boom has transformed the U.S. and global energy sector to such an extent that it has upended traditional supply dynamics and made forecasts far more polarised.Investment banks, many of which finance new projects, along with oil majors such as Total and Eni, have warned that huge spending cuts caused by a plunge in oil prices since 2014 would lead to a supply crunch in the next two years.Yet Goldman Sachs, the only bank to make more than $1 billion a year from commodities trading, believes a looming recovery in U.S. output on the back of higher oil prices combined with an avalanche of new conventional projects will create a substantial surplus by 2019.Prior to the shale revolution, conventional oil was the only game in town. Estimating future supply essentially involved calculating the project pipeline and factoring in the "unknown knowns" such as political risk in oil-producing nations.The ability of the shale sector to adapt quickly and nimbly to a lower-price environment means production cycles have shortened as fields can be switched on and off in a matter of weeks.Most forecasters including OPEC and the International Energy Agency underestimated shale's decline during the oil price collapse and its production increases as prices recovered.Goldman predicts the coming two years will see a huge burst of development, complicating OPEC's efforts to rebalance the market and ease a global glut with the help of output cuts."This long lead-time wave of projects and a short-cycle revival, led by U.S. shales, could create a material oversupply in 2018-19," Goldman's equity research team said last month."As OPEC prepares for its May 25 meeting, it is likely to weigh the relative benefit of stability (extend cut) versus the risk of long-term share loss."Goldman estimates that new projects and rising shale output could add 1 million barrels per day (bpd) to global supply by 2018-2019.The forecast contrasts with those of consultancy Wood Mackenzie, which foresees a supply gap of 20 million bpd by 2025, and Goldman's rival Morgan Stanley, which believes a surge in U.S. production this year will not derail the rebalancing."OPEC has successfully constrained output, and although drilling activity in U.S. shale is picking up rapidly, this will probably not come quick enough to prevent a period of sizeable inventory draws late this year," Morgan Stanley said.
U.S. crude oil imports increased in 2016 - Gross U.S. crude oil imports in 2016 rose to an average of 7.9 million barrels per day (b/d), 514,000 b/d more than the 2015 average. Net crude oil imports increased by a smaller amount (460,000 b/d), as U.S. crude oil exports rose despite a decline in U.S. crude oil production. From a longer term perspective, gross crude oil imports in 2016 were still 22% lower than their 2005 high of 10.1 million b/d. Crude oil imports have also been affected by other major changes since 2005, when the United States was the world’s largest net importer of refined products and crude oil. In 2016, the United States was the world’s largest net exporter of refined products, with a significant portion of crude oil input to U.S. refiners supporting those exports. Canada continued to be the largest source of U.S. crude oil imports in 2016, providing a record 3.3 million b/d, or 41% of total U.S. imports—more than all Organization of the Petroleum Exporting Countries (OPEC) combined. Among non-OPEC suppliers, 2016 marked the seventh consecutive year of increasing crude oil imports from Canada and the sixth consecutive year of decreasing crude oil imports from Mexico. Imports from Mexico have declined as Mexico’s crude oil production, its total crude export sales, and the share of its exports sold in the United States have all fallen. Increased U.S. imports of heavy Canadian crude oils are replacing some imported Mexican crude oils of similar quality. Canada’s share of U.S. crude oil imports declined slightly from 2015, as both imports and import shares from countries such as Iraq and Nigeria grew, according to annual trade data from EIA's Petroleum Supply Monthly. OPEC supplied 40% of the crude oil imported to the United States in 2016, up slightly from 36% in 2015. Nevertheless, OPEC’s share in 2016 was lower than in any year between 1973, the earliest year for which EIA has country-specific crude oil import data, and 2014. Imported crude oil from Iraq and Nigeria were the largest contributors to the increase in U.S. crude oil imports in 2016. Imports from Iraq increased from 229,000 b/d in 2015 to 418,000 b/d in 2016, and imports from Nigeria increased from 54,000 b/d to 210,000 b/d. Nigerian crude oil is of similar quality to that produced in the Bakken region in parts of North Dakota and Montana. As production in the Bakken region (and the United States as a whole) declined, refiners may have increased imports from Nigeria to replace these barrels.
EIA: Expect Record U.S. Oil Production in 2018, Exceeding 1970 Peak --- “U.S. crude oil production is expected to be higher during the next two years than previously forecast, with annual output in 2018 now forecast to reach 9.9 million barrels per day, exceeding the previous record level of 9.6 million barrels per day reached in 1970.” The EIA released the Short-Term Energy Outlook today. From the STEO:
- • U.S. crude oil production averaged an estimated 8.9 million barrels per day (b/d) in 2016. U.S crude oil production is forecast to average 9.2 million b/d in 2017 and 9.9 million b/d in 2018.
- • For the 2017 April-through-September summer driving season, U.S. regular gasoline retail prices are forecast to average $2.46/gallon (gal), compared with $2.23/gal last summer. The higher forecast gasoline price is primarily the result of higher forecast crude oil prices. For all of 2017, the forecast average price for regular gasoline is $2.39/gal, which, if realized, would result in the average U.S. household spending about $200 more on motor fuel in 2017 compared with 2016.
- • North Sea Brent crude oil spot prices averaged $52 per barrel (b) in March, $3/b lower than the February average. EIA forecasts Brent prices to average $54/b in 2017 and $57/b in 2018. West Texas Intermediate (WTI) crude oil prices are forecast to average $2/b less than Brent prices in both 2017 and 2018.
Methane Leaks from Energy Wells Affects Groundwater, Travels Great Distances, Study Confirms – A new University of Guelph study proves what many western Canadian landowners have long documented — that methane gas leaking from energy industry wells can travel great distances in groundwater and pose safety risks, contaminate water and contribute to climate change. The study, published in Nature Geoscience this month, also concluded that current monitoring for gas leakage, usually at ground level and adjacent to wells, is inadequate to detect contamination. “Current surface and subsurface monitoring efforts of shale gas development are thus insufficient to meaningfully detect or assess methane impacts to atmosphere and groundwater,” the study found. British Columbia’s floundering shale gas industry has drilled and fracked nearly 10,000 wells in northeastern B.C. over the last decade, causing more than 1,000 earthquakes in the region. Impacts on groundwater are not being systematically monitored.Cahill and other scientists at Guelph’s Institute for Groundwater Research injected methane over a 72-day period into a shallow sand aquifer at Canadian Forces Base Borden in Ontario at a rate of about a cubic metre a day — a volume much less than actually recorded at many leaking oil and gas wells in Alberta and B.C. Guelph researchers tracked the injected methane for more than eight months via monitoring wells as the explosive gas travelled through the ground, entered the atmosphere or dissolved into groundwater, causing subtle but important changes to water chemistry. In an aquifer, bacteria can metabolize methane and generate undesirable byproducts such as hydrogen sulfide. Bacterial reactions can also bring about the release of trace elements, changing water quality and potentially rendering it undrinkable. “We didn’t see a lot of methane reacting. It degraded at low rates. In other words, if a leak were to occur the methane wouldn’t go away too rapidly from the aquifer,” Cahill said. Cahill also noted that the study covered only a short time period and used only small amounts of methane. “For larger leaks over longer times and greater areas, these findings would indicate that the groundwater would likely become unusable,” he said.
Anticipating hazards from fracking-induced earthquakes in Canada and US - As hydraulic fracturing operations expand in Canada and in some parts of the United States, researchers at the 2017 Seismological Society of America's (SSA) Annual Meeting are taking a closer look at ways to minimize hazards from the earthquakes triggered by those operations. Hydraulic fracturing, or fracking, is a method of hydrocarbon recovery that uses high-pressure injections of fluid to break apart rock and release trapped oil and natural gas. Most induced earthquakes in Canada have been linked to hydraulic fracturing, in contrast to induced earthquakes studied in the central and eastern United States. In the U.S., these earthquakes have been linked primarily to massive amounts of wastewater injected back into the ground after oil and gas recovery. However, some presentations at the SSA meeting will take a closer look at the possibilities for fracking earthquakes in the United States. Michael Brudzinski of Miami University and his colleagues will discuss their work to identify swarms of small magnitude earthquakes in Ohio that appear to be correlated in time and space with hydraulic fracturing or wastewater disposal. Their work suggest that there are roughly three times more earthquake sequences of magnitude 2 or larger induced by hydraulic fracturing compared to wastewater disposal in the area—even though there are about 10 times more hydraulic fracturing wells than wastewater disposal wells. Their technique, they say, provides evidence of induced seismicity from hydraulic fracturing in Oklahoma, Arkansas, Pennsylvania, West Virginia and Texas as well. Zenming Wang and colleagues are preparing for the onset of oil and gas exploration in the Rome Trough of eastern Kentucky, conducting a study of the natural background seismicity in the area to be able to better identify induced earthquakes if they occur. In their SSA presentation, they will also discuss how an area like eastern Kentucky might assess and prepare for ground shaking hazards from induced earthquakes, since the ruptures may occur on unmapped or "quiet" faults. In western Alberta and eastern British Columbia in Canada, a significant increase in the rate of felt earthquakes from hydraulic fracturing has researchers looking at ways to mitigate potential damage to infrastructure in the region. In her SSA presentation, Gail Atkinson of Western University will discuss the factors that affect the likelihood of damaging ground motion from fracking-induced earthquakes. Based on these factors, Atkinson proposes targeted "exclusion zones" with a radius of about five kilometers around critical infrastructure such as major dams.
A Houston company is set to massively expand its Canadian pipeline - The Trans-Pecos and North Dakota Access pipelines have garnered a lot of headlines over the past year or so, but with both of those projects now pretty much complete, the next big pipeline battle may be over the proposed expansion of the Trans Mountain pipeline in Canada. And again, a Texas-based company is behind that project. In November, Canadian Prime Minister Justin Trudeau approved an expansion project by Houston energy company Kinder Morgan that would nearly triple the capacity on its Trans Mountain pipeline, which stretches from Edmonton, Alberta to Burnaby, British Columbia (here’s a map if you’re not up on Canadian geography). It’s a truly massive endeavor. The plan would add more than 600 miles of new pipeline, allowing Trans Mountain to carry 890,000 barrels of oil per day. To put that in perspective, that’s more barrels than both the Keystone XL and Dakota Access pipelines carry, and it’s enough oil to meet 4 percent of our daily gas consumption here in the United States, according to Seattle’s NPR affiliate KUOW. The project is expected to cost a whopping $7.4 billion. The expansion would be a huge boon for Canada’s oil industry—it is expected that it would dramatically expand the nation’s oil exports and open up access to key Asian markets. In late March, Kinder Morgan said it had already contracted all available long-term capacity on its expanded pipeline to about thirteen customers, according to Reuters, and if all goes well, the expanded pipeline could be up and running by 2019. But the project has already run into problems. Kinder Morgan is facing over eighteen legal challenges aimed at halting the expansion, according to the Toronto Star. Along with the usual anti-pipeline arguments focused on climate change and oil spills, environmentalists also say that the pipeline would have a detrimental effect on endangered killer whales in the Pacific waters off the coast of Vancouver, since it is expected to increase oil tanker traffic in the port at Burnaby by about 29 ships a month, according to CBC. The cities of Burnaby and Vancouver have each filed lawsuits against the federal government, and a handful of Canada’s First Nation tribes have also sued the Canadian government on the grounds that they were not properly consulted before the project was approved. In early March, 122 First Nation tribes signed a treaty urging TD Bank, an adviser hired by Kinder Morgan in February, to divest from the expansion project. Protestors took to the streets outside the bank’s headquarters in Toronto last week.
Carbon emissions factor into major oil sands shakeup - As global companies abandon the Canadian oil sands at a time of low oil prices and huge losses, some of them are also concerned that producing one of the world’s most carbon-laden fossil fuels may be bad business in a warming world. A wave of sell-offs began last year when Murphy Oil and Norway’s Statoil decided to pull out of the oil sands. Royal Dutch Shell followed last month, selling most of its operations to Canadian Natural Resources as part of a $7.25 billion divestment. Shell will maintain a small stake in the oil sands, however. Shell’s announcement was followed by Marathon Oil, which said it would sell its oil sands subsidiary to Shell and Canadian Natural for $2.5 billion. Finally, at the end of March, ConocoPhillips struck a $13 billion deal to offload its oil sands business to Calgary-based Cenovus Energy after losing about $1 billion in the oil sands each year since 2014. “As a high-carbon intensity, high-cost producer, the oil sands are in trouble,” said David Keith, a physics and public policy professor at Harvard University.
US EIA raises Q2 Henry Hub spot gas price forecast 15 cents - The US Energy Information Administration raised its forecast for second-quarter spot natural gas prices and said prices for 2017 and 2018 would likely be further buoyed by added exports and rising consumption. While gas production levels are expected to be higher, on average, this year for the first time since 2005 after declining last year, the EIA in its April Short-Term Energy Outlook nonetheless scaled back its production estimates from the prior-month's report. The outlook released Tuesday raised the Q2 Henry Hub natural gas spot price forecast to $3.04/MMBtu, 15 cents above the agency's estimate a month earlier. Prices picked up in March, averaging $2.88/MMBtu, the agency said, as temperatures returned closer to seasonal norms after significantly warmer-than-normal eather in February. EIA's Q3 estimate in the April report slid 3 cents to $3.06/MMBtu.The agency said new gas-export capabilities and growing domestic consumption would contribute to the expected rise in prices for full years 2017 and 2018, compared with 2016, when the average was estimated at $2.51/MMBtu. For 2017, Henry Hub prices are projected to average $3.10/MMBtu, 7 cents above what was indicated in March. The forecast for 2018 stayed steady at $3.45/MMBtu. On the supply side, EIA lowered its Q2 gas marketed production estimate 910 MMcf/d to 77.48 Bcf/d, and trimmed its Q3 projections 250 MMcf/d to 79.47 Bcf/d. EIA also scaled back its full-year production estimates compared with the prior month's forecast, with 2017 average estimates down 610 MMcf/d to 78.32 Bcf/d and 2018 estimates 740 MMcf/d lower at 82.82 Bcf/d.
Hedge funds build big bullish position in U.S. natural gas: Kemp - (Reuters) - Hedge funds are more bullish about U.S. natural gas prices than at any time for almost three years, according to position records published by regulators and exchanges.By April 4, hedge funds and other money managers had amassed a net long position in the two main futures and options contracts linked to U.S. gas prices equivalent to 3,280 billion cubic feet (http://tmsnrt.rs/2nxfzE0).Fund managers had boosted their net long position for five consecutive weeks by a total of 1,082 billion cubic feet, taking it to the highest level since May 2014 (http://tmsnrt.rs/2nZFHU1).Hedge fund long positions outnumbered short positions by a ratio of nearly 3.6:1 on April 4, up from just 2.2 on Feb. 28, and nearing the recent high of 4.2 on Jan. 17 (http://tmsnrt.rs/2ohYJYv). Fund managers have responded to signs the gas market is tightening, despite one of the warmest winters in the last 50 years.Strong exports and the continued weakness of gas output have offset warm weather and reduced consumption from electric power producers.The United States exported a record 270 billion cubic feet of gas in January, up from 169 billion cubic feet in the same month a year earlier (http://tmsnrt.rs/2nZp5Mw).Gas stocks finished winter at just 2,051 billion cubic feet, which was 426 billion cubic feet, or 17 percent, lower than a year earlier (http://tmsnrt.rs/2nxikoZ).As a result, gas prices have risen to limit power producers’ consumption especially during the coming summer airconditioning season.Futures prices for gas delivered at Henry Hub in June 2017 have risen to $3.31 per million British thermal units (BTUs), up 16 percent since Feb. 22. Futures prices for deliveries in June 2017 are now trading at a premium of 48 cents per million BTUs over June 2018 in an effort to limit short term power burn (http://tmsnrt.rs/2nZNRfn).There may be fundamental reasons for hedge funds’ bullishness towards gas but the concentration of long positions has become a source of downside price risk in the short term.Large concentrations of hedge fund positions on one side of the market often presage a sharp retracement in prices when managers attempt to unwind them and lock in profits.Gas prices could be vulnerable to a correction if temperatures across the main U.S. population centres remain mild over the next 5-6 weeks, cutting gas consumption more than usual.
NYMEX May natural gas settles at $3.187/MMBtu, up 3.7 cents - The NYMEX front-month natural gas contract edged 3.7 cents higher Wednesday to settle at $3.187/MMBtu, chipping into Tuesday's near 9-cent decline ahead of the weekly US Energy Information Administration natural gas storage report. According to Platts Analytics' Bentek Energy, US demand is expected to surge 2 Bcf day on day Thursday, reaching about 65 Bcf/d, with a large portion of coming from an increase in residential/commercial demand in the Northeast. Looking ahead, prospects for weaker US demand in the coming weeks and restrictions on NET Mexico, impacting exports into the Mexican market, may prove difficult for the prompt month to continue to trudge higher over the next two weeks. Forecasts through April 26 maintain that US demand will hover near 64 Bcf/d, below the current April month to date of 65.5 Bcf/d, and a stark 8.2 Bcf/d below year-ago levels. The National Weather Service projects the eight- to 14-day temperature outlook to mirror more immediate weather outlooks, with "near to below normal temperatures [being] favored over the northern [continental US]," with a high degree of confidence of above average temperatures over the southern half of US. In addition, CENEGAS announced that from April 10 through 21, NET Mexico flows through the Agua Dulce compressor station will be restricted in a range of 570 MMcf/d to 1.22 Bcf/d. In the more immediate, preliminary projections formulated by Platts expects an injection between 9 Bcf-13 Bcf into storage stocks, bringing total inventory to nearly 2.064 Tcf, about 416 Bcf below year-ago levels.
How U.S. LNG Transformed The Market - The global market for LNG is changing quickly, spurred on by new sources of supply from U.S. shale.U.S. natural gas production surged over the past decade, as fracking opened up a wave of new gas supply. That wave led to a glut and a crash in prices long before shale drillers did the same for oil. The U.S. was sitting on massive volumes of gas that routinely traded as low as $2 or $3 per million BTU (MMMBtu). At the same time, Asian consumers – mainly Japan, South Korea and increasingly China – paid a hefty premium to import gas, with prices spiking close to $20/MMBtu following the Fukushima meltdown in 2011 that left Japan painfully short of functioning electricity capacity.That presented U.S. gas companies with a straightforward arbitrage opportunity – export cheap American gas to Asia, selling it for a much higher price. The race to build LNG export terminals was on.But by the time the first LNG export terminal in the U.S. came online in 2016, the gas market was radically changed. On the demand side, Japan – the largest LNG importer in the world – was no longer desperate for gas imports in the same way that it was back in 2011 and 2012. New renewable energy, a monumental efficiency campaign, and a greater reliance on coal cut into gas demand. China’s gas demand has also grown slower than expected.The effects on the supply side of the equation are arguably much more significant. LNG export capacity around the world has surged in recent years, hitting 340 million tonnes per annum (mtpa) in 2016, up from 278.7 mtpa at the end of 2011, an increase of 20 percent. New megaprojects have come online, including Chevron’s Gorgon LNG project in Australia. A whopping 879 mtpa of new export capacity has been proposed for the future, although much of that probably won’t be constructed now that the market is oversupplied. Surging supply and disappointing demand caused prices to come down from their peaks. Spot prices in East Asia – the Platts JKM marker – hit $19.42/MMBtu in March 2014. By 2016, Japan only paid an average of $7/MMBtu for imported LNG, or around one-third of the prices from three years ago. Spot prices for May 2017 delivery are now trading below $6/MMBtu. The glut of LNG today is upending long-standing trade practices. LNG has historically been traded on long-term contracts at prices linked to the price of crude oil. The volume of LNG traded had once been limited, so there wasn’t much of a true market price for the product. Fixing cargoes to the price of crude oil became a common practice.
Old Guard Calls Foul on Sweeter LNG Deals Luring New Buyers -- Buyers in the world’s largest liquefied natural gas markets are concerned upstarts are winning better deals than traditional customers who helped underwrite the industry. New importers in the Middle East and South Asia could be getting cheaper LNG than established users in North Asia, according to Hiroki Sato, a senior executive vice president with Jera Co., one of the world’s biggest buyers of the super-chilled gas. Sellers may be sweetening deals to lock up fresh customers as new projects, made possible partly by long-term commitments from buyers in countries including Japan and South Korea, flood the market, he said. To raise the tens of billions of dollars needed to build an LNG project, developers have traditionally needed to find both large natural gas resources as well buyers willing to commit to purchase contracts that can last more than 20 years. Jera’s wariness over how new importers are being courted highlights the growing pressure on sellers trying to manage old relationships while winning new customers amid the oversupply of capacity that’s tilted the seaborne gas market in favor of buyers. “Japan and some other Asian countries are traditional foundation buyers for many LNG projects, but substantial demand is now coming from emerging markets” Sato said in an email Friday. “We traditional buyers have a right to the cheapest price.” Many Japanese customers and other big buyers signed supply deals between 2012 and 2014 when prices were at their peak, according to Kerry Anne Shanks, an analyst at Wood Mackenzie Ltd. in Singapore. Those contracts require them to buy gas at a higher percentage of the price of crude -- known as oil indexation -- than newer agreements, she said. Last year, Pakistan State Oil Co. agreed to import LNG from Qatar at 13.4 percent of the price of oil, while Japan’s Chubu Electric Power Co., Kansai Electric Power Co. and Tokyo Electric Power Co. Holdings Inc. all reached deals in 2012 with the country at a price 14.9 percent of oil, according to Bloomberg New Energy Finance. Chubu has another contract from 2007 at 17 percent. “Clearly these foundation buyers are annoyed that low-credit buyers in emerging markets are getting better deals than them,” said Shanks. “But it is a function of when the deals were signed.”
Brazil's oil exports set to jump this year, weakening OPEC curbs | Reuters: Brazil is poised to sharply increase oil exports this year as heavy investments spur new output and demand for its lighter crudes win more buyers, especially in China and India. Production is projected to rise 210,000 barrels per day (bpd) in 2017, second only in the size of additional supply to the United States among non-OPEC producers. Higher output from the U.S. and Brazil are among the factors impeding an OPEC-led effort to lift crude prices through production cuts. Growth in exports should continue in future years as companies such as Royal Dutch Shell Plc prepare to tap some of the largest discoveries made since the end of the last decade off the nation's Atlantic coast. Already just in the first two months of the year, Brazil's oil exports have soared 65 percent over the same period a year earlier to record highs of more than 1.46 million bpd, according to government data obtained by Reuters. Consultancy Wood Mackenzie estimates 2017 exports will hit nearly 1 million bpd, up from 798,000 bpd last year. Years of heavy investment that left state-controlled Petróleo Brasileiro SA (Petrobras) as the world's most indebted oil company are beginning to pay off. The nation hopes to use higher oil sales to help drag its economy out of a two-year recession.
A country off the border of South America may become the next oil hot spot -- ExxonMobil last week announced its third successful oil find offshore Guyana – the tiny Latin American country squeezed between Venezuela and Suriname. The Snoek discovery follows hitting oil-bearing rock in the Liza-1 well and the Payara-1 well, where Exxon struck oil at the beginning of this year. The three finds together have led analysts to estimate the total reserves held in Exxon’s Starbroek block at between 1.4 and 2 billion barrels of oil equivalent, which Exxon is developing in partnership with Hess and China’s Nexen. First commercial oil will probably start flowing in 2020, from a floating production storage and offloading vessel, to be later joined by a second one and later by a third one, if all goes well. According to Wood Mackenzie, by the mid-2020s daily output from the Starbroek block could reach 450,000 barrels—a pretty respectable figure that is bound to attract the attention of other oil players. Exxon is not the only one in Guyana: Tullow Oil and Eco Atlantic are exploring the potential of a neighboring block, Orinduik, which was initially estimated to hold some 700 million barrels of oil equivalent when exploration started last year but the companies later revised reserves to as much as 900 million barrels. Eco Atlantic’s chief executive said that the company has been approached several times by companies offering to buy its stake in the Orinduik block. Noting they were "big names", Gil Holzman added that Eco had declined the offers. Instead, the company plans to push the launch of drilling at Orinduik forward to 2018, three years ahead of schedule, in case international oil prices stay where they are now.
Japan says methane hydrate output test crucial for commercial production -- Japan is set to conduct what will be a "crucial" offshore output test of gas from methane hydrate as its results will decide the future of commercial production, a senior official at the Ministry of Economy, Trade and Industry said Monday. The Chikyu drilling ship arrived at the Daini-Atsumi Knoll in Nankai trough, 80 kilometers (49.6 miles) south of the Atsumi Peninsula in Aichi prefecture and will start finishing the two production wells already drilled at the site, Yuki Sadamitsu, METI's director of oil and gas division, said at a press briefing. The test would mark a crucial step in the path to commercialization of methane hydrate production, Sadamitsu said. Once the production wells are drilled another 50-60 meters to reach methane hydrate layers about 300 meters below the seabed at a water depth of around 1,000 meters, the Chikyu will start extracting gas from methane hydrate using the decreased pressure system for a flare test in late April or early May, he added. This will be the second offshore methane hydrate production test globally after Japan produced 120,000 cubic meters, or 20,000 cu m/day, of gas from methane hydrate in a six-day offshore production test at the Daini-Atsumi Knoll in March 2013. This followed more than a decade of field research as well as testing of various technologies. Although there are a number of technical barriers to methane hydrate production, such as achieving sufficient flow rates to reduce output costs, known resources could be large enough to meet Japan's demand for about 10 years, based on its confirmation of 40 Tcf of methane hydrate resources in place in the southern Sea of Kumano in 2007. Commercialization of methane hydrates would involve deposits of water and methane gas from solid, ice-like hydrates, located deep underwater where cold temperatures and extreme pressure causes the gas to condense and solidify.
Can ‘Fire Ice’ Solve Japan’s Energy Problem? - Resource-challenged Japan, the world’s top LNG importer, the third-largest oil consumer and net importer, and the third biggest coal importer, is estimated to have spent an additional annual average of around $30 billion for fossil fuel imports in the three years following the Fukushima disaster, after which the country suspended all of its nuclear power generation.Japan has been studying for years the potential recovery of one resource lying in its seabed – methane hydrate – also known as ‘fire ice’ or ‘flammable ice’. Methane hydrate is a cage-like structure of crystallized ice, inside of which are trapped molecules of methane, the chief constituent of natural gas. If methane hydrate is either warmed or depressurized, it reverts back to water and natural gas.In March 2013, two years after the Fukushima disaster, Japan Oil, Gas and Metals National Corporation (JOGMEC) carried out the first methane hydrate offshore production test in the Japan Eastern Nankai Trough, successfully extracting 20,000 cubic meters (706,300 cubic feet) per day on average for six days.Now, Japan’s trade ministry said on Monday that it had started preparing to carry out a second production test to extract methane gas from gas hydrates with two wells. The test is expected to continue for a combined four to five weeks, according to officials at the Japanese Ministry of Economy, Trade and Industry (METI). In February, a ministry official told Platts that the test would begin sometime around late April, with the goal to have the tests run non-stop for up to one month. The trial will test the decreasing pressure system at the Daini-Atsumi Knoll in the eastern Nankai Trough, and would aim to evaluate the feasibility of stably producing gas from methane hydrate with the decreasing pressure system for a certain period. The ultimate goal is to ascertain whether the output could go commercial-scale in the future, according to the trade ministry’s official. Japan hopes that it can start commercial production of gas from methane hydrates by 2023, the EIA says in its country profile of Japan.
Analysis: S Korea looks towards US, Russian crudes amid Middle East squeeze - South Korean oil refiners are stepping up purchases of US and Russian crudes, in the wake of a squeeze in supplies of Middle Eastern grades after output curbs by the Organization of the Petroleum Exporting Countries. The country's fourth-biggest refiner Hyundai Oilbank said Monday that it had purchased 2 million barrels of US Southern Green Canyon crude oil, the country's first import of the grade. "We have purchased 2 million barrels of US Southern Green Canyon from Shell, and they will arrive in South Korea from next month," a company official told S&P Global Platts. The first and second cargoes will arrive in May and June, respectively, he said. The company official said there would be no problems using Southern Green Canyon at its crude distillation units, which are equipped to run sour and heavy crudes. Hyundai Oilbank, the only South Korean refiner that can run very heavy, sour crudes without the need for blending, is focused on procuring heavy grades and is not interested in light, sweet crudes. The refiner currently runs two crude distillation units with a combined capacity of 390,000 b/d at its Daesan complex on the west coast. In addition, Hyundai Oilbank began commercial operations at its 130,000 b/d condensate splitter in November last year, which had raised its overall refining capacity to 520,000 b/d. "We purchased the US crude due to weaker prices and low freight rates. We have no immediate plans to import more crude from the United States, but we will seek to import from sources other than the Middle East as part of diversifying supply sources," the official said.
ANALYSIS: Iranian oil exports dip in March, floating storage almost cleared -- Iran's crude oil and condensate exports in March fell slightly from the previous month as refinery runs picked up but the OPEC producer has managed to clear almost all of its oil in floating storage.
- Exports fall to 2.35 million b/d
- Flows to India jump but relations could sour over Farzad B row
- Floating storage barrels dwindle
- Fall in European spot demand from stiffer competition
Iran, which is allowed special status to increase output slightly under the recent OPEC deal, could be switching its focus to improving returns for its oil from maximizing its market share over a year after coming out of the sanctions doldrums, as its output begins to plateau.Total estimated export volume on Aframaxes, Suezmaxes and VLCCs from Iranian ports in March dropped to 2.35 million b/d from 2.41 million b/d in February, data from cFlow, S&P Global Platts trade flow software, showed.This contrasts with the small output rise according to an S&P Global Platts survey, which estimated crude oil production at 3.77 million b/d in March compared with 3.75 million b/d in February thanks to a steady production boost due to the startup of the Azar and South Pars fields.But with Iran's allocation under the OPEC/non-OPEC output agreement at 3.797 million b/d and its key competitors -- Russia, Saudi Arabia and Iraq -- having to clip their wings in recent months, OPEC's third largest producer is hoping to strengthen its relations among various global refiners. Barrels held in floating storage again accounted for a proportion of Iran's exports in March and the country has now reduced the volume held on the water from over 40 million barrels early last year to around 5 million barrels, according to Platts estimates. Exports to Asia jumped sharply to 1.685 million b/d in March from 1.442 million b/d in February, led by a sharp increase in shipments to India.
May a big month for Iran amid rising crude oil output (podcast) Iran's crude oil production is close to pre-sanctions levels, according to the S&P Global Platts OPEC survey, but can the country push on further? Associate director Paul Hickin and senior editor Eklavya Gupte shed light on the diversification of Iranian crude export destinations, as it faces the uncertainty of Iranian elections on May 19 and bids to lure in global expertise through a new contract model. OPEC also meets next month to discuss extending the current output cuts and Iran's rising production profile is likely to be in focus.
Iran To Reduce Exports To Below Pre-Sanctions Levels -- Iran will be decreasing oil exports to 2.4 million barrels per day in the current fiscal year, according to a recent report by the Azeri news agency Trend. The last month of the last fiscal year, which ended on March 21st, saw export levels touch 3.05 million barrels per day. The new goal will bring those heights to just below pre-sanctions levels. Since the international community lifted sanctions against Iran’s oil sector in January 2016, the country has been rebuilding international market share. Fellow OPEC-member and regional rival Saudi Arabia took most of Tehran’s lost business, which caused a production war until November of last year. It was then that OPEC agreed to 1.2 million barrels from production. A portion of Iran’s export growth over the past few months came not from production, but from the sale of oil and gas stored in floating tankers. On April 2nd, the Oil Ministry announced that all stored resources had been sold. New data from OPEC suggests that Iran has been slow to make promised cuts in production. Iran’s production was up over 36,000 bpd in February to 3,814,000 bpd. The last time Iran produced this much oil was in October of 2008. But on March 14th, Oil Minister Bijan Zanganeh announced that Iran would cap production at 3.8 million bpd in the second half of 2017, as long as the OPEC production deal held. Iran has been seeking more investment for its undeveloped gas and oil fields, some of the richest in the world. Last month, the country said production from the Azar oil field, which it shares with neighboring Iraq, had begun. Output is set at 15,000 bpd and is expected to double in the spring before reaching 65,000 bpd in March 2018.
Indonesia's Pertamina plans to import up to 7.5 mil barrels of gasoline in May - Oil | Platts News Article & Story: Indonesia's Pertamina plans to import 6.8-7.5 million barrels of gasoline in May, down 11%-19% from the 8.4 million barrels estimated as April imports, according to market sources. This was another noticeable decrease month on month from an average of around 10.55 million b/month in the first quarter. May imports will comprise 4.7-5 million barrels of 88 RON gasoline and 2.1-2.5 million barrels of finished 92 RON gasoline. The estimate for April's imports comprised 5.3-5.5 million barrels of 88 RON gasoline and about 3 million barrels of finished 92 RON gasoline, according to market sources.Traders said that Pertamina's gasoline imports were higher than expected in January and February, but buying interest is limited in March and April. A trader summed it up by saying: "Talk is they over-bought in quarter one."
Asian refiners diversify crude oil supplies to reduce impact of OPEC-related output cuts (video) Since the start of 2017, Asian refineries have been looking at a wider range of crudes to run as they seek to diversify their supplies and reduce the impact of OPEC related production cuts. In this video, Calvin Lee, editorial director for Asia & Middle East oil markets, examines the spread between medium-heavy sour Dubai crude and light sweet Brent crude, and the surge in Atlantic basin crudes heading to Asia.
China data: Independent refiners' Mar crude imports hit new record high, up 21% on month - Independent refineries in China's eastern Shandong province, Hebei province and Ningxia province had imported in March a total of 10 million mt, or 2.36 million b/d, of crude oil, up 21% from a revised 8.03 million mt in February, a monthly survey by S&P Global Platts showed Friday. The February imports were revised up as several cargoes imported in late February which also finished offloading discharges were also included. The higher import level for the month, was in line with the increasing feedstock demand at refineries, which had raised runs in March. Operating rates at the 42 independent refineries surveyed by Beijing-based energy information provider JLC rose to 61% of capacity in March from 56% in February, suggesting that consumption of feedstock also have increased. The cargo count for March comprises parcels that arrived into ports in Shandong and Tianjin and completed discharge operations through the month, as well as a few cargoes that arrived in late-February but only completed offloading in early-March. Crude cargoes counted for the month include imports by refineries that have import quotas, as well as those that have no quotas but are buying from those with quotas. The volumes imported by trading companies like PetroChina, Sinochem, Mercuria, Trafigura, Kunyang and Yijia that are dedicated for independent refineries are also included.
Saudi Aramco to supply full crude contract volumes to Asia, offers more light oil | Reuters: The world's top oil exporter Saudi Arabia has stepped up sales of light oil to Asia by offering buyers more cargoes on top of the full contract volumes it will provide for May, industry sources with knowledge of the matter said on Wednesday. The offers will add to a glut of light oil supplies in Asia, increasing competition with fellow Gulf producer Abu Dhabi National Oil Co and Russia, said multiple sources, who declined to be identified due to the sensitivity of the matter. "There will be less demand for light grades such as Das, Murban, ESPO and Sokol," said a Singapore-based trader, referring to crude grades from Abu Dhabi and Russia. State-owned oil company Saudi Aramco has also priced its Arab Extra Light crude at a competitive level, another trader said, after lowering the grade's May official selling price to the lowest in eight months. Saudi Aramco plans to supply full volumes of crude to least six buyers in Asia in May, the sources said, despite cutting production to comply with a deal between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers. OPEC and some non-OPEC producers pledged to cut output in the first half of 2017 to support oil prices. To comply with the deal, Saudi Arabia has cut production of medium-heavy oil to keep its overall output lower. But it has kept supplies to Asia steady so far this year as it defends its market share in the world's fastest oil-demand growth region against other producers. In line with its strategy, Saudi Aramco reduced Arab Medium crude supplies and replaced it with Arab Light for some customers, the sources said. Still, a buyer who has previously received cuts to his Arab Heavy term supplies said he will be getting the full contract volume of the heavy oil in May.
Russian crude Urals at its highest so far this year on strong month-end demand - Russian crude Urals for loading out of the Black Sea port of Novorossiisk has spiked over 90 cents/barrel last week, to stand at its highest of the year so far, due to strong month-end demand for Urals. CIF Augusta-delivered Urals crude was assessed at Dated Brent minus $0.98/b Friday, up 21.5 cents/b day on day, to stand at its highest since December 5. All through last week, Urals loading from the Black Sea port of Novorossiisk gained 92 cents/b, as Litasco repeatedly appeared in the Platts Market on Close assessment process as a bidder, looking for cargoes loading between April 25-29, and while the company was sold a cargo Tuesday and Wednesday by Vitol, which increased prices day on day. Litasco and Tenergy -- who appeared offering the cargo Litasco was looking for in the MOC process Thursday and Friday -- did not cross each other, which was one of the reasons of the price increase over the past week. On Friday, Litasco's bid was outstanding at Dated Brent minus $0.80/b, while Tenergy's offer was outstanding at the end of the MOC process at Dated Brent minus $0.60/b for the April 26-27 loading Aframax Urals cargo.Sources said that the increase has come from a largely unexpected Asian demand for Urals as four out of the eight April-loading Suezmaxes have been said to be going to India.
OPEC sees 2017 call on its crude at 32.2 mil b/d, market in deficit Q3 - Despite revising sharply upward its projection for 2017 non-OPEC oil supply, largely due to US shale, OPEC on Wednesday sounded an optimistic note, saying that the onset of the summer driving season, along with strong discipline within the producer group with its production cut agreement, will provide a bullish environment for prices in the coming months. "The return of refineries from seasonal maintenance and healthy demand, together with the high conformity observed in OPEC and non-OPEC production adjustments, should enhance market stability and reduce the volatility seen in recent weeks," OPEC said in its monthly oil market report. In particular, US oil demand trends "continue to provide grounds for optimism," OPEC said, while oil demand growth in China was "very solid" in February. OECD commercial oil stocks fell 28.3 million b/d in February, reversing January's build, OPEC said, and stand at 2.987 billion barrels, about 268 million barrels above the five-year average.The call on OPEC crude for 2017 will average 32.2 million b/d, a downward revision of 100,000 b/d from February's report but above the group's March output level of 31.93 million b/d, according to secondary sources. OPEC kept its overall 2017 world oil demand forecast largely unchanged at 96.32 million b/d.
Is a 'decade of disorder' ahead for global oil markets? (podcast) Low oil prices and a lack of upstream spending are fueling a looming, worldwide supply crisis for the 2020s, some oil industry experts say. Adam Sieminski, former head of the US Energy Information Administration, and Michael Cohen, head of energy markets research at Barclays, speak with Brian Scheid about how the current decade of shale may be setting the stage for a supply shock. Global populism, trade wars and geopolitical issues could all further complicate market fundamentals.
OPEC's war on oil overhang starts to bear fruit | Reuters: OPEC appears to be slowly winning the battle against a global overhang of crude and oil products as inventories in onshore and floating storage decline. The price of oil may not reflect this just yet, as Brent crude futures are struggling to recover its losses for the year to date and break above $55 a barrel. But there is no doubt that stocks are falling around the world, from Saldanha Bay in South Africa, to the Caribbean. A persistent glut of Nigerian oil is easing and even Iran has liquidated the amount of crude held in floating storage. The Organization of the Petroleum Exporting Countries explicitly said a joint deal with non-OPEC producers to cut some 1.8 million bpd in the first half of 2017 was aimed at slashing an excess of around 300 million barrels of crude and petroleum products in OECD stocks. "Across the first quarter of the year, crude stocks built by much less than they did in the first quarter of last year even though refinery maintenance globally was much heavier," Energy Aspects analyst Richard Mallinson said. Iran has sold all the oil it had stored for years at sea and Tehran is now struggling to keep exports growing as it grapples with production constraints. Trading giant Vitol has sold millions of barrels of Nigerian crude oil from storage in South Africa's Saldanha Bay, according to oil traders, with cargoes sailing for Taiwan, India, the United States and Europe. France's Total has offered a further 2 million barrels of Nigerian Escravos oil from its own Saldanha Bay storage tanks, while sources said trader Mercuria had also been offering oil from storage.
Hedge funds regain some of their faith in oil: Kemp (Reuters) - Hedge funds have turned bullish towards crude oil again as international marker prices have steadied above the psychologically important $50 threshold.Hedge funds and other money managers increased their net long position in the three main Brent and WTI futures and options contracts by 54 million barrels in the week to April 4.The boost in the net long position comes after five consecutive weeks of drawdowns between Feb. 21 and March 28 totalling 309 million barrels (http://tmsnrt.rs/2oi5fi3).By April 4, fund managers held an overall long position equivalent to 696 million barrels, according to an analysis of position data published by regulators and exchanges (http://tmsnrt.rs/2oi1YPy).The position is well below the recent peak of 951 million barrels reported on Feb. 21 but far above the recent low of 422 million recorded in mid-November before OPEC’s production deal.Hedge fund managers remain overwhelming bullish about the outlook for oil prices. Fund managers’ long positions outnumber shorts by a ratio of more than 4:1 (http://tmsnrt.rs/2nZYkHq). Hedge fund managers' faith in the outlook for oil prices was badly shaken by the sharp sell-off that started on March 8 and lasted through subsequent sessions. But managers seem to have recaptured some of that confidence after front-month Brent prices found a floor just above $50 per barrel on March 27 (http://tmsnrt.rs/2nxixIt). Funds added the equivalent of 30 million barrels of extra long positions in Brent and WTI between March 28 and April 4.The stabilisation and subsequent rise in prices also prompted a wave of short-covering, with funds cutting short positions by a total of 24 million barrels.Short positions had previously more than doubled to 241 million barrels on March 28 from 102 million on Feb. 21 in the sixth cycle of short-selling since the start of 2015.But with prices no longer falling, and new buyers emerging, many short position owners decided to take profits, accelerating the upward move in prices. If hedge funds have shifted to closing out short positions after just five weeks, which seems likely, this will be the briefest and shallowest short-selling cycle since the start of 2015 (http://tmsnrt.rs/2nZRlOX).
WTI/RBOB Extend Gains After Biggest Crude Inventory Draw Of 2017 WTI/RBOB prices jumped intraday on the heels of anonymous and ambiguous headlines about Saudi and OPEC production cut extensions and extended gains on API inventory data. After last week's surprise builds in crude (and at Cushing), API showed a 1.3mm draw in crude inventories - the biggest since Dec 2016. Gasoline and Distillates continued their season drawdowns also. API
- Crude -1.3mm (-1.5mm exp)
- Cushing (+800k exp)
- Gasoline -3.7mm (-1mm exp)
- Distillates -1.6mm (-1mm exp)
Biggest crude draw of the year as the seasonal draws in gasoline and distillates continues... And the reaction - after WTI has risen for 6 straight days - was further gains for both oil and gasoline futures...
Oil Prices Pull Higher After API Reports Draws Across The Board -- The American Petroleum Institute (API) reported a draw of 1.3 million barrels in United States crude oil inventories, compared to analyst expectations for a crude oil build of 125,000 barrels.API also reported a significant gasoline inventory draw of 3.7 million barrels, compared to predictions of a 1.8-million-barrel draw.Distillates saw a 1.6-million-barrel draw compared to an expected 1.3-million-barrel draw for the fuel.Inventories at the Cushing, Oklahoma, site fell by 358,000 barrels, following last week’s 1.34-million-barrel build.Oil prices rose to five-week highs after Friday’s reports of U.S.-ordered airstrikes against Syrian infrastructure, followed by production outages from Libya’s largest oilfield, and late-breaking news on Tuesday that suggested Saudi Arabia would support OPEC production cuts. Despite the overarching sentiment that the American Petroleum Institute would report a build late Tuesday afternoon, WTI was trading up 0.36% at $53.27 at 1:20pm EST, while Brent Crude traded at $56.03, up .09% on the day. These per-barrel prices are more than $2.00 higher than this time last week.This week’s draw in crude oil inventories is only the sixth draw in the last 15 weeks, using API data, with the API still reporting an overall hefty b uild over the previous 15 weeks of roughly 37.9 million barrels.
Is The Oil Price Rally Running Out Of Steam? | OilPrice.com: Oil prices started the week at a one-month high, with geopolitical tensions and growing confidence over an OPEC deal extension driving a rally. But as oil prices settle in the mid-50s the rally is slowing and traders appear happy to lock in gains. Also, after sharp gains in recent weeks, the rally for crude prices could be slowing. . One of the world’s largest oil traders, Gunvor, has approached at least two of its competitors to gauge interest in a sale of the company. The discussions are being held close to the vest – Gunvor’s CEO says it has no plans to sell – but if it occurred it would consolidate an already consolidated industry. The WSJ reports that Gunvor’s trading volumes have held steady in recent years while its competitors, including Vitol Group, Glencore and Trafigura Group have increased their volumes. The market turmoil since 2014 has been a boon due to the fact that traders profit on storage and volatility. The market stability so far in 2017 has led to softer business for the traders. The oil majors, including ExxonMobil, Statoil, Royal Dutch Shell and Total are all suffering from a falling reserve base as they fail to replace the reserves that are being produced, according to a Reuters analysis. Exxon, for example, saw its reserves fall to an equivalent of just 13 years’ worth of oil, given its current rate of production. That is the lowest lifespan since 1997. Shell has the lowest reserve life since 2008, even after incorporating the large oil and gas reserves from its purchase of BG Group. Historically, the volume of reserves was one of the most important metrics for Wall Street. But in an age of low oil prices, that is no longer the case. Shareholders are increasingly willing to overlook a declining reserve base as long as the majors keep debt and spending in check. Of course, that raises questions about a supply shortage years from now because of a failure to find and discover new reserves.According to TASS news agency, Russian officials will start consultations with Russian oil companies about the extension of the OPEC deal, a sign that Russia is on board with a six-month extension.
Oil rebalancing: delayed rather than derailed? Kemp (Reuters) - Oil market rebalancing has been pushed back by a few months rather than pushed off course, if recent movements in crude futures prices are to be believed.Brent futures prices for June delivery have risen in 10 of the last 11 trading sessions by a total of more than $5 per barrel.Brent has now recovered all its previous losses after the sell that began on March 8 and continued through March 23 (http://tmsnrt.rs/2p5snBy).In contrast to the recovery in flat prices, Brent calendar spreads have remained weak and showed no signs of strengthening.The calendar spread between Brent for delivery in June and December 2017 has remained in an overall contango of 82 cents per barrel (http://tmsnrt.rs/2p5hMGF).Brent spreads for the second half of 2017 have not tightened significantly and remain well below the peak set in February.However, the overall spread weakness conceals very different performance for different months within the second half. Spreads for June and July have continued to weaken while spreads later in the year have been strengthening in recent sessions (http://tmsnrt.rs/2p5gGuC). Calendar spreads have become the major battleground among traders about the timing of any draw down in crude stocks.Hedge funds built record long positions in both flat prices and calendar spreads between December and February anticipating an early rebalancing and move into backwardation.In the event, the positions proved premature, contributing to a sharp correction in spreads (from late February) and flat prices (from early March).But believers in rebalancing mostly think that the movement to backwardation has been postponed rather than aborted.
EIA: U.S. crude oil inventories decreased by 2.2 million barrels from the previous week --Key highlights from the Summary of Weekly Petroleum Data for the Week Ending April 7, 2017, published by the U.S. Energy Information Administration:
- U.S. crude oil refinery inputs averaged 16.7 million barrels per day during the week ending April 7, 2017, 268,000 barrels per day more than the previous week’s average. Refineries operated at 91.0% of their operable capacity last week
- U.S. crude oil imports averaged 7.9 million barrels per day last week, up by 28,000 barrels per day from the previous week.
- U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 2.2 million barrels from the previous week. At 533.4 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year.
EIA: US crude stockpiles drop 2.2 million bbl - US commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, declined 2.2 million bbl during the week ended Apr. 7 compared with the previous week’s total, according to the US Energy Information Administration’s Weekly Petroleum Status Report.It marks just the second drop of the past 14 weeks. At 533.4 million bbl, US crude inventories are near the upper limit of the average range for this time of year.Separate data from the American Petroleum Institute indicated crude inventories lost 1.3 million bbl last week.EIA reported that total motor gasoline inventories decreased 3 million bbl last week but are in the upper half of the average range. Both finished gasoline inventories and blending components inventories fell.Distillate fuel inventories dropped 2.2 million bbl but are in the upper half of the average range for this time of year. Propane-propylene inventories fell 1.2 million bbl and are in the lower half of the average range. Total commercial petroleum inventories decreased 4.7 million bbl.US crude refinery inputs during the week ended Apr. 7 averaged 16.7 million b/d, up 268,000 b/d from the previous week’s average. Refineries operated at 91% of their operable capacity.Both gasoline production and distillate fuel production increased to 9.9 million b/d and 5.1 million b/d, respectively.US crude imports averaged 7.9 million b/d, up 28,000 b/d from the previous week’s average. Over the last 4 weeks, crude imports averaged 8.1 million b/d, up 3.0% from the same 4-week period last year.Total motor gasoline imports, including both finished gasoline and gasoline blending components, averaged 488,000 b/d. Distillate fuel imports averaged 118,000 b/d last week.
US oil settles at $53.11 a barrel, down 29 cents as traders eye Cushing build, US supply: Oil futures turned lower on Wednesday, pulling back after eight straight sessions of gains after U.S. crude inventory data suggested that the market was still heavily supplied. Traders focused on preliminary U.S. production estimates in the weekly EIA report that suggested domestic output is still climbing. The report also showed stockpiles at the U.S. crude hub at Cushing, Oklahoma, rose 276,000 barrels in the week. Brent crude futures were last down 37 cents at $55.86 a barrel, after hitting a one-month high of $56.65. U.S. West Texas Intermediate (WTI) crude futures were down 29 cents at $53.11 a barrel, after touching the highest since March 7 at $53.76. Both contracts had initially jumped to the highest in more than a month, the eighth straight session of gains, after Saudi Arabia was reported to be pushing fellow OPEC members and some rivals to prolong supply cuts beyond June. Analysts and traders said long-term fundamentals remained strong and more stockpile draw-downs are likely as refiners exit maintenance season. "Crude inventories at Cushing rose 0.28 million barrels (mb) to 69.42 mb; however, this leaves just over 10mb of available storage before operational efficiency starts to be compromised," Standard Chartered said in a note. "We do not expect inventories to reach this point, particularly with the added downward pressure on Midwest inventories from the reduction in Canadian flows."
WTI/RBOB Slide As Crude Production Hits 20-Month High, Cushing Glut Hits Record High --WTI/RBOB prices slipped ahead of DOE data as Canada's growth outlook cut trumped Saudi Arabia's wishy-washy chatter on production cuts. DOE data confirmed the biggest crude draw of 2017 (-2.16mm) and gasopline and distilates saw the 8th week in a row of drawdowns but Cushing's 276k build pushed it to a new record high as US crude production rose once again to its highest sine August 2015. DOE:
- Crude -2.16mm (-1.5mm exp)
- Cushing +276k (+800k exp)
- Gasoline -2.97mm (-1mm exp)
- Distillates -2.15mm (-1mm exp)
The biggest crude draw since 2016 and 8th weekly draw in gasoline and distillates inventories...
Oil Retreats as U.S. Production Gain Offsets Stockpile Decline Crude retreated for the first time in seven sessions after a government report showed U.S. production climbed to the highest level in more than a year, offsetting data on declining stockpiles. Futures ended the longest stretch of gains this year in New York. Crude output climbed for an eighth week, the longest stretch since 2012, according to the U.S. Energy Information Administration. Inventories fell 2.17 million barrels, compared with a 1.5 million barrel drop forecast by analysts surveyed by Bloomberg. Prices rose earlier on reports that Saudi Arabia will support an extension to OPEC-led production curbs. While speculation that the Organization of Petroleum Exporting Countries and its allies will extend their six-month pact aimed at eroding a global glut is helping boost prices, there’s also concern that rising U.S. output will counter the reductions. In its monthly report on Wednesday, OPEC boosted estimates for rival supplies as shale drillers emerge from the industry’s two-year slump. “Overall supply and demand are coming into balance,” Brian Kessens, a managing director and portfolio manager at Tortoise Capital Advisors LLC in Leawood, Kansas, who helps manage $17.1 billion in energy assets, said by telephone. “There’s a little less focus on the weekly inventory numbers and more on OPEC rhetoric.”West Texas Intermediate for May delivery slipped 29 cents, or 0.5 percent, to close at $53.11 a barrel on the New York Mercantile Exchange. Prices touched $53.76 earlier, the highest intraday price since March 7. Total volume traded was about 16 percent above the 100-day average. Brent for June settlement slipped 37 cents, or 0.7 percent, to $55.86 a barrel on the London-based ICE Futures Europe exchange. The global benchmark oil climbed the previous seven sessions, the longest stretch of gains since July 2012. Brent closed at a $2.34 premium to June WTI.
The numbers behind US crude oil balances and inventories -- Crude oil prices are up more than $5/bbl over the past couple of weeks, mostly due to Middle East tensions and the latest readings of OPEC tea leaves. U.S. markets have contributed little to the bullish trend, with crude oil inventories hanging in there at 533.4 million barrels, just under the all-time record hit last week. U.S. production is up almost 800 Mb/d since the low last summer and a whopping 550 Mb/d since the OPEC/NOPEC deal. That’s some decidedly bearish statistics. If these trends hold, the U.S. could completely offset the 1.2 MMb/d in OPEC production cuts in another six months. But that begs the questions, where exactly do these statistics come from, and how should they be interpreted? The first answer is simple: it is the U.S. Energy Information Administration. But where do they get the numbers? And what can we learn about the crude oil market through a better understanding of the sources and assumptions behind these numbers? That is our topic in today’s blog. This is Part 3 of a blog series in which we are examining the growing significance of the U.S. supply/demand balance in the Shale Era, as well as the data that are available to assess the balance on a regular basis. In Part 1, we discussed the relationship between crude oil prices and the U.S. supply/demand balance equation, focusing on what throws the equation out of balance, and what imbalances mean for crude oil prices. Part 2 took us into the math of EIA’s Weekly Petroleum Status Report (WPSR), the numbers released each Wednesday at 10:30 a.m. Eastern Time that include the latest on U.S. crude production; imports and exports; inputs and production at refineries and blending terminals; and inventories at refineries, terminals and pipelines, among other things. Using these data, the folks at EIA give us data to better understand the crude oil supply/demand balance.
Oil: Solid increase for Oil Rig Count - A few comments from Steven Kopits of Princeton Energy Advisors LLC on Apr 13, 2017:
• Total US oil rigs were up 11 to 673
• US horizontal oil rigs added 11 to 572
• The US horizontal oil rig count is now within three weeks of the entire number necessary to cover the US contribution to incremental global oil supply.
• US supply is blowing right through earlier production gain forecasts, up by 600 kbpd over the last half year
U.S. Oil Rig Count Hits 2 Year Hi -- This week’s Baker Hughes rig count has oil rigs up by 11, with a majority of the growth occurring in the Permian Basin in Texas and New Mexico.The number of active oil rigs in the United States now stands at 683 – 332 rigs higher than the figure one year ago. The last time oil rigs were this high in number was in April 2015.Gas rigs declined this week by 3—after five consecutive weeks of growth—bringing the total oil and gas rig count to 847, or 407 more than a year ago today. This week marks the thirteenth straight week of increases to the oil and gas rig count.Both benchmarks were trading down on the day an hour after data release, with WTI trading down 14 cents at $52.97, and Brent trading down 23 cents at $55.63. State-wise, New Mexican drilling activity grew by seven rigs, Oklahoma by three rigs and Texas, by two rigs. Alaska and Louisiana lost two sites each. The Permian Basin saw eight rigs come online, right after a 12-site jump last week. The Permian, the most prolific basin by far, now boasts 339 total rigs, which is 198 more than the 141 rigs in that basin a year ago, dwarfing runner up Eagle Ford’s 75 rigs, which holds 33 more active rigs than a year ago. Eagle Ford and Cana Woodford gained three and two rigs, respectively. DJ-Niobrara, Utica and Williston all gained a single rig, each, while Haynesville and Granite Wash lost the same number. Canada’s oil rig count was down by two, while gas rigs in Canada fell 12. Canada’s total oil and gas rig count now stands at 118, which is 78 more rigs than a year ago.
US Oil Rig Count Surges To 2-Year High - Will Shake Kill The Oil Rally Again? --For the 14th straight week, US oil rig counts rose (by 11 to 683). This is the highest since April 2015... and leads US crude production to its highest level since Aug 2015… The question is, as OilPrice.com's Nick Cunningham asks, will Shale kill off the recent oil price rally again?WTI has rallied more than 11 percent over the past month, raising hopes from oil bulls that maybe, just maybe, the price gains are here to stay. Oil had dipped in February and March on record high levels of oil sitting in U.S. storage, but by April, the market is starting to look tighter.The oil market bust is closing in on the three-year mark, and there are growing signs that things could finally be moving in the right direction.Despite the record high levels of crude oil storage in the U.S., inventories are falling pretty much everywhere else. South Africa, the Caribbean, Nigeria, and Iran are all reporting lower inventory figures, although the reasons vary. Iran cleared out its fleet of floating storage, which had built up during years of sanctions that prevented the Islamic Republic from exporting to its full potential. That backlog of oil has now been worked through and Iran could have trouble lifting exports. In fact, Iran’s exports have been flat since last summer.Europe also has high levels of oil and refined products sitting in storage, but total levels are down from 2016. And like the U.S., the past few months have been quiet ones for refiners. That suggests that inventories should start seeing some more meaningful declines in the months ahead as refineries ramp up. According to FGE, and reported on by Reuters, total product stocks across the U.S., the Amsterdam-Rotterdam-Antwerp region, plus Singapore and Japan, declined by a combined 6.5 million barrels – a sign of market tightening. Storage is still exceptionally high, but converging down towards long-run averages. Outside the U.S., accurate data is hard to come by, so these snippets offer some clues into broader market trends."Across the first quarter of the year, crude stocks built by much less than they did in the first quarter of last year even though refinery maintenance globally was much heavier," Energy Aspects analyst Richard Mallinson told Reuters.
US oil settles at $53.18 a barrel, up 7 cents in overall strong week for crude: Oil prices were little changed on modest volume on Thursday, in a week where crude benchmarks recouped more of March's losses on increased hopes world supply and demand were nearing balance. Benchmark Brent crude futures were up 1 cent at $55.87 a barrel as of 2:30 p.m. ET, after touching a one-month high on Wednesday. U.S. West Texas Intermediate crude futures settled at 7 cents at $53.18 a barrel. The Paris-based International Energy Agency (IEA) said on Thursday that supply and demand in the global oil market were close to matching after a fall in stockpiles in developed countries in March. The market has been oversupplied for three years, prompting members of the Organization of the Petroleum Exporting Countries and some non-OPEC producers to agree to cut output in the first six months of 2017 to rein in the glut. OPEC meets on May 25 to consider extending the cuts beyond June. Saudi Arabia, Kuwait and most other OPEC members are leaning towards this if agreement is reached with other producers, OPEC sources told Reuters last month. OPEC data showed members of the group had cut March output beyond the level they had promised. At the same time, however, U.S. production has continued to increase, with overall production rising to 9.24 million barrels a day out of the United States, according to U.S. Energy Department figures.
Oil Prices Rally Amid Rising Rig Count | OilPrice.com: Oil posted some solid gains this week on outages in Libya, further confidence in an OPEC extension, and the first sizable drawdown in U.S. crude stocks this year. The IEA added its voice to the growing chorus of analysts seeing light at the end of the tunnel. The IEA said in its latest report that the oil market is probably already balanced, although more data is needed. Oil inventories are falling in many parts of the world and have started to decline in the OECD as well. In the coming months, the agency says, more substantial inventory declines will arrive and demonstrate that the oil market is no longer oversupplied. At the same time, the IEA downgraded its oil demand growth estimate for this year from 1.4 mb/d to 1.3 mb/d.Goldman Sachs maintains its projection that oil prices will remain stable for years to come due to improvements in drilling technology that can add marginal barrels whenever they are needed, keeping a lid on prices. The investment bank says that shale will also limit volatility, with crude likely to trade within a 10 to 20 percent band. Goldman has a five-year estimate on WTI at $54 per barrel. "We believe we are going back to an environment similar to pre-2003, a period characterized by stable long-term oil prices and low oil-dollar correlation," the bank’s research note said. JPMorgan Chase, Wells Fargo and Citigroup said this week that their portfolio of energy loans has turned out much better than expected, allowing them to put to work a combined $370 million that they had set aside to cover for losses on those loans. The result will likely be more lending, which will allow more shale companies to drill more wells. Ultimately, this could boost production. Early evidence suggests banks are already stepping up their lending. So-called leveraged loans, which are loans to already indebted companies, shot up by 86 percent in the first quarter compared to a year earlier. The U.S. rig count jumped again this week, the 13th consecutive week of increases. Standing at 683, the rig count is now at its highest level since April 2015.
Exclusive - Saudis, oil majors discuss gas investments ahead of giant IPO | Reuters: Saudi Arabia and international oil companies have discussed gas venture opportunities inside the kingdom and abroad as part of the top crude-exporting country's drive to diversify investments before the listing of national energy giant Saudi Aramco. Saudi officials explored investment opportunities with firms including BP and Chevron to help develop its gas reserves, the world's sixth largest, at a time of booming energy demand at home, four industry sources told Reuters. Aramco has also looked into investing in gas ventures abroad, including with Italy's Eni, the sources said. The development revives memories of talks between Aramco and global majors at the end of the 1990s and early 2000s, known as the Saudi gas initiative. Most of those talks collapsed as the parties disagreed over returns on investment. This time, Aramco is gearing up for a share listing next year, aiming to get a valuation of up to $2 trillion in what could be the world's biggest initial public offering (IPO). Chevron, BP, Aramco and Eni declined to comment on talks. "We have a long-standing relationship with Saudi Arabia, so it is not uncommon for us to talk to them. We're always having discussions about business development. I don't have anything particular to say about Saudi Arabia," Chevron CEO John Watson told Reuters last week. BP Chief Executive Bob Dudley, who traveled to Saudi Arabia at the end of last year, said this year he wouldn't rule out "creative partnerships" with Aramco but that an outright investment by BP in the IPO was unlikely.
Secondary OPEC Sources Show Saudi Oil Production Rose For Second Month --For the second month in a row, Saudi oil production both declined or rose, depending on which sources one believes, OPEC's latest market report showed. Saudi's self-reported production declined by 111Kbbl/d from 10,011 to 9,900kbpd the lowest since January... ... even as secondary sources showed a second consecutive increase in production, from 9,809 in January to just why of 10mmpd in March. And while Saudi production may be rising according to secondary sources, overall OPEC production declined driven by a steep drop in Libyan output where geopolitical developments have prevented the nation's oil fields from producing at capacity. Total OPEC output was said to have declined by -153k b/d (-0.5%) m/m in March to 31.928m b/d, as 9 out of 13 members reduced output. In addition to Libya, Venezuela crude production also extended its decline in March.Curiously, OPEC said that while oil inventories shrank in developed nations as its production cuts took effect, it forecast that rivals in the U.S. shale industry are growing stronger. The cartel boosted estimates for U.S. production growth by 200,000 barrels a day, to 540,000 a day as a recovery in investment helps the nation’s shale-oil explorers resume drilling. The number of rigs in operation has more than doubled since May, according to Baker Hughes Inc., while government data shows U.S. production has recovered to its highest in more than a year Bloomberg reported. Overall non-OPEC production is now expected to grow by 580tb/d. From the report:For 2017, non-OPEC oil supply is now projected to grow by 0.58 mb/d, up by 176 tb/d from the previous MOMR, to average 57.89 mb/d. This is due to higher expectations for US growth – revised up by 200 tb/d – along with lower declines in Colombia and China following revisions of 23 tb/d and 26 tb/d, respectively. Offsetting some of this increase are downward revisions to expected growth in Canada and Brazil has been adjusted down by 53 tb/d and 56 tb/d, respectively.From the supply point of view, it is evident that there are many projects waiting to come on stream in the coming years. The period 2017-2019 is likely to see the largest production increase from mega projects in the industry’s history. Large projects in Brazil, Russia, Canada and the Gulf of Mexico are expected to reach completion and add to global supply between 2017 and 2019. Combined with new shale output, these projects could add another 1 mb/d in the coming years. Many of these projects, costing billions of dollars and taking many years to bring online, were initiated back when oil prices traded at $100/b.In total, OPEC raised estimates for growth in non-OPEC supply for a third month, increasing its forecast by 176,000 barrels a day. The group sees rival production expanding by 580,000 barrels a day, more than four times the growth rate projected in January and almost half the amount its members pledged to cut.
U.S. Insurers Sue Saudis For $4.2 Billion Over 9/11 -- Last year’s Justice Against Sponsors of Terrorism Act (JASTA), a bill which allowed Americans to sue Saudi Arabia in US court over their involvement in 9/11, has yielded another major lawsuit yesterday, a $4.2 billion suit filed by over two dozen US insurers related to losses sustained because of the 2001 attack. The lawsuit is targeting a pair of Saudi banks, and a number of Saudi companies with ties to the bin Laden family, accusing them of various activities in support of al-Qaeda in the years ahead of 9/11, and subsequently having “aided and abetted” the attack."But for the assistance provided by defendants," the lawsuit said, "al Qaeda could not have successfully planned, coordinated, and carried out the September 11th attacks, which were a foreseeable and intended result of their material support and sponsorship of al Qaeda."The 10 defendants in the lawsuit include Al Rajhi Bank, aviation contractor Dallah Avco, the Mohamed Binladin Co, the Muslim World League, and other charities, but the biggest target is the Saudi National Commercial Bank, which is majority state-owned. The Saudi government heavily pressured the Obama Administration to block the JASTA last year, threatening to crash the US treasury market if it led to lawsuits, but overwhelming Congressional support still got it passed into law.While there were more than a few lawsuits already filed in the past several weeks related to JASTA, this is by far the biggest, and most previous lawsuits are still in limbo as the court and lawyers try to combine them into various class action groups.Historically, US sovereign immunity laws have prevented suits against the Saudi government related to overseas terrorism. With the release of the Saudi-related portions of the 9/11 Report last year, however, such suits were inevitable, and the federal government could no longer protect the Saudis from litigation.
Arab Populists Also Blame Foreigners as Gulf Austerity Sets In -- The angst against foreigners that’s sweeping the globe isn’t skipping the oil-rich Middle East.Safa Al-Hashem, the only woman in Kuwait’s 50-seat parliament, is capitalizing on a growing resentment of foreigners to build support for a movement that’s taking shape as the nation’s ruling al-Sabah family withdraws some handouts in an era of cheap oil.“Before asking citizens to pay, the government should reform the population mix by levying taxes on foreigners," said the 52-year-old former investment banker, whose salt-and-pepper pixie-cropped hair and attire of smart business suits make her stand out among exclusively male counterparts in white gowns and headdresses. “The citizen feels that our entitlements lack social justice.” Voices of discontent in Kuwait’s legislature, the most-independent in the Gulf, provide a rare glimpse into how locals are reacting as cash-strapped monarchs from Saudi Arabia to the United Arab Emirates risk their legitimacy by overhauling social contracts that cemented decades of largely autocratic rule. Kuwait’s rulers “have to manage a very delicate transition,” said Graham Griffiths, an analyst at global risk consultancy Control Risks in Dubai. “The issue for them is managing the economic reforms they see as necessary, while placating populist pressures amid broader demand for political reform and accountability.”
Justin Trudeau’s dangerous Syrian Trump gambit -- Trudeau less than twenty four hours prior to the attack said that there needed to be an investigation due to "continuing questions" about who was responsible for the gas strike in Syria and advised caution. Immediately after Trump unleashed the cruise missiles, however, Trudeau was fully on board the war train and asserting now with implied certainty that there was no question of the Syrian regime's guilt. All his pretensions to supporting United Nation's investigations and all his supposed concern about multilateralism were gone. It is amazing what loyal little puppies Canadian Liberals are to American Imperialism and how they love the whiffs of grapeshot the empire likes to unleash. The Trudeau government's utter spinelessness makes perfect sense in this context. It likely makes them feel that they are important players on the world scene as they get the phone call from the Americans advising them in advance of the strike, they can pretend that they matter to the Yanks, and they can stand up in parliament, all serious and statesperson like, and play at being big children one day hoping to grow into adults. The fact that Trump is a megalomaniac whose motives for this attack are anything but humanitarian, that supporting his actions helps to normalize his vile administration, and that these same liberals were denouncing Trump on every front right up until they got to get in on the political boost that seems to come with a certain kind of media endorsed violence, does not factor into their amoral, opportunistic, sad thinking at all. But Canada's Liberal government and other western governments lining up to embrace and endorse this are faced with the immediate conundrum that they are now active apologists for a regime that they know to be headed by a President of uncommon mental instability and surrounded by extremists, bigots, racists and religious lunatics.
Russia-Baiting Pushed Trump To Attack Syria — And Increases The Risk Of Nuclear Annihilation -- Vast efforts to portray Donald Trump as Vladimir Putin’s flunky have given Trump huge incentives to prove otherwise. Last Thursday, he began the process in a big way by ordering a missile attack on Russia’s close ally Syria. In the aftermath of the attack, the cheerleading from U.S. mass media was close to unanimous, and the assault won lots of praise on Capitol Hill. Finally, the protracted and fervent depictions of Trump as a Kremlin tool were getting some tangible results.At this point, the anti-Russia bandwagon has gained so much momentum that a national frenzy is boosting the odds of unfathomable catastrophe. The world’s two nuclear superpowers are in confrontation mode. It’s urgent to tell ourselves and each other: Wake up! The dangers of a direct U.S.-Russian military conflict are spiking upward. After the missile attack, the Russian Foreign Ministry announced that it was suspending a memorandum of understanding with the United States to prevent mid-air collisions over Syria. And Russia’s prime minister, Dmitry Medvedev, issued a statement referring to “our now completely ruined relations” and declaring that the United States was “on the verge of a military clash with Russia.” These ominous developments are a longtime dream come true for ultra-hawks like Republican Senators John McCain and Lindsey Graham, who’ve gained leverage in an alliance with numerous congressional Democrats. The neocons and the “liberal interventionists” really have something going now, after propagating the meme that Trump is a Putin puppet. At this perilous moment in human history, the quality of the Democratic Party leadership was embodied in a tweet last month from the Democratic National Committee’s new chair, Tom Perez, who sent out this message about a weekly address by President Trump: “Translated from the original Russian and everything.” Such tactics aren’t just McCarthyite. They are baiting, goading and pressurizing Trump to prove that he’s willing to clash with Russia after all.
The Risk Of A Major Oil Outage Just Grew Substantially -- The U.S. cruise missiles that were fired on Syria will have severe repercussions for the global oil market. The current price hike could be short-lived, but new confrontations are already on the horizon. Analysts are wrong to expect that Trump’s military action has improved the Middle East’s situation. The political risk premium will be higher for the foreseeable future as instability has increased.Assad’s allies, Russia, Iran and Hezbollah, are openly confronting the U.S. and its allies. In a statement made by the joint command center, which is made up of Russia, Iran and militias supporting Syrian President Bashar al-Assad, the U.S. has been warned that the missile attack crossed “red lines”. The pro-Assad group reiterated that any new aggression will be met by military force.One of the main worries should be the cancellation by Russia of its cooperation with the U.S. (and others) with regards to operational security in the area. The risk of a military confrontation between the different armed players in the conflict has increased. Several NATO countries, such as Belgium, have already postponed further air force operations in Syria. The latter is playing into the hands of the respective armed extremists and Russian backed forces. It seems that this is not what Trump was intending. At the same time, the Arab world also doesn’t seem to be totally supporting the U.S. attack. Iraq, as a perceived ally of Iran, indicated its worries while the region’s leading military and political power, Egypt, has openly criticized the military action. This in stark contrast to most of the GCC Arab countries. Trump’s unilateral military action has increased instability instead of decreasing it. As openly criticizing Washington is still not done, except by Cairo, leaders in Riyadh, Abu Dhabi, Doha and Baghdad, will be assessing the options and the possible negative repercussions of this U.S. action. In the short term, the global oil market might not feel an effect of the actions. Syria’s position as an oil and gas producer is negligible. The future impact, however, could be immense. Especially if there is a spill-over of the civil war to Jordan, Saudi Arabia, or Iraq. Trump’s actions have increased this option substantially.
Intelligence and Military Sources Who Warned About Weapons Lies Before Iraq War Now Say that Assad Did NOT Launch Chemical Weapon Attack -- Former U.N weapons inspector Scott Ritter warned before the start of the Iraq war that claims that Saddam Hussein possessed weapons of mass destruction were false. Sunday, Ritter wrote that current claims that the leader of Syria launched a chemical weapons attack was false: Some sort of chemical event took place in Khan Sheikhoun; what is very much in question is who is responsible for the release of the chemicals that caused the deaths of so many civilians. No one disputes the fact that a Syrian air force SU-22 fighter-bomber conducted a bombing mission against a target in Khan Sheikhoun on the morning of April 4, 2017. The anti-regime activists in Khan Sheikhoun, however, have painted a narrative that has the Syrian air force dropping chemical bombs on a sleeping civilian population. A critical piece of information that has largely escaped the reporting in the mainstream media is that Khan Sheikhoun is ground zero for the Islamic jihadists who have been at the center of the anti-Assad movement in Syria since 2011. Up until February 2017, Khan Sheikhoun was occupied by a pro-ISIS group known as Liwa al-Aqsa that was engaged in an oftentimes-violent struggle with its competitor organization, Al Nusra Front (which later morphed into Tahrir al-Sham, but under any name functioning as Al Qaeda’s arm in Syria) for resources and political influence among the local population. Al Nusra has a long history of manufacturing and employing crude chemical weapons; the 2013 chemical attack on Ghouta made use of low-grade Sarin nerve agent locally synthesized, while attacks in and around Aleppo in 2016 made use of a chlorine/white phosphorous blend. Early on, the anti-Assad opposition media outlets were labeling the Khan Sheikhoun incident as a “Sarin nerve agent” attack; one doctor affiliated with Al Qaeda sent out images and commentary via social media that documented symptoms, such as dilated pupils, that he diagnosed as stemming from exposure to Sarin nerve agent. Sarin, however, is an odorless, colorless material, dispersed as either a liquid or vapor; eyewitnesses speak of a “pungent odor” and “blue-yellow” clouds, more indicative of chlorine gas. The lack of viable protective clothing worn by the “White Helmet” personnel while handling victims is another indication that the chemical in question was not military grade Sarin; if it were, the rescuers would themselves have become victims (some accounts speak of just this phenomena, but this occurred at the site of the attack, where the rescuers were overcome by a “pungent smelling” chemical – again, Sarin is odorless.)
US claims of Syria nerve gas attack: The anatomy of a lie - The claims by the US government that the Syrian government carried out a chemical weapons attack on the town of Khan Sheikhun, in southern Idlib province on April 4, have been backed by a week of nonstop media propaganda, as well as uncritical support, across the official political spectrum, for the missile strike ordered by President Trump against a Syrian base. The charges against the Syrian government are absurd and unbelievable. The campaign mounted by the Trump administration, the intelligence agencies, the Pentagon and the Democratic Party demonstrates complete contempt for the intelligence of the people, and a belief that they can lie with impunity, because nothing they say will be challenged by the servile American media. When a policeman shoots down a working-class youth, it takes months, sometimes years, to complete the investigation. In the case of the Syrian events, it required only minutes for the US government to affix blame and three days to carry out the punishment, firing 59 Tomahawk cruise missiles at a Syrian airbase. In analyzing a crime, there are three factors to investigate: motive, means and opportunity. In relation to the nerve gas attack on Khan Sheikhoun, neither the Russians nor the Syrians had any reason to carry out the attack. The Assad regime had nothing to gain from the use of nerve gas on a town that was not a significant military target. Moreover, carrying out such an attack would inevitably provoke US military retaliation, something that Assad, on the brink of complete victory in the protracted civil war, would hardly want to risk.The Syrian rebels and the US government, on the contrary, had motive, means and opportunity. The rebels would view any loss of life as a small price to pay to bring about US intervention in the civil war which they were losing. They have stockpiles of nerve gas and have shown before, in the staged attack on Ghouta in 2013 which killed many more people, a willingness and ability to carry out such a provocation. Just as importantly, the rebels and their CIA sponsors had opportunity. According to a detailed analysis of the Khan Sheikhoun attack by the respected US physicist and missile expert Theodore Postol, emeritus professor at MIT, the physical evidence strongly suggests that the delivery system for the nerve gas was a mortar shell placed on the ground, not a bomb dropped from a warplane. That means the attack was almost certainly carried out by those who controlled the ground around Khan Sheikhoun, the rebel forces linked to Al Qaeda.
ISIS Attacks US-Led Base In Southern Syria, As Assad Said To Use White Phosphorus -- With the US now engaged in military conflict with, and targeting Syrian army forces, what the Trump administration has (un)wittingly done is provide support to Islamic State, al-Qaeda, and al-Nusra and other terrorist forces, all of which have been engaging with the Assad regime in a fight in which the Syrian president has gradually seen the tide of war turn in his favor. At least until last Friday's US cruise missile attack that is. Which is why it should probably come as no surprise that, emboldened by US actions, moments ago the WSJ reported that Islamic State militants attacked a US-led coalition base (at least we now have official confirmation that there are US military bases in Syria) in southern Syria on Saturday, "triggering a fierce fight that required coalition airstrikes to repel, U.S. military officials said Sunday."The complex attack began on Saturday when Islamic State fighters detonated a vehicle bomb at a base in al-Tanf, a town in southern Syria along the Jordan border used by American special operation forces and Syrian rebels working with the U.S. coalition, the officials said.Between 20 and 30 Islamic State fighters, including some with suicide vests, then attacked the base, which is a staging ground and training facility for the U.S.-backed Syrian rebels.As the WSJ adds, Coalition forces and Syrian rebels engaged in firefights with the attackers and then called in airstrikes to repel the attack, officials said.Luckily, there was no word of any American fatalities in the attack, although next time the US forces on the ground may not be so lucky, and the resulting media storm would prompt a full reappraisal of Trump's action which by weakening Assad implicitly and directly is boosting the relative strength of the Islamic State. The Islamic State attack comes as the U.S. military is deepening its presence in Syria as part of an intensifying campaign to drive the extremist group from its de facto capital in Raqqa. For weeks, the U.S. military has been strengthening its presence along the Jordan-Syria border, according to U.S. and Jordanian officials.
Trump’s Strike has Prolonged the Syrian Tragedy -- The liberals pleasure at the proof of Trump's attack capabilities is felt even more keenly by the U.S. foreign policy establishment, all strands of which are overjoyed that the President has shown first that he is prepared to take the U.S. back onto the attack, and second that he is coming back under their control. In the words of former NATO commander James Stavridis: “With this tactically sound, professionally executed strike in response to significant human rights violations, President Trump shows above all that he is willing and able to take advice from the first-class national security team that he has assembled.” The argument, if that is not too strong a word, most widely used to justify the attack is that it will have a deterrent effect on President Assad and so reduce the likelihood of further atrocities. It therefore apparently represents some kind of limited progress for Syrian people. The chemical attack at Khan Sheikhoun was horrific, and outrage is the only human reaction. But the question is, has Trump's response really helped to limit future killing? Events since have proved the hollowness of this claim. Apart from the fact that the attack will have caused its own horrors – the Syrian government claims nine civilians have been killed – it has demonstrably escalated tensions in Syria. The Russians, for example, have responded by moving to beef up Syria's air defence systems and upgrade their ability to bring down fighter planes. They have also apparently redirected a Black Sea Frigate armed with cruise missiles to the Syrian port of Tartus. Interventionists on all sides have been emboldened. Inside Syria, calls for more Western intervention against Assad are being made with renewed vigour. In the U.S., Hilary Clinton is following up recent calls for a no-fly zone and attacks on all of Assad's airbases with a demand for “a broader strategy to end Syria's civil war.” This atmosphere is almost certain to lead to an intensification of the fighting, leading of course in turn to many many more civilian deaths. Crucially, it also makes an effective political process – the only possible path to peace – ever more remote. Hundreds of thousands of people have been killed in this desperate war. In so far as it has had an impact on the Syrian situation, Trump's attack can only have deepened and prolonged the terrible tragedy of the Syrian people.
Syria Claims US-Led Coalition Strike On ISIS Chemical Weapons Depot Has Killed Hundreds --The Syrian General Staff said that the US-led coalition struck an ISIS depot storing chemical weapons in Deir ez-Zor on Wednesday, poisoning and killing several hundred people, including civilians. As SputnikNews reports, the Syrian military said that this fact proves that terrorists possess chemical weapons."The jets of the so-called US-led coalition launched a strike at about 17:30-17:50 [local time, 14:30-14:50 GMT] on a Daesh warehouse where many foreign fighters were present. First a white cloud and then a yellow one appeared at the site of the strike, which points at the presence of a large number of poisonous substances. A fire at the site continued until 22:30 [19:30 GMT],"The Syrian army yet again denied possessing chemical weapons. According to the Syrian General Staff, the US-led coalition's strike killed several hundred people, including civilians. Hundreds were poisoned as a result of the strike on Daesh's headquarters and depot with chemical weapons."This confirms that Daesh and al-Nusra terrorists possess chemical weapons and are capable of using, obtaining and transporting it," the document said.Furthermore, if true, the US coalition just did exactly what Russia has claimed occurred in the initial chemical attack (that prompted President Trump's "Tomahawk" torrent). The Russian Defense Ministry said the day after the initial chemical weapons release that an airstrike near Khan Shaykhun was carried out by Syrian aircraft, struck a terrorist warehouse that stored chemical weapons slated for delivery to Iraq. Of course, the propaganda battle is not over so what we need now is some YouTube clip to 'prove' what the US coalition did.
For The Third Straight Month, The US Killed More Syrian Civilians Than Russia --March was the deadliest month ever recorded by Airwars during the Coalition’s campaign in Iraq and Syria. This coincided with the greatest number of munitions dropped by the allies so far in the war. The high number of alleged incidents across both countries forced Airwars temporarily to pause its full vetting of Russian airstrikes in order to keep pace with the reported Coalition toll. As of March 31st 2017, 11,554 airstrikes had been carried out in Iraq and 7,831 in Syria since the start of the Coalition campaign against so-called Islamic State. During March, reported strike actions in Syria decreased by 21%, with 434 reported strikes. In Iraq, 268 strikes were declared – a marginal decrease of 1% over February. Yet as the record tolls of civilians killed and bombs dropped show, these strike numbers do not tell the whole tale. The month actually saw the greatest number of munitions dropped during the war so far. The declared active members of the Coalition (the US, UK, France, Belgium, Denmark, Australia – along with possibly Jordan, Saudi Arabia and the UAE) dropped a total of 3,878 munitions on ISIL targets in March, according to figures published by US Air Force Central Command. This was a 13% increase over the previous month. So far this year, 10,918 munitions have been dropped on Iraq and Syria, with January, February and March each setting new records for munitions dropped. This represents a 59% rise on the number of munitions released during January – March 2016, suggesting that President Donald Trump may be following through with his election promise to “bomb the shit out of ISIS”. According to official figures provided to Airwars by CENTCOM, the US carried out 97% of all Coalition strikes in Syria during March. The remaining members of the alliance conducted just 13 strikes in Syria during the month – a drop of 28% on those carried out in February. In effect, the US is carrying out a quasi-unilateral campaign against ISIS in Syria – alongside its completely unilateral campaign against al Qaeda targets.
Migrants from west Africa being ‘sold in Libyan slave markets’ - West African migrants are being bought and sold openly in modern-day slave markets in Libya, survivors have told a UN agency helping them return home. Trafficked people passing through Libya have previously reported violence, extortion and slave labour. But the new testimony from the International Organization for Migration suggests that the trade in human beings has become so normalised that people are being traded in public. “The latest reports of ‘slave markets’ for migrants can be added to a long list of outrages [in Libya],” said Mohammed Abdiker, IOM’s head of operation and emergencies. “The situation is dire. The more IOM engages inside Libya, the more we learn that it is a vale of tears for all too many migrants.” The north African nation is a major exit point for refugees from Africa trying to take boats to Europe. But since the overthrow of autocratic leader Muammar Gaddafi, the vast, sparsely populated country has slid into violent chaos and migrants with little cash and usually no papers are particularly vulnerable. One 34-year-old survivor from Senegal said he was taken to a dusty lot in the south Libyan city of Sabha after crossing the desert from Niger in a bus organised by people smugglers. The group had paid to be taken to the coast, where they planned to risk a boat trip to Europe, but their driver suddenly said middlemen had not passed on his fees and put his passengers up for sale. “The men on the pick-up were brought to a square, or parking lot, where a kind of slave trade was happening. There were locals – he described them as Arabs – buying sub-Saharan migrants,” said Livia Manante, an IOM officer based in Niger who helps people wanting to return home. She interviewed the survivor after he escaped from Libya earlier this month and said accounts of slave markets were confirmed by other migrants she spoke to in Niger and some who had been interviewed by colleagues in Europe.
China Car Sales Growth Slumps In March As Tax Incentives Removed As U.S. auto OEM's deal with 'plateau-ing' sales domestically, it appears increasingly likely that they're also about to suffer the consequences of some volume pull forward in China that artificially boosted 2016 sales. As the Wall Street Journal points out this morning, Chinese auto sales growth has slowed materially so far in 2017, with passenger car sales up just 0.59% in March versus 15% growth in 2016, after auto 'purchase taxes' were raised to 7.5% from 5% last year. The tax cut was implemented in 2016 to boost slowing car sales and it seems to have worked 'beautifully.' The tax is expected to return to it's normal level of 10% at the end of 2017...unless more stimulus is deemed necessary in the interim, of course.Car sales in China rose at their fastest pace in three years in 2016 but are expected to cool considerably this year, as a weaker sales-tax incentive puts pressure on demand. Buyers of cars with engines up to 1.6 liters last year paid a 5% purchase tax. This year, buyers of such cars will pay a 7.5% rate.In January, the car manufacturers’ group predicted a considerably slower 5% rise in China’s car sales this year compared with 15% in 2016. A rush by consumers to benefit from a lower purchase tax drove record-setting monthly sales figures last year but cut into future purchases, dealers and analysts say. Ford Motor Co. has said it expects sales growth in China to slow as the market matures.Sales of vehicles, excluding those typically used for commercial purposes, grew 1.7% to 2.1 million units in March from a year earlier, the government-backed China Association of Automobile Manufacturers said Tuesday.This marked a slowdown from the 6.3% growth in the first two months of the year. By comparison, sales grew nearly 10% in March 2016 from the previous year.Car sales in China rose at their fastest pace in three years in 2016 but are expected to cool considerably this year, as a weaker sales-tax incentive puts pressure on demand. Buyers of cars with engines up to 1.6 liters last year paid a 5% purchase tax. This year, buyers of such cars will pay a 7.5% rate.
China Is Playing a $9 Trillion Game of Chicken With Savers -- Like many individual investors in China, Yang Mo has no idea what’s in the wealth management products that make up a big chunk of her net worth. She says there’s really no point in finding out. Sure, WMPs invest in all kinds of risky assets, but the government would never let a big one fail, she says. “It’s not how the Chinese government does things, and it’s not even Chinese culture,” explains Yang, a 29-year-old public relations professional in Beijing. Hers is a common refrain in Asia’s largest economy, where savers have poured $9 trillion into WMPs and similar products on the assumption that they’ll get bailed out if the investments sour. Even after news in February that policy makers are drafting rules to make it clear that state guarantees don’t exist, Yang is undaunted. She says she’ll only withdraw money from WMPs in the unlikely event that they start to suffer losses. “Cracking down on implicit guarantees is just like curbing home prices,” she says. “It’s something that the government needs to say, but it’s not something they will eventually do.” Yang’s steadfast faith in bailouts illustrates the dilemma for authorities as they try to reduce moral hazard and improve the pricing of risk in China’s financial system: It may require a major WMP blowup to shake investors out of their complacency, an event that could wreak havoc on banks that increasingly rely on the products for funding. Read more: A QuickTake Q&A on wealth-management products “Only after a WMP defaults in a high-profile way will investors start worrying about their money,” says Hao Hong, a Hong Kong-based strategist at Bocom International Holdings Co. who’s known for his prescient calls on Chinese markets. While Hong characterizes the proliferation of WMPs as a “bubble” that will eventually burst, he says imminent losses are unlikely because policy makers are focused on maintaining market stability before a leadership reshuffle at the end of 2017.
So, Is China Pegging to the Dollar or to a Basket? - Brad Setser - Does China manage its currency against the dollar, against a basket, or to whatever is most convenient at any given point time? Cynics have argued that China seems to peg to the dollar when the dollar is going down and the basket when the dollar is going up. The yuan’s moves in March at least raise the question again, even if the signal is relatively weak. The yuan has hewed fairly closely to the dollar over the last few weeks. And in March that meant some modest depreciation against the basket (though the depreciation against the basket was partially reversed in the first week of April when the dollar rose). In other words, had China managed more against a basket, the yuan should have appreciated a bit more against the dollar than it did. Managing the yuan against the dollar is in some ways less risky than managing against a basket, as Chinese residents still seem to focus on the yuan’s value against the dollar. Stability against the dollar so far this year—and tighter controls— has contributed to the relative stability in China’s headline reserves. It is likely that China is no longer selling all that much foreign exchange in the market, though we still need the settlement data and the PBOC balance sheet data to have a clear picture for March. I still worry a bit. The risk all along has been that China’s new policy of managing its currency against the basket was masking a policy of managing its currency to depreciate against the basket. But the way China manages its currency matters—to the U.S. and to the world. The value of the yuan, more than any other single factor, determines whether it makes sense to locate production in China for U.S. sales, or locate production in the U.S. for sales to China. Of course sectoral barriers matter. But in theory, restrictive Chinese policies in one sector should be offset in part by moves in the currency—fewer Chinese imports should mean a stronger currency, and fewer exports. The sectoral barriers thus matter for particular firms, but the exchange rate matters for the broader economy.* That is why I think China’s currency management needs to remain on the bilateral and multilateral agenda and why I disagree with those who argue that other issues (notably the ability of U.S. firms to invest more freely in China) matters more to the U.S. economy than the level of the exchange rate.
When Did China “Manipulate” Its Currency? -- Brad Setser -- There is no single definition of manipulation, to be sure—so no way of definitively answering the question. Over the last ten or so years, manipulation has been equated with “buying foreign exchange in the market to block appreciation.” That definition is certainly built into the criteria laid out in the 2015 Trade Enforcement Act. But “buying reserves to block appreciation” wasn’t hardwired into the 1988 act, which has a much more elastic definition of manipulation.Yet even if the 2015 Trade Enforcement Act isn’t the only possible definition of manipulation, it still provides a bit of guidance – as President Trump implicitly recognized today: “Mr. Trump said the reason he has changed his mind on one of his signature campaign promises is that China hasn’t been manipulating its currency for months.”The thresholds of being called out for “enhanced analysis” that the Treasury was required to set out in the 2015 act aren’t perfect—no measures are. The threshold for the bilateral trade balance is genuinely problematic. It lets small countries with a propensity to intervene in the foreign exchange market off the hook for one. And even if you think there is sometimes valuable information in the bilateral trade data (many don’t), the bilateral balance really should be assessed on a value-added basis.* But the current 3 percent of GDP current account surplus and 2 percent of GDP in intervention thresholds are certainly reasonable. Those criteria show that China should have been singled out for “enhanced engagement” from 2005 to roughly 2012, but not since. But all criteria can be gamed. And I worry a bit that China has been revising its current account data with the goal of keeping the headline external surplus down—it is hard to overstate the number of times the details of China’s services data have been revised since 2014.*** So Cole Frank and I looked at what would happen if some of the Treasury criteria were changed, or more realistically, augmented.****
Opinion: summit was not quite the meeting of equals Xi would have wanted | South China Morning Post: Chinese President Xi Jinping’s two-day visit to US President Donald Trump’s over-the-top estate at Mar-a-Lago in Florida was meant to offer an opportunity to showcase China as an equal to the United States. Xi would ideally have stood shoulder-to-shoulder with Trump, amid all the pomp and ostentatious kitsch of what Trump has called his ‘Winter White House’, and impressed on the US administration that China’s long-sought reality of a ‘G2’ of sorts with the United States was now a fait accompli amid Trump’s supposed lurch away from the old shibboleths of US foreign policy since the end of the second world war.For Xi, the Mar-a-Lago summit could have represented the start of a new era not only in US-China relations, but also served to carve out an unmistakable role for Beijing in global leadership – something the Chinese leaders sought to impress on the world’s gathered elite at the World Economic Forum meeting in Davos, Switzerland, in January. The Trump administration, however, had other plans. Just before the two leaders sat down to dine on steak, Trump authorised a major unilateral use of force, with the US military firing 59 cruise missiles against a Syrian military airfield in retaliation for President Bashar al-Assad’s use of chemical weapons against civilians days earlier. When Trump informed Xi of the strike later in the evening, the subtext was likely laid on so thick that Xi could have cut it with his steak knife: the United States remains a superpower and the only country both capable and willing of this sort of unilateral action. Tellingly, the Chinese Foreign Ministry, while noting the strike, did not offer outright condemnation. If this wasn’t a moment of humiliation for Xi with nationalistic audiences back home looking for signs of strength against a US leader who had been vocal about pushing back against China, it was at least a moment of forced weakness.
The End of China’s Export Juggernaut - NY Fed - China has been an exporting juggernaut for decades. In the United States, this has meant a dramatic increase in China’s share of imports and a ballooning bilateral trade deficit. Gaining sales in the United States at the expense of other countries, Chinese goods rose from only 2 percent of U.S. non-oil imports in 1990 to 8 percent in 2000 and 17 percent in 2010. But these steady gains in U.S. import share have stopped in recent years, with China even losing ground to other countries in some categories of goods. One explanation for this shift is that Chinese firms now have to directly compete against manufacturers in high-skill developed countries while also fending off competition from lower-wage countries, such as Vietnam. This inability to make additional gains at the expense of other countries means that exports don’t contribute as much to China’s overall growth as they used to. The United States had a merchandise trade deficit of $350 billion with China in 2016, accounting for roughly half of the overall U.S. trade deficit. The import growth of goods from China has been impressive, with imports from China growing at an annual rate of 14 percent since 1990, while total U.S. imports were growing at an annual rate of only 6 percent. That is, China has had great success in selling to the United States by taking market share away from other countries. A breakdown of U.S. imports into the four largest categories, accounting for roughly two-thirds of the total, demonstrates the source of this success. As seen in the chart below, China’s import shares for apparel, electronics, electric machinery, and non-electric machinery were all fairly high in 2002, the beginning of the data series used here, and continued to increase. In 2002, China accounted for 25 percent of all U.S. apparel imports and 15 percent of all electronics imports. By 2010, these shares were up to 50 percent and 40 percent, respectively. Market-share increases in general machinery and electrical machinery were less dramatic but still substantial over this period, rising by 8 percentage points (to 15 percent) and 11 percentage points (to 35 percent), respectively.
Chinese Exports Surge Most In 2 Years But Goldman Warns It Won't Continue - Amid all the chaos of lunar new year adjustments, Chinese exports in March surged 16.4% YoY (-1.3% YoY in Feb) - the biggest jump since Feb 2015. Import growth fell back from February's surge (but surprised to the upside). Furthermore, China's trade surplus with the United States, another bone of contention for Trump, widened in March from February. China's overall trade surplus rose in March after logging its first deficit in three years in February. With very limited details released so far, we cannot be certain about the drivers of the high March trade growth yet, but the following factors likely contributed according to Goldman:
- 1. Firm domestic and external demand growth.
- 2. Higher export and import prices. These prices tend to lag spot market prices and possibly still went up despite the correction in spot market prices. In value terms, iron ore imports went up 101% yoy, higher than 96% yoy in January/February; steel products imports decelerated to 11% yoy, from 18% yoy in January/February; crude oil imports grew 99% yoy, vs. 71% yoy in January/February. In volume terms, iron ore imports went up 11% yoy, lower than 13% yoy in January/February; steel products imports grew 2.4% yoy in March, vs 17.2% yoy in January/February; crude oil imports grew 19.4% yoy, vs. 12.5% yoy in January/February.
- 3. Low base, especially for exports, which supported year-over-year growth. (March 2016 export sequential growth was -5.9% mom sa)
- 4. Chinese New Year distortions for both exports and imports but in opposite directions. Exports were distorted on the upside and imports on the downside. The magnitude of the distortions are highly uncertain, but potentially as large as 10 ppt. As a result March trade balance was heavily distorted on the upside, just as February balance was distorted on the downside which resulted in the temporary deficit.
Does Currency Pressure Work? The Case of Taiwan - Brad Setser -- I probably am the only person in the world who—setting aside the internal politics of the Trump White House—would be excited to write the Treasury’s foreign currency report this quarter. Not because of China. I would say China met the existing 2015 manipulation criteria in the past and I would put the criteria under review (I personally think the bilateral surplus analysis should be complemented with value-added measures, which would reallocate some of China’s surplus to Japan, Korea, Taiwan, and others).* I might even find a way to warn that a country that guides its currency down could meet the 1988 definition manipulation even if it is selling some of its foreign currency reserves to limit the pace of depreciation (a controlled depreciation is hard, and usually requires reserve sales). But not name China now. The U.S. would be completely isolated in naming China now, the impact of China’s 2016 stimulus seems to have been bigger than the impact of the renminbi’s depreciation and there is plenty of scope to get tough on China on other trade issues. As the Financial Times notes” “It is in no one’s interest, including the US, if Beijing suddenly stops intervening to defend the renminbi and a destabilising rush of capital flight and sharp devaluation follows.” But the report could still be interesting, as there is a good case that the United States should find ways to keep the heat on Korea and Taiwan up — even if neither likely meets all three of the criteria in the 2015 Trade Enforcement Act, and even if geopolitics probably is a constraint on getting too tough on Korea right now. Korea for example still seems pretty comfortable intervening to keep the won in a band. It seems to have intervened again to limit the won’s appreciation in late March (at around won 1115, the market has subsequently turned). And Korea’s band is set in a way that keeps the won much weaker than it was before the global crisis, allowing foreign demand (via the trade surplus) to help offset the domestic impact of Korea’s weak social safety net, forced pension savings, and tight fiscal policy. And Taiwan has long been comfortable with a weak New Taiwan dollar maintained in part through intervention and in part through encouraging Taiwanese financial institutions (notably the life insurers) to invest ever larger sums abroad.
Exclusive: North Korean ships head home after China orders coal returned | Reuters: A fleet of North Korean cargo ships is heading home to the port of Nampo, the majority of it fully laden, after China ordered its trading companies to return coal from the isolated country, shipping data shows. Following repeated missile tests that drew international criticism, China banned all imports of North Korean coal on Feb. 26, cutting off the country's most important export product. To curb coal traffic between the two countries, China's customs department issued an official order on April 7 telling trading companies to return their North Korean coal cargoes, said three trading sources with direct knowledge of the order.U.S. President Donald Trump and Chinese President Xi Jinping were discussing North Korea at Trump's Mar-a-Lago resort on April 7. Shipping data on Thomson Reuters Eikon, a financial information and analytics platform, shows a dozen cargo ships on their way to North Korea's main west coast port of Nampo, almost all carrying cargoes from China. Chinese authorities did not respond to requests for official comment. The Trump administration has been pressuring China to do more to rein in North Korea, which sends the vast majority of its exports to its giant neighbor across the Yellow Sea. But U.S. Secretary of State Rex Tillerson has said last week's U.S. military strike against Syria over its alleged use of chemical weapons was a warning to other countries, including North Korea, that "a response is likely" if they pose a danger.
China Reportedly Tells Military To Be Ready To "Move" To North Korea Border -- According to the otherwise credible UPI, or United Press International, China has ordered its military to be on nationwide alert, in addition to areas near the North Korea border, as tensions escalate on the peninsula.Citing the Information Center for Human Rights and Democracy, a nongovernmental organization in Hong Kong, UPI writes that Beijing has ordered troops at all five military "regions" to maintain preparedness because of the situation in North Korea, according to Oriental Daily News in Hong Kong. According to the NGO, China's armored and mechanized infantry brigades in the provinces of Shandong, Zhejiang and Yunnan received the state mandate.UPI adds that about 25,000 troops of the Chinese military's 47th group army of the Ninth Armored Brigade have been instructed to be ready to move long distances, close to the North Korea border, the Hong Kong-based organization said. Other troops may have been mobilized.As reported prefiously, according to Taiwan's China Post, the Chinese government may have deployed about 150,000 troops along the North Korea border on Sunday, as U.S. and South Korea militaries conducted joint exercises in and around the peninsula. However, earlier on Wednesday Chinese officials categorically denied the report.The country keeps missiles, including 12 Dongfeng-03 ballistic missiles and 24 Dongfeng-21 "Carrier-killer" missiles at the 51st rocket army station in Shenyang, Liaoning Province.China has become increasingly frustrated with North Korea's missile threats.Following news of the U.S. deployment of the aircraft carrier Carl Vinson to the peninsula, state tabloid Global Times issued an editorial on Wednesday, saying more Chinese citizens want China to place heavier sanctions on North Korea. The Global Times English edition also issued an editorial saying China would "send out troops for sure" if military conflict is sparked on the peninsula.
US and North Korea ‘closer to brink’ of accidental conflict | South China Morning Post: A US Navy strike group headed by the aircraft carrier USS Carl Vinson steamed towards the western Pacific on Sunday for what is expected to be another American show of force off the Korean peninsula. The US Pacific Command ordered the group – which includes several missile destroyers and cruisers – to sail north from Singapore on Saturday, according to the US Navy. The orders come as observers warn of a growing risk of accidental conflict on the peninsula. While the US and North Korea would avoid unilateral action, rising tensions in the region mean either one might, in haste, misread moves by the other. “Neither the US nor North Korea would take the initiative to wage a war, but the risk of conflict is higher as a small miscalculation or accident could bring war to the peninsula,” said Zhang Tuosheng, from the China Foundation for International and Strategic Studies. Beijing-based military analyst Li Jie agreed. “The [presence of] the US strike group [near the Korean peninsula] will surely raise the possibility of miscalculation, which is already very high. It could go even higher if [US President] Donald Trump or [North Korean leader] Kim Jong-un takes a stronger stand against the other.” The US has close to 30,000 troops stationed in South Korea, and US warships routinely make shows of force near the peninsula.The strike group’s deployment comes just days after Trump told President Xi Jinping in their first face-to-face meeting that the US was prepared to act alone on North Korea.
Air China Suspends Flights To North Korea As Kim Vows "Merciless Response To Any US Provocation" ---In the latest escalation over what may be an imminent preemptive airstrike on North Korea by US warships now located just 300 miles away from the North Korean nuclear test site, moments ago China's national airline, Air China, announced it was suspending flights from Beijing to the North Korean capital, Pyongyang, from late on Friday, Chinese state broadcaster CCTV said. It did not say why the flights, which operate on Monday, Wednesday and Friday, were being suspended.In the report published on its website, CCTV did not cite a source while according to Reuters, Air China could not immediately be reached for comment after business hours. The last flight between the two cities took place on Friday, with the return flight to Beijing arriving in the early evening, the broadcaster said. Air China began regular flights between the two countries in 2008 but the flights were frequently cancelled because of unspecified problems, the broadcaster said. China is North Korea's sole major ally but it disapproves of the North's weapons programs, and its confrontations with the United States and its Asian allies, and it has supported U.N. sanctions against it.Following repeated missile tests that drew international criticism, China banned all imports of North Korean coal on Feb. 26, cutting off the country's most important export product. North Korea's army vowed a 'merciless' response to any US provocation, the official news agency reported Friday, as tensions soar over Pyongyang's rogue nuclear program. Meanwhile, after warning that it was ready to "go to war", on Friday North Korea's army vowed a "merciless" response to any US provocation, the official news agency reported Friday. A statement of KCNA, which cited Washington's recent missile strike on Syria, said the administration of President Donald Trump had "entered the path of open threat and blackmail against the DPRK".
China warns of North Korea conflict ‘at any moment’ - A conflict over North Korea could break out “at any moment”, China said Friday, warning there would be no winner in any war as tensions soar with the United States. The sharp language came after US President Donald Trump said the North Korea issue “will be taken care of”. Trump has sent an aircraft carrier-led strike group to the Korean Peninsula to press his point, one of a series of measures that indicate his willingness to shake up foreign policy strategy, AFP reported. “Lately, tensions have risen… and one has the feeling that a conflict could break out at any moment,” Chinese Foreign Minister Wang Yi said. “If a war occurs, the result is a situation in which everybody loses and there can be no winner.” Whichever side provoked a conflict “must assume the historic responsibility and pay the corresponding price,” he said. Wang’s comments mirrored a warning from the North Korean Foreign Ministry’s Institute for Disarmament and Peace which said “thermo-nuclear war may break out any moment”. “The US introduces into the Korean Peninsula, the world’s biggest hotspot, huge nuclear strategic assets… pushing the situation there to the brink of a war,” it said according to the North’s official news agency KCNA.
India’s cash crunch and the risk to its non-bank lenders A thought from Ambit’s Saurabh Mukherjea on the risks to India’s non banking financial companies: ... Prime Minister Modi’s crackdown on black money creates even bigger asset quality risks for the NBFCs, risks that the money market is not pricing in. Almost by design, the NBFCs have historically assumed those credit risks that the banks do not want to assume eg. lending to SMEs whose cash flows are not entirely shown accurately in their tax returns or lending to homeowners with irregular cash flows. Both of these constituencies have a heavy interface with the informal economy in India. As the PM’s crackdown on black money proceeds apace, first by reducing the amount of currency in circulation by 40%, then by 1.8mn Income Tax notices issued through Jan-Mar 2017 to people who deposited more than Rs0.25mn of cash in the banks in Nov-Dec 2016, then through the Wages Act of February 8, 2017 (which says that all registered firms have to pay their employees’ salaries through the banking system) and then through the implementation of the GST in July 2017 – the NBFCs’ customer base is going to be squeezed brutally. Already, this financial pressure is apparent in the financial position of some of the non-bank lenders. Specifically, lenders to real estate developers and to low-income borrowers are already suffering badly. However, as FY18 progresses further, these pressures will make themselves felt more widely. As that happens, a major correction in the NCD [a type of bond] market seems inevitable. Such a correction obviously has grim implications for Indian mutual funds who have loaded up on the NCDs issued by the NBFCs. So, domestic money floods into Indian bonds, liquid funds and equities as they, for once, take precedence over real estate and gold. Good news if you prefer your saving vehicles of choice to reside in the formal economy.
Why India Is Ready for a Universal Basic Income - In India, it is not unusual for the rich to receive more welfare money than the poor. As India’s Finance Ministry noted in its annual economic survey released in January, the problem is “almost intrinsic” to the country’s anti-poverty and social programs. Much of the money is funneled through India’s convoluted bureaucracy and ends up “leak[ing] to non-poor and…corrupt local actors.” But a new idea, the ministry suggests, could ensure that funds for the poor actually reach the poor: a universal basic income. The decision to simply hand out cash to everyone is not new and, of course, quite political. In 2013, the Indian government had also toyed with a variant of universal basic income known as “direct cash transfer,” but it never took off because of the difficulties in determining who should receive such payments. But setting all that aside, the concept of universal income is a rather simple and appealing one: replace existing social programs with a comprehensive cash payment. And that payment doesn’t have to be large. The Finance Ministry’s economic survey estimated that a modest sum of $4 per person per month could reduce India’s poverty level from 22 percent at present to seven percent. The cost would be a mere two percent of GDP, or $42 billion, which is approximately the same amount the government spends in total on food, fuel, and fertilizer subsidies. Compared to other social programs, universal basic income would also be simpler to implement in that it would be granted based on only one condition: Indian citizenship. Such an approach minimizes all the distortions, such as targeting based on income and other factors, and maximizes efficiency. This means that although a payment of few thousand rupees will have very little impact on the wealthy, the same payment to a very poor family would substantially improve their welfare. Let’s consider the example of India’s mammoth public distribution system, which subsidizes food for poor households.
More than 100 Sri Lankan peacekeepers had sex with children in Haiti, internal UN report reveals -The Haitian girl known Victim No 1 was 12 when she first had sex with a Sri Lankan peacekeeper. She says she didn’t even have breasts yet. The boy, known as Victim No 9, was 15 when his ordeal began. Over the course of three years, he said he had sex with more than 100 Sri Lankan peacekeepers, averaging about four a day. From 2004 to 2007, nine Haitian children were exploited by a child sex ring involving at least 134 Sri Lankan peacekeepers, according to an internal UN report obtained by The Associated Press. Often the children were given cookies or a few dollars in exchange for sex. Although 114 of the peacekeepers were sent home, none was ever jailed for the abuse. Justice for victims is rare. An Associated Press investigation of UN missions during the past 12 years found an estimated 2,000 allegations of sexual abuse and exploitation by peacekeepers and UN personnel around the world — signalling the crisis is much larger than previously known. More than 300 of the allegations involved children, but only a fraction of the alleged perpetrators were jailed.
More than 2,000 migrants rescued in dramatic day in Mediterranean | Reuters: More than 2,000 migrants trying to reach Europe were plucked from the Mediterranean on Friday in a series of dramatic rescues and one person was found dead, officials and witnesses said. An Italian coast guard spokesman said 19 rescue operations by the coast guard or ships operated by non-governmental organizations had saved a total of 2,074 migrants on 16 rubber dinghies and three small wooden boats. The medical charity Medecins Sans Frontieres (MSF) said in a tweet that one teenager was found dead in a rubber boat whose passengers were rescued by its ship Aquarius. "The sea continues to be a graveyard," MSF said in a Tweet. The coast guard spokesman confirmed that one person had died but gave no details. MSF said two of their ships, Aquarius and Prudence, had rescued about 1,000 people in nine boats. Desperate refugees struggled to stay afloat after they slid off their rubber boat during a rescue operation by the Phoenix, a ship of the rescue group Migrant Offshore Aid Station (MOAS). Video footage showed rescuers jumping into the water off the coast of Libya to help them. "In 19 years of covering the migration story, I have never experienced anything like today," said Reuters photographer Darrin Zammit Lupi, who was aboard the Phoenix. In one operation, the Phoenix rescued 134 people, all from sub-Saharan counties, he said.
Britain to push for tough new sanctions on Putin -Britain is pushing western nations to impose new sanctions on Russia if it fails to cut ties with President Assad as the conflict over Syria escalates. Russia and Iran warned jointly yesterday that they would “respond with force” if there were further US attacks in Syria. The Russian embassy in London suggested that if Moscow received an ultimatum from western powers this week it could lead to “real war”. Boris Johnson, the foreign secretary, is demanding that western nations draw up “very punitive sanctions” in response to last week’s chemical attack on a rebel-held area, in which up to 90 people were killed. A paper on sanctions has been prepared for a meeting of G7 foreign ministers in Lucca, Italy, which starts today. The foreign secretary believes that the chemical attack, and the swift use of force by President Trump, who fired 59 cruise missiles into a Syrian airbase, presents a new opportunity to alleviate the country’s suffering after six years of civil war. Mr Johnson said that the US had delivered “a clear and united message” from the West in the raid. “Crucially, they could do so again,” he told The Sun. Mr Johnson wants the G7 to issue a joint declaration that Russia should end its support for the Assad regime, and remove its forces from Syria to enable aid convoys to return. If President Putin refuses, new sanctions on Russia — on top of those in place because of the incursion in Ukraine — will be introduced, aimed at “making life very difficult” for government figures. Britain believes that Russia is responsible for the chemical attack “by proxy”, Sir Michael Fallon, the defence secretary, said yesterday. One source suggested that Russia failed to act on information that the chemical attack was coming.
Britain defies allies on Russia sanctions - Theresa May threw her weight behind efforts to impose sanctions on Russia over its backing for President Assad last night in the face of European opposition. The prime minister said after a 20-minute call with Donald Trump that the US president had created a “window of opportunity” for Vladimir Putin to change course. She also backed his efforts to apply pressure on China to curb North Korea and supported his toughening position against Iran’s influence in the Middle East. Her intervention will dismay European allies, who were resisting plans set out by Boris Johnson for sanctions against Russian military officials. Germany and Italy made clear that they would not support the foreign secretary’s initial proposals, with senior officials in Berlin protesting that a further wave…
G7 Fails To Agree On New Russian Sanctions: US, UK Push Rejected By Europe -- While eager to show a united front against Russia and Syria, G7 foreign ministers meeting in Italy again failed to reach an agreement over new sanctions against the two nations as a British plan to impose targeted sanctions on military personnel in Russia and Syria, supported by the US, was rejected by European allies. Foreign Secretary Boris Johnson spearheaded the drive at the G7 for punitive measures against Moscow, but could not win the full-throated backing he wanted from Germany, Italy or the wider European Union. Officials tried to play down the failure to win more vocal support for sanctions, saying gaining backing from the Germans and Italians was always likely to prove difficult.According to the Independent, British officials insisted that targeted sanctions are still on the table, but that moving forward with them would have to wait for a full investigation into the attack which killed scores in the rebel-held village of Khan Sheikhoun.Ahead of Rex Tillerson's trip to Russia to try to persuade Putin to abandon his Syrian ally Assad, foreign ministers were seeking a common position on the Syrian conflict. And while the nations agreed there was no solution to the Syria crisis with President Assad in power, BBC reported that a UK proposal to target sanctions at senior military leaders were sidelined.Italian foreign minister Angelino Alfano - hosting the G7 talks - said ministers wanted to engage with Russia to put pressure on President Assad, adding that "we must not push Russia into a corner". "We think the Russians have the leverage that is needed to put pressure on Assad and to get him to observe the commitments with regard to the ceasefire," he added.Speaking after the meeting, Tillerson denounced Russia's "failure" to ensure the elimination of chemical weapons in Syria and said it had not made enough progress in peace talks.Tillerson said that Russia had failed to uphold commitments it made in 2013 to guarantee the Syrian regime got rid of chemical weapons.
Marine Le Pen could 'blow up' European Union, fear in bond market: Changes in the French presidential race injected a little fear into markets there Friday. France's left-wing politicians are gearing up for what promises to be a tough campaign against right-wing candidate Marine Le Pen. Socialist Benoit Hamon and hard-left candidate Jean-Luc Melenchon held talks Friday about possibly joining forces to beat Le Pen and her Front National party. Opinion polls put support for the two men at levels which, if combined, could be enough to reach a May 7 runoff election between the two top-scoring candidates. French bond yields ticked higher on the news. Yields move in the opposite direction of prices, and many holders of French debt fear Le Pen, who has said she will pull the country out of the European Union. But they apparently sold the bonds on fear that a unified left-wing front could — perhaps ironically — push the centrist vote toward Le Pen. The difference between French and German 10-year sovereign debt rose to greater than 0.7 percentage points as French yields climbed. "The spreads between the two are being driven by political risk from the election," said Diego Iscaro, senior economist at IHS Markit, a London-based research firm. If Le Pen wins, "I would expect these spreads to increase dramatically." France's main stock market index, the CAC 40, was down 0.65 percent Friday. Financial analysts were already keeping a close eye on the Continent this year, with elections in France, Germany, Italy and the Netherlands coming up and the future of the European Union potentially at stake.
European Parliament’s chief Brexit negotiator demands Theresa May back Britons who want to keep EU citizenship - The European Parliament’s chief Brexit negotiator Guy Verhofstadt is calling on Theresa May to be “open” to a plan helping British people who want to retain EU citizenship after the UK leaves. Writing exclusively for The Independent, Mr Verhofstadt sends a clear and direct message to the Prime Minister that he wants the European Union to make a “generous” offer to people in the UK angry at losing EU privileges. In response to his article a government spokesman has now said that Ms May and Brexit Secretary David Davis are actually ready to "discuss" any proposals that are put forward. The European Parliament has already cemented into its formal negotiating guidelines its intention to explore what a potential offer to Brits might look like, with ideas including allowing them to opt in to a form of “associate EU citizenship”. In his article, Mr Verhofstadt underlines the EU’s willingness to agree a quick reciprocal deal guaranteeing the rights of EU citizens in the UK and UK citizens in Europe, but he then moves on to the separate issue of offering rights to people in the UK who he calls “British Europeans”. He cites the resolution passed by the European Parliament on Wednesday which notes that many UK citizens have “expressed strong opposition to losing the rights they currently enjoy” and commits the EU-27 to “examine how to mitigate this”. The ex-Belgian prime minister writes in his piece: “I fought hard in the parliament for this provision to be maintained and hope in the coming months to continue to push for such an offer from the EU to British Europeans. “The European Union will defend its interests in discussions with the British Government, but I also believe it is important the European Union is generous and open to British citizens.” He adds: “I hope any such steps will be viewed openly by Theresa May.”
EU considering excluding UK from trade talks before Brexit - Brussels is eyeing the exclusion of Britain from updates on EU trade talks amid concerns that the UK could take advantage of sensitive information in its own post-Brexit trade negotiations. After a briefing last month by Michel Barnier, the EU’s chief Brexit negotiator, the European Commission warned that there needed to be a “discussion about the treatment of sensitive information in the context of certain trade negotiations, to which the UK would continue to have access to while it remained a full member of the union”. The warning, in an official account of the meeting, came as the EU prepared to initiate trade talks with Australia, a country which with the UK hopes to strike its own post-Brexit free-trade deal. All EU member states, including the UK, participate in a trade policy committee that meets weekly in Brussels to discuss the EU’s trade dealings. Representatives of member states also meet regularly with EU trade negotiators to discuss strategies and aims. Many EU leaders are worried that allowing the UK to continue to receive the routine updates until it leaves the bloc in 2019 will strengthen Britain’s bargaining position in post-Brexit trade talks and potentially enable it to outbid the EU in future negotiations. “The question is to what extent Britain should be involved or informed or have access to ongoing negotiations when they are leaving because then they will proceed to conclude their own deals,” said a senior figure briefed on discussions within the European Commission.
The Problem With Freedom – Monibot - Propaganda works by sanctifying a single value, such as faith, or patriotism. Anyone who questions it puts themselves outside the circle of respectable opinion. The sacred value is used to obscure the intentions of those who champion it. Today the value is freedom. Freedom is a word that powerful people use to shut down thought.When thinktanks and the billionaire press call for freedom, they are careful not to specify whose freedoms they mean. Freedom for some, they suggest, means freedom for all. In certain cases, this is true. You can exercise freedom of thought and expression, for example, without harming other people. In other cases, one person’s freedom is another’s captivity.When corporations free themselves from trade unions, they curtail the freedoms of their workers. When the very rich free themselves from tax, other people suffer through failing public services. When financiers are free to design exotic financial instruments, the rest of us pay for the crises they cause.Above all, billionaires and the organisations they run demand freedom from something they call “red tape”. What they mean by red tape is public protection. An article in the Telegraph last week was headlined “Cut the EU red tape choking Britain after Brexit to set the country free from the shackles of Brussels”. Yes, we are choking, but not on red tape. We are choking because the government flouts European rules on air quality. The resulting air pollution frees thousands of souls from their bodies. Ripping down such public protections means freedom for billionaires and corporations from the constraints of democracy. This is what Brexit – and Trump – are all about. The freedom we were promised is the freedom of the very rich to exploit us.
Bank of England tells City to prepare better for ‘no-deal’ Brexit - FT - The Bank of England is concerned the City is not doing enough to plan for a “no-deal” Brexit and has set a July deadline for all financial services companies — including European ones — to get their houses in order. Friday’s letter from the BoE’s Prudential Regulation Authority coincided with a sweeping speech on the challenges of Brexit from Mark Carney, the central bank’s governor. Mr Carney called for a system of mutual recognition of financial rules between the UK and the EU, whereas the financial stability of both sides would be put at risk if Britain — as “Europe’s investment banker” — crashed out of the bloc without a deal. However, the BoE stressed in its letter to the City that it must plan for the worst, especially now that Article 50 has been invoked and there is a two-year deadline before Brexit is complete. The letter, signed by Sam Woods, the PRA’s head, read: “Our current assessment is that the level of planning is uneven across firms and plans may not be being sufficiently tested against the most adverse potential outcomes — for example, if there is no withdrawal or trade agreement in place when the UK exits from the EU, and the UK and EU do not reach agreement on issues such as implementation periods, mutual recognition of standards, and co-operation in financial regulation or supervision.” It was sent to all companies with a presence in the City, from UK high-street stalwarts to US investment banks, and included European-headquartered firms that use passporting to access the UK market.
U.K. mint testing blockchain trading platform for digital gold -- Move over, bitcoin: There's a new digital gold in town. The United Kingdom's Royal Mint, the entity that strikes British coins, has teamed up with CME Group to create a blockchain-based platform for electronically buying, selling and holding spot gold. Unlike bitcoin and digital currencies, this digital gold product, known as Royal Mint Gold, or RMG, is backed by more than just innovative cryptography. "An RMG is a digital representation of real gold sitting in the Royal Mint vaults," Sandro Ro, CME Group's head of digitization, said in a blog post. "There is no rehypothecation, there is no lending on that gold, there will be enough physical gold to represent all the RMGs that are issued." The platform, currently in live testing with a number of market makers, is aimed at financial institutions and has the potential to make gold trading faster, more transparent and safer. One party will be able to transfer gold to another instantly anywhere in the world. "Distributed ledger technology is a game changer and supplying gold on a blockchain has been something The Royal Mint has wanted to develop for some time," said Vin Wijeratne, The Royal Mint's chief financial officer. The Royal Mint is planning to fund the full RMG product, when it launches in the summer of 2017, with as much as $1 billion in gold bullion. To develop the platform where institutional clients will trade RMGs, CME Group has partnered with the financial services infrastructure firm AlphaPoint. While RMGs will trade on a permissioned private network, the underlying code is open source and based on bitcoin's, according to Ro. That means that outside developers and researchers are able to view the code and verify its quality.
British industrial output took a big hit in February due to 'unseasonably warm weather : – Industrial production in the UK shrank by -0.7% in the month of February against positive forecasts, according to data released by the Office for National Statistics on Friday. Economists had forecast a consensus of 0.3% growth for the month. The electricity and gas sector provided the largest downward contribution, decreasing by -3.4%, which the ONS said was due to "unseasonably warm weather" in February. "The monthly decrease in electricity and gas was largely due to falls in both electricity generation and in the supply and distribution of gas and gaseous fuels; this was largely attributable to the temperature in February 2017 being 1.6 degrees Celsius warmer than average," said the ONS in a release. Total production output for February 2017 compared with February 2016 increased by 2.8%, with growth in three of the four main sectors. Manufacturing provided the largest contribution, increasing by 3.3%. Each of the four main sectors saw negative month-on-month growth, however, with manufacturing shrinking by -0.1% against the 0.3% consensus. Here is how it breaks down: ONS Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said in an email that production "likely will continue to surprise on the downside." He said: "The average temperature was even further above its long-run average in March than in February, so output in the energy supply sector likely fell further [in March]. "Despite this, quarter-on-quarter growth in industrial production likely picked up to about 0.7% in [the first quarter of 2017] from 0.4% in [the last quarter of 2016]. Even so, it is clear that industry does not have the momentum required to offset the consumer-led slowdown in the services sector this year."
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