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

Saturday, April 22, 2017

week ending Apr 22

Fed Watch: Fed Looking Forward to the Second Quarter -- First quarter growth is likely to fall flat - at least that is the signal from numerous forecasters and the Atlanta Fed. But what does it mean for Fed policy? Probably not much for now. It will leave policymakers a little cautious as we head toward the June FOMC meeting (May seems most likely a off the table for policy action). But mostly the Fed will be watching incoming data from the end of the first quarter and the beginning of the second. If the data flow picks up over the next couple of months, they will likely move forward with a June hike. They seem to be in a "what, me worry?" frame of mind.Retail sales stumbled in March, following up on a revised decline in February as well. Motor vehicle sales are partly to blame; we have likely seen the peak in car sales for this cycle and are settling into a lower pace of activity going forward. Lower gas prices and sluggish sales at building supply stores contributed to the fall as well. Stripping out the more volatile components, however, suggests a bit more stability in sales than suggested by the headline numbersMarch inflation came in lower than expected, with a surprise hit to core: Ocular econometrics suggests the March print is something of an outlier - the first monthly decrease since 2010. A big 7 percent decline in cellular service prices played a roll, as did falling used car and apparel prices. While I anticipate a rebound in April, this kind of print will help keep the Fed's inflation forecast intact thus preventing them from stepping up the pace of tightening. Watch how this plays through to core-PCE inflation. As a reminder, that was running hot in the first two months of the year:

 Fed's Kaplan: Three rate rises this year 'still a good baseline' | Reuters: Dallas Federal Reserve President Robert Kaplan said on Thursday that two more interest rate hikes this year remains possible but that the U.S. central bank has the flexibility to wait and see how the economy unfolds. "Three rate increases this still a good baseline. If the economy develops a little more slowly, then we can do less than that and if the economy is a little stronger, we can do more than that," Kaplan said in an interview with Bloomberg TV. The Fed has already raised its benchmark interest rate once this year, by a quarter percentage point at its last policy meeting in March. In deciding when to support future rate rises, the Dallas Fed chief noted he was closely watching inflation and that even though it continued to slowly move up, excess capacity in China and technology-enabled disruption of business were both exerting downward pressure. The central bank has raised interest rates at two of its last three meetings and has already partly turned its attention to tackling the $4.5 trillion balance sheet it built up to help spur the economy in the wake of the financial crisis. Kaplan said that he thought this year could be appropriate to take action to reduce the size of the Fed's portfolio. "As soon as later this year or maybe early next year, we should begin the process of letting the balance sheet roll off," he said, adding that any plan should be made public at least a couple of months in advance.

Fed's Rosengren: "Quite Likely" The Fed's Balance Sheet Will Be Used In The Next Recession --The Fed has not even announced the framework of what its balance sheet "normalization" would look like, and already Boston Fed president Rosengren is talking about the next Fed QE program. In a speech titled “The Federal Reserve Balance Sheet and Monetary Policy” delivered to Bard College on Wednesday afternoon, Rosengren said that structural changes in the macroeconomy "may necessitate more frequent use of large-scale asset purchases during recessions" and he said it is "quite likely" that the use of central bank balance sheets will be necessary in future economic downturns.The reason?  A combination of low inflation, low rates of productivity growth, and slow population growth may imply an economy "where equilibrium short-term interest rates remain relatively low" by historical standards. In other words, the natural rate, or r-star, is so low, the Fed will only be able to hike rates a handful of times before it tip the economy over into contraction, requiring a new easing regime.As a result, reductions in short-term rates to combat recessions will encounter the zero boundary and "will not be sufficient," Rosengren said – so "it is likely to be more common for central banks to engage in asset purchases to stimulate the economy by reducing longer-term rates.""So balance-sheet expansions – and exits – are likely to become more standard monetary policy tools around the world." As a quick reminder, for all the talk of tightening, central banks are currently creating just under $200 billion in new money every month...

Trump said to pick ex-Treasury official for top Fed post - President Donald Trump plans to nominate Randal Quarles, a senior Treasury official in the Bush administration, to be the Federal Reserve's top banking regulator, according to a person familiar with the selection process. Currently a managing director at a Salt Lake City-based private equity firm, Quarles would bring backgrounds in both domestic and international finance to the role, said the person who asked not to be named because no final decision has been made. He also has years of experience as a banking lawyer. Trump's expected nomination of Quarles would put an end to what has been a long, and sometimes arduous, search for the Fed's vice chair of supervision. The Senate-confirmed post has great sway over JPMorgan Chase & Co., Goldman Sachs Group Inc. and other large banks. Quarles would play a pivotal role in carrying out Trump's pledge to remove some of the regulatory constraints that were put on banks in the wake of the 2008 financial crisis.  Quarles joined the Treasury in 2002 as an assistant secretary for international affairs. He was later elevated to undersecretary for domestic finance. At the end of 2006, Quarles left the department and went to Carlyle Group LP where he specialized in investing in the financial services industry. Prior to his time in the Bush administration, Quarles was a partner at the Davis, Polk & Wardwell law firm. He graduated from Columbia University and has a law degree from Yale Law School. In his current post at the Cynosure Group, Quarles helps invest money from wealthy families, including the Eccles family of Utah. Quarles is married to Hope Eccles. Another member of the family, Marriner Eccles, was Fed chairman from 1934 to 1948, and one of the buildings at the central bank's Washington headquarters is named after him. Trump officials have been interviewing candidates for the supervision job since late last year, before the president took office. The choice had been bogged down by a lack of agreement among the president's advisers and industry lobbying, people familiar with the matter have said.

Don't Appoint Clones to the Fed - Narayana Kocherlakota - Donald Trump has reportedly zeroed in on a candidate to be the top financial regulator at the Federal Reserve. Unfortunately, his choice lacks one of the fundamental requirements for the job: a background and perspective different from that of other Fed governors. I'm not personally acquainted with Randal Quarles, Trump's purported nominee to be vice chair for supervision and regulation on the Fed's Board of Governors. His education and experience, though, suggest that the Trump administration is looking for a clone of current Fed Governor Jay Powell. Both have Ivy-league undergraduate degrees and juris doctorates from top law schools. Both worked in the Treasury Department under President George H.W. Bush (Quarles also worked there under George W. Bush). Both worked in the private sector at the Carlyle Group, a politically well-connected investment firm. At first glance, these are excellent credentials. Powell has certainly been a great governor. But I think this approach to choosing a new governor is flawed for at least a couple of reasons. First, it’s not consistent with the intent of Congress as expressed in the Federal Reserve Act. Second, it won’t be conducive to effective decision-making. It’s well-known (and intuitive) that homogeneous decision-making teams don’t explore a sufficiently broad range of ideas.  More interestingly,research suggests that such groups don’t process relevant information sufficiently carefully and are overly confident in the quality of their decisions. The Board of Governors has seven members so that its decisions can be shaped by seven different perspectives. But that can happen only if the president appoints governors who have sufficiently diverse life experiences. Quarles doesn’t come close to meeting this basic criterion.

 Fed's Beige Book: Modest to Moderate expansion, Tight labor markets -- Fed's Beige Book "This report was prepared at the Federal Reserve Bank of Richmond based on information collected on or before April 10, 2017."Economic activity increased in each of the twelve Federal Reserve Districts between mid-February and the end of March, with the pace of expansion equally split between modest and moderate. In addition, the pickup was evident to varying degrees across economic sectors. Manufacturing continued to expand at a modest to moderate pace, although growth in freight shipments slowed slightly. Consumer spending varied as reports of stronger light vehicle sales were accompanied by somewhat softer readings in non-auto retail spending. Tourism and travel activity generally picked up. On balance, reports suggested that residential construction growth accelerated somewhat even as growth in home sales slowed, in part due to a lack of inventory. Nonresidential construction remained strong, but became more mixed in some regions; leasing activity generally improved at a more modest pace. More than half of the reports suggested that loan volumes increased, while only one said they were down modestly. Non-financial services generally continued to expand steadily. Energy-related businesses noted improved conditions while agricultural conditions varied. ... Employment expanded across the nation and increases ranged from modest to moderate during this period. Labor markets remained tight, and employers in most Districts had more difficulty filling low-skilled positions, although labor demand was stronger for higher skilled workers. Modest wage increases broadened, and reports noted bigger increases for workers with skills that are in short supply. A larger number of firms mentioned higher turnover rates and more difficulty retaining workers. A couple of Districts reported that worker shortages and increased labor costs were restraining growth in some sectors, including manufacturing, transportation, and construction. Businesses generally expected labor demand to increase moderately in the next six months, and looked for modest wage growth.

Mnuchin Says Trump Is "Absolutely Not" Trying To Talk Down The Dollar -- One week after Donald Trump, in an interview with the WSJ, sent the dollar tumbling in its biggest one day drop in months, Treasury Secretary Steven Mnuchin has been engaging in damage control with not one but two appearances in the FT, first stating that in the "long-run" a stronger dollar is beneficial for the US economy on Monday, and then again making headlines overnight when he said that Donald Trump is "absolutely not" trying to talk down the strength of the dollar, as saying in the Financial Times on Wednesday. As we noted at the time, Mnuchin first had played down Trump's WSJ comment that the dollar was getting "too strong" in an interview first published late on Monday in the FT. Then, in a more detailed version published on Wednesday, he directly rejected the idea that Trump was trying to talk down the dollar, saying "Absolutely not, absolutely not."

FT — You say you don’t intervene in foreign exchange markets, and yet some people in the markets took the president’s comments last week as him talking down . . .
SM — Absolutely not. Absolutely not. I disagree with that completely.
FT — OK. So that’s not part of the strategy? To talk down the dollar?
SM — No. The president was making a factual comment about the strength of the dollar in the short term. And by the way, when we talk about an intervention, and we even noted this in the report, there’s a big difference between talk and action

 Treasury Snapshot: The Recent Breakout in Yields Appears to Be in Reversal - Let's take a closer look at recent activity in US Treasuries. The yield on the 10-year note ended the day at 2.21% and the 30-year bond closed at 2.92%, well off their interim highs. Here is a table showing the yields highs and lows and the FFR since 2007 as of today's close. The 2-10 yield spread is now at 1.04%. The chart below shows the daily performance of several Treasuries and the Fed Funds Rate (FFR) since the pre-recession days of equity market peaks in 2007. A log-scale snapshot of the 10-year yield offers a more accurate view of the relative change over time. Here is a long look since 1965, starting well before the 1973 Oil Embargo that triggered the era of "stagflation" (economic stagnation with inflation). The trendline (the red one) connects the interim highs following those stagflationary years. The red line starts with the 1987 closing high on the Friday before the notorious Black Monday market crash. The S&P 500 fell 5.16% that Friday and 20.47% on Black Monday. The dashed lines on the chart above were provided by Bob Bronson of Bronson Capital Markets Research. Bob comments: "The blue dashed lines are much more closely parallel to the all-data, log-linear best fit line — very similar to the high-low mid-channel line — since 1980. Then there is the even more currently relevant downtrend (black dashed line) since the 2007 high." We saw a failed breakout of the downtrend in December of 2013 and a new breakout is currently underway. Will the current breakout remain above the near decade upper trend line? The direction in recent days certainly puts the breakout at risk. The Here is a closeup view of the trend since the pre-recession peak in June 2007.

Trump tested as hard economic data spell trouble -- As the presidency of Donald Trump approaches its 100-day milestone, a mystery is opening up around the US economy about what the “soft” and “hard” economic signals mean. This is a debate that investors urgently need to watch — not to mention policymakers too. The issue at stake is that if you look at recent so-called soft economic signals — those linked to sentiment — Mr Trump seems to be enjoying extraordinary success. Since he won the election, business confidence has surged: the National Federation of Independent Business survey reached its highest level in January since 2004, while the Business Roundtable CEO economic outlook survey displayed the biggest jump in the first quarter of the year since 2009. More remarkably still, consumer sentiment jumped to a 17-year high last month in the University of Michigan’s survey. That, coupled with a fall in unemployment to 4.5 per cent and rising wages, has prompted consumers to borrow more: credit card debt rose above $1tn for the first time since 2008 in April. But if you look at most “hard” data — statistics about tangible economic activity — Mr Trump’s presidency does not seem a success. Last month manufacturing activity dropped for the first time in seven months, along with housing starts. Retail spending fell 0.2 per cent in March, the second month of decline, while consumer prices unexpectedly slid. Corporate investment has remained flat. As a result, the Atlanta Federal Reserve’s “Gross Domestic Product Now” indicator, which is a composite of hard data, suggests the economy grew just 0.5 per cent in the first three months of 2017. This is slower than last year. It is also well below the 4 per cent growth rate that Mr Trump promised to deliver on the election trail. So what explains this split? The optimistic explanation is that this is merely a time lag effect. Hard economic signals tend to be backward-looking, since these capture activity that has already occurred, after a delay; soft data, by contrast, are about future expectations. So if you want to be upbeat — as many investors seem determined to be — you can argue (or hope) that this upturn in sentiment will eventually spark more tangible economic growth, as Mr Trump’s policy measures bite. It is also possible that the downbeat GDP data will eventually be revised up, since the statistics tend to be unreliable in winter, because of seasonal effects. But there is a second, more pessimistic, theory: namely that it is actually the hard data that tell the more accurate tale. The recent surge in sentiment has been largely sparked by hopes that the Trump presidency will deliver tax reform, deregulation and infrastructure investment. 

 Trump still hasn't given the U.S. economy a reason to pick up ---President Donald Trump and congressional Republicans relentlessly run their mouths about their ability to “get the economy going again.” But they have yet to produce or enact any ideas that would generate results. International Monetary Fund (IMF) projections for U.S. growth in 2017 released Tuesday show the economy will likely continue the moderate growth rate that’s characterized the U.S. since emerging from the Great Recession. While the news isn’t horrible, it’s not enough to reach the growth Trump promised.The IMF predicts that U.S. gross domestic product (GDP) will expand by roughly 2.3 percent this year, which would be slightly higher than the 2.1 percent it’s been averaging since the economy registered annual growth again in 2010. Last year, the U.S. grew 1.6 percent.The 2017 growth rate should be enough to keep the unemployment rate reasonably low and corporate profits rising. With a bit of luck, American workers might even get a raise. But 2.3 percent growth is far below the sky-high expectations stoked by Trump during the campaign when he repeatedly said he would get gross domestic product to grow at 4 percent or higher. That’s something many economists consider highly unlikely. Of course, projections can be off. And the IMF notes that it prepared the April estimates without a lot of clarity on what the Trump administration is going to do on key economic issues like taxes, spending, and deficits — details that present a “wide range of upside and downside risks to the current baseline forecast for the United States.” But that’s just the point. Even if you take Trump’s claims that repealing and replacing the Affordable Care Act and overhauling the U.S. tax code to lighten the load  for America’s richest families would spur growth at face value (I don’t), the administration is nowhere near accomplishing either of those goals. The healthcare bill collapsed before it even came to a vote in the House. And while Trump promised a “phenomenal” tax plan within his first 100 days in office, he keeps fast-talking around the fact that the deadline is slipping away.

 Congress needs to reach a budget deal in a matter of days. What could go wrong? -- The fate of the federal government – whether it stays open or shuts down at the end of April – is all up to Congress and President Donald Trump. What could possibly go wrong?Republican and Democratic congressional leaders are optimistic that when they return from their recess the last week of April, they’ll reach a deal and avert a government shutdown by April 28, when legislation that is now funding the government expires.Yet there are a number of issues, including the White House’s push for U.S.-Mexico border wall money and Trump’s threat this week to pull some health care funding, that could lead to a collapse of comity and a budget blowup.It’s happened before: The longest shutdown, in December 1995-January 1996, lasted 21 days. Conservatives in the House of Representatives prompted a 16-day shutdown in 2013 over opposition to paying for President Barack Obama’s Affordable Care Act. This year’s showdown is most likely in the House, where Republicans are counting on Democratic support to pass a spending bill because some House conservatives have steadfastly refused to vote for spending bills: “Anything that depends on 216 Republicans is a highly risky proposition,” said Rep. Tom Cole of Oklahoma, a top Republican on the House Appropriations and Budget committees, citing the number needed to pass legislation in the House.  That could, however, mean White House priorities go wanting, for now. Here’s a look at the potential flashpoints:

Goldman Warns 1-In-3 Chance Of Government Shutdown In May -- Goldman's Jan Hatzius believes the odds of a government shutdown next week are fairly low, but rise to around one in three if the debate extends into May. A shutdown at the start of the next fiscal year, in October, is a greater risk in their view.

  • President Trump has continued to focus on “reciprocity” in trade but has clearly changed course on his prior view that economic relations with other countries should not be subordinated to geopolitical concerns. In light of the range of geopolitical concerns at the moment, this suggests that trade policy changes may be more incremental in the near term.
  • Despite clear indications that they would postpone further consideration of health legislation, Republican leaders appear intent on trying to pass health legislation one more time. House passage of a broad ACA replacement bill seems unlikely, and we expect that the House will either pass a much narrower bill or will ultimately move on to other issues by June.
  • The renewed focus on health care has once again delayed tax reform efforts, however. We still believe tax legislation is likely to become law, but continued delays suggest that enactment is likely to slip to early 2018.
  • Strong Democratic performance in recent special elections for the House of Representatives has generated discussion of more significant than expected Republican losses in the 2018 midterm election. While special elections do have some predictive power, a simple analysis of special elections back to 1970 shows a fairly weak relationship between special elections and the following midterm election results.
Q: How much of a risk is a government shutdown at the end of next week?
A: There is a risk of a partial federal shutdown, but we believe the risk is fairly low next week, rising slightly if the debate is pushed into May, and rising further still later this year. Congressional appropriations expire April 28, and Congress will need to reach an agreement on a new spending bill by that time to avoid a partial shutdown of the federal government. Even if all Republicans support the bill passage is not guaranteed, since it is likely to need 60 votes in the Senate, or at least 8 Democrats in light of the 52-seat Republican majority. In the House, the bill is likely to need some Democratic support as well, since some fiscal conservatives are likely to vote against it. In our view, there is only a one in four chance of a shutdown on April 29, because it appears likely that if an agreement is not in place by that time, Congress will pass a “clean” short-term extension that avoids controversial issues. The cumulative probability of a shutdown by May is somewhat higher in our view—around one in three—since lawmakers might eventually demand a longer extension through the end of the fiscal year, which would require resolution of any controversial items.

White House eyes harder line on shutdown talks -  The White House, under internal pressure to show legislative achievements ahead of the 100-day mark, is gearing up for a government shutdown fight to secure money for a border wall, more immigration enforcement officers and a bigger military, according to White House and congressional sources familiar with the plan. It is a risky gambit. With almost uniform Democratic opposition to nearly all of the Trump administration's spending proposals, the fight could lead to a government shutdown next Friday — the day government spending expires, and right before the 100th day of Donald Trump's presidency. Officials could also strike a one-week compromise, giving them more time for a broader agreement. Story Continued Below Congressional Republicans, desperately looking to avoid a shutdown scare, are eyeing a modest increase for border security — perhaps an increase in funding for surveillance technology — and a small uptick in military spending. But two senior White House officials say they want a bigger win out of the fight, and an important deadline might help. People familiar with the negotiations say Mick Mulvaney, the budget director, and Marc Short, the White House legislative affairs director, are pushing congressional appropriators to include "billions" for their agenda in private conversations. The White House, one person familiar with the conversations said, has pushed for $3 billion for the border wall, and discussions have been ongoing. "The CR is our biggest focus right now," one senior administration official said, referring to the continuing resolution on spending.

Ryan’s Best Hope to Avoid a Shutdown: Making Friends With Pelosi -  There may be only one way for Speaker Paul Ryan to avoid a government shutdown: Ask his Democratic counterpart, Nancy Pelosi, for help.The problem is, the two don’t have much history of deal-making together. They don’t even know each other that well. But after spending weeks trying -- so far unsuccessfully -- to ram through legislation to undo Democrats’ signature health-care law, Ryan will almost certainly need Pelosi’s support to keep the government open after April 28, when current funding expires.Ryan and Pelosi have dined together only once, a well-publicized steak dinner in the speaker’s office in December 2015. Several people who know Ryan and Pelosi say they speak a few times each week, but almost always by phone and usually late in the day. The distance between the pair, who are separated in age by three decades, also reflects how little time House Republicans have spent negotiating with Democrats in recent years.On issues like spending, however, Republicans will need Democratic votes even in the House. That’s because a sizable group of GOP conservatives, led by the House Freedom Caucus, are expected to oppose the omnibus spending measure currently being negotiated in bipartisan, closed-door talks.Both Democrats and Republicans say those talks are going well, but it will take the personal involvement of the leaders -- particularly Ryan and Pelosi -- to resolve the last few sticking points and get something over the finish line.Cozying up to Pelosi comes with risks for Ryan, who watched his predecessor, John Boehner, resign amid a conservative backlash over some of his bipartisan deals with Democrats on spending measures. "I cannot imagine it going that route," said Representative Dave Brat of Virginia, a Republican member of the House Freedom Caucus, among those who say it is premature to suggest Ryan will eventually scramble for Democratic vote help.

White House demands disrupt shutdown negotiations - POLITICO: Congressional leaders' efforts to hatch a massive spending deal have been thrown off course by the Trump administration's 11th-hour intervention, leaving the bipartisan bill teetering on the brink of collapse just a week before a government shutdown deadline. The hard line taken by White House officials, particularly Office of Management and Budget Director Mick Mulvaney, has strained an emerging deal between House and Senate leaders that would skirt hot-button issues that could shut down the government. In particular, administration officials’ hopes of giving President Donald Trump a win during his first 100 days, such as border wall funding or a crackdown on sanctuary cities, have complicated what had been a relatively smooth, bicameral, bipartisan negotiation, according to staffers in both parties. Story Continued Below But Democrats are taking an aggressive stance, too, flatly insisting that Trump or Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan make a commitment to funding Obamacare’s cost-sharing subsidies as a precondition to voting for any bill to fund the government through September. Democrats have also talked tough on ruling out funding for a wall or a provision restricting billions in federal grants from cities that don’t enforce federal immigration laws. “Negotiations are slow-going,” said a Republican aide familiar with the bargaining. “There is a deal to be had — a good one with wins for both parties, but I think with a new minority leader and a new president, anything can happen. … If we don’t get much progress by this weekend, bad news.”

Buy the Dip? -- Kunstler - The list of things that pretend to be “money” these days would be long and shocking and the sheer churn of these instruments among the banks and markets “produces” the fabled “revenue streams” beloved of The Wall Street Journal. What happens when the world discovers that these instruments (securities and their derivatives) represent falsely? Why, bigly trouble. And this is the season we’re moving into as the dogwoods blaze: the season of the re-discovery of actual value. For those of you gloating over last week’s demonstrations of US Big Stick-ism, be warned that our military shenanigans have given China and Russia every reason to discipline this country by undermining the international standing of the dollar. They’ve been preparing for this very deliberately for years: constructing an alternative to the US-sponsored SWIFT international payment system, stockpiling thousands of tons of gold, building trade partnerships to circumvent US dominated syndicates. Before the month of April is out, they’ll “pull the trigger” on new voting arrangements in the International Monetary Fund that will reduce the financial power of the US and the Eurozone, especially in the oil trade.Around the same moment, America will wake up to the awful reality of the debt ceiling. This petard has been ticking the whole time that the political bureaucracy of Washington has wasted its mojo on the quixotic crusade to blame Russia for the 2016 election outcome. Congress will return from the Easter recess to discover that they have a few mere days to debate and resolve the debt ceiling problem — that is, to raise it so the country can borrow more “money” — or else they’ll be faced with a shut-down of government operations, including their own generous emoluments. It’s a good thing (for them) that they have plenty of walking-around money from the mysterious perqs of government service, but the rest of America doesn’t have $500 to pay for a new set of tires or the extraction of an abscessed molar. Some readers may have long wondered what might happen in this country if the SNAP card refills and social security checks stopped coming. Perhaps we’re about to find out. Congress might find itself in a painfully tight spot. The Democrats would like nothing better than to let this drag on for a while in order to humiliate, and perhaps finish off, their arch-nemesis, the Golden Golem of Greatness. Many Republicans have a religious-strength ideological aversion to increasing the already appalling US debt load. The prospects are not bright for a quick-and-easy resolution to this quandary.

 A ‘Cuban Missile Crisis in Slow Motion’ in North Korea - NYT - All the elements of the North Korean nuclear crisis — the relentless drive by Kim Jong-un to assemble an arsenal, the propaganda and deception swirling around his progress, the hints of a covert war by the United States to undermine the effort, rather than be forced into open confrontation — were on vivid display this weekend. There was the parade in Pyongyang’s main square, with wave after wave of missiles atop mobile launchers, intended to convey a sense that Mr. Kim’s program is unstoppable. Then came another embarrassing setback, a missile test that failed seconds after liftoff, the same pattern seen in a surprising number of launches since President Barack Obama ordered stepped-up cyber- and electronic-warfare attacks in early 2014. Finally, there was the test that did not happen, at least yet — a sixth nuclear explosion. It is primed and ready to go, satellite images show. What is playing out, said Robert Litwak of the Woodrow Wilson International Center for Scholars, who tracks this potentially deadly interplay, is “the Cuban missile crisis in slow motion.” But the slow-motion part appears to be speeding up, as President Trump and his aides have made it clear that the United States will no longer tolerate the incremental advances that have moved Mr. Kim so close to his goals. Secretary of State Rex W. Tillerson has said repeatedly that “our policy of strategic patience has ended,” hardening the American position as Mr. Kim makes steady progress toward two primary goals: shrinking a nuclear weapon to a size that can fit atop a long-range missile, and developing a hydrogen bomb, with up to a thousand times the power of the Hiroshima-style weapons he has built so far. While all historical analogies are necessarily imprecise — for starters, President John F. Kennedy dealt with the Soviets and Fidel Castro in a perilous 13 days in 1962, while the roots of the Korean crisis go back a quarter-century — one parallel shines through. When national ambitions, personal ego and deadly weapons are all in the mix, the opportunities for miscalculation are many.

Pence warns NKorea ‘era of strategic patience is over’ Vice President Pence warned North Korea on Monday not to test U.S. military might by pursuing its nuclear weapons program, citing recent strikes in Syria and Afghanistan as proof of American “strength and resolve.” The stark warning, delivered in Seoul after the vice president went to the military demarcation line that separates the two Koreas, could revive speculation that the White House is considering military action against the regime in Pyongyang. Pence said the Trump administration wants to persuade North Korea to abandon its nuclear weapons “through peaceful means,” but he repeated the administration’s warning that “all options are on the table.” Pence arrived in South Korea just hours after North Korea launched its latest ballistic missile — which exploded within a few seconds — and amid a weekend of fanfare in North Korea, during which the regime showed off what appeared to be new missiles designed to reach the United States. Vice President Pence warned North Korea on April 17 that it could be in for the same treatment as Syria and Afghanistan — both of which the Trump administration has bombed this month — if it continues with its nuclear program. The stark warning, delivered in Seoul after the vice president went to the military demarcation that separates the two Koreas, could revive speculation that the White House is considering military action against the regime in Pyongyang. R There, during a trip to the Demilitarized Zone between North and South Korea and later in remarks to journalists, he issued strong warnings to Pyongyang. “Just in the past two weeks, the world witnessed the strength and resolve of our new president in actions taken in Syria and Afghanistan,” Pence said after delivering a statement to the media alongside Hwang Kyo-ahn, South Korea’s acting president. Neither took questions. “North Korea would do well not to test his resolve or the strength of the armed forces of the United States in this region,” Pence said

 Trump Is Willing to Consider a Sudden Strike on North Korea -  In the wake of North Korea’s failed medium-range missile test this weekend, President Donald Trump is willing to consider ordering “kinetic” military action, including a sudden strike, to counteract North Korea’s destabilizing actions in the region, said a person familiar with the White House’s thinking. But Trump’s very strong preference is for China to take the lead on dealing with North Korea, said the person, who asked not to be named because the discussions are private. Trump’s strategy isn’t exactly a departure from long-standing U.S. policy. He isn’t particularly interested in toppling the regime of leader Kim Jong Un and isn’t looking to force a reunification of the two Koreas, the person said. He instead wants to push for their long-term cooperation. Trump’s national security team had already thought through various scenarios that North Korea might take this weekend, and how the U.S. would react. So when the medium-range missile test failed right after launch early Sunday morning local time, Trump was informed immediately and decided to downplay it, according to the person. It was Trump’s decision that the administration’s initial response would come from Defense Secretary James Mattis, who issued a 22-word statement Saturday night. National Security Adviser General H.R. McMaster also used familiar language Sunday to describe North Korea’s “provocative and destabilizing and threatening behavior,” while leaving all options on the table as his team helps develop plans of action for the region. In an interview Sunday on ABC’s “This Week,” McMaster said Trump had directed the National Security Council to collaborate with the Defense and State Departments, and intelligence agencies to “provide options and have them ready for him if this pattern of destabilizing behavior continues.” Hours after the failed test, McMaster emphasized Trump’s preference, as with this month’s airstrikes in Syria, for unannounced military action. He added that the North Korean leader’s unpredictability complicated U.S. strategy.

The Problem is Washington, Not North Korea - Mike Whitney - Washington has never made any effort to conceal its contempt for North Korea. In the 64 years since the war ended, the US has done everything in its power to punish, humiliate and inflict pain on the Communist country. Washington has subjected the DPRK to starvation, prevented its government from accessing foreign capital and markets, strangled its economy with crippling economic sanctions, and installed lethal missile systems and military bases on their doorstep. Negotiations aren’t possible because Washington refuses to sit down with a country which it sees as its inferior. Instead, the US has strong-armed China to do its bidding by using their diplomats as interlocutors who are expected to convey Washington’s ultimatums as threateningly as possible. The hope, of course, is that Pyongyang will cave in to Uncle Sam’s bullying and do what they are told. But the North has never succumbed to US intimidation and there’s no sign that it will. Instead, they have developed a small arsenal of nuclear weapons to defend themselves in the event that the US tries to assert its dominance by launching another war. There’s no country in the world that needs nuclear weapons more than North Korea. Brainwashed Americans, who get their news from FOX or CNN, may differ on this point, but if a hostile nation deployed carrier strike-groups off the coast of California while conducting massive war games on the Mexican border (with the express intention of scaring the shit of people) then they might see things differently. They might see the value of having a few nuclear weapons to deter that hostile nation from doing something really stupid. And let’s be honest, the only reason Kim Jong Un hasn’t joined Saddam and Gadhafi in the great hereafter, is because (a)– The North does not sit on an ocean of oil, and (b)– The North has the capacity to reduce Seoul, Okinawa and Tokyo into smoldering debris-fields. Absent Kim’s WMDs, Pyongyang would have faced a preemptive attack long ago and Kim would have faced a fate similar to Gadhafi’s. Nuclear weapons are the only known antidote to US adventurism.

Burying 'Trumpomania,' Kremlin TV says Trump scarier than North Korean leader | Reuters: As Russian hopes of swift detente under President Donald Trump have fizzled, state media, which hailed his election win, have made a U-turn. On Sunday, they said he was scarier than North Korea's Kim Jong-Un. Trump's decision to launch a missile strike against Syria, a Russian ally, drop a giant bomb on Afghanistan, and stick with Obama-era policies on Crimea, mean Russian hopes of him befriending the Kremlin have been on the slide for a while. If state TV is a guide, his tough talk on North Korea's nuclear program and decision to despatch a naval strike force to the region appear to have buried any Russian hopes that he might intervene less in foreign affairs than his predecessors. Dmitry Kiselyov, anchor of Russia's main weekly TV news show "Vesti Nedeli," on the Rossiya 1 channel, is widely seen as the top pro-Kremlin presenter. He had already began to dial back the Trumpomania and start criticizing the U.S. president. But on Sunday, his first broadcast since Rex Tillerson's maiden visit to Moscow as U.S. secretary of state, Kiselyov, who once praised Trump for his "independence" from the U.S. political establishment, removed the proverbial gloves. "The world is a hair's breadth from nuclear war," said Kiselyov. "War can break out as a result of confrontation between two personalities; Donald Trump and Kim Jong-Un. Both are dangerous, but who is more dangerous? Trump is." Kiselyov went on to say that Trump was "more impulsive and unpredictable" than the North Korean and to say both men shared some of the same negative traits: "Limited international experience, unpredictability, and a readiness to go to war."

Russia Warns U.S. Not To Act Unilaterally Against North Korea --In response to the US vice president, Russia's foreign minister Sergey Lavrov said that Mike Pence’s statement on the US running out of “strategic patience” towards Pyongyang does not contribute to resolving the crisis. The top Russian diplomat also voiced hope there will be no repeat of the US strike on Syria in North Korea. On Monday, speaking from the DMZ, Mike Pence said the world has witnessed the “strength and resolve of Trump in actions taken in Syria and Afghanistan,” and threatened North Korea “not to test” this resolve or “or the strength of the armed forces of the United States.” Lavrov responded by saying “I hope that there won’t be any unilateral actions like we recently saw in Syria and that the US will follow the policies Trump repeatedly declared during his election campaign.” He also warned the US not to take any military actions, stressing that the “risky nuclear and missile endeavors of Pyongyang” violating UNSC resolutions could not be used as an excuse for violating international law and the UN Charter “in the same fashion” as in Syria. The period of US policy before the current escalation could be hardly described as an “era of strategic patience,” Lavrov added. “I cannot call the Obama administration’s period an ‘era of strategic patience,’ as the US has been quite harshly limiting North Korea’s capabilities to develop economy sectors related to nuclear or energy areas,” Lavrov said, referring to past US initiatives, many of them backed by the UN Security Council.

White House defends portrayal of 'armada' push toward Korean peninsula | Reuters: President Donald Trump's administration on Wednesday denied being misleading about a U.S. carrier strike group's push toward the Korean peninsula, saying it never gave an arrival date and that the ships were still on their way. When Trump boasted early last week that he had sent an "armada" as a warning to North Korea, the USS Carl Vinson strike group was still far from the Korean peninsula, and headed in the opposite direction. The U.S. military's Pacific Command explained on Tuesday that the strike group first had to complete a shorter-than-initially planned period of training with Australia but was now heading toward the Western Pacific. "The president said that we have an armada going towards the peninsula. That's a fact. It happened. It is happening, rather," said White House spokesman Sean Spicer. He referred further queries about the deployment timetable to the Pentagon. The U.S. military initially said in a statement dated April 10 that Admiral Harry Harris, the commander of Pacific Command, directed the Vinson strike group "to sail north and report on station in the Western Pacific." But the strike group first headed elsewhere, On April 15, the U.S. Navy even published a photo showing the Vinson transiting the Sunda Strait on its way to drills with Australia. ">">">">here

Trump aide McMaster: Time for tough talks with Russia | Reuters: White House national security adviser H. R. McMaster said on Sunday it was time for tough talks with Russia over its support for Syria's government and its "subversive" actions in Europe. Speaking on ABC News' "This Week" program, McMaster said Russia's backing of Syrian President Bashar al-Assad's government has perpetuated a civil war and created a crisis that has bled over into Iraq, neighboring countries and Europe. "So Russia's support for that kind of horrible regime, that is a party to that kind of a conflict, is something that has to be drawn into question as well as Russia's subversive actions in Europe," McMaster said. "And so I think it's time though, now, to have those tough discussions Russia." The United States early this month bombed a Syrian air base in reaction to what Washington said was a nerve gas attack by the Assad government that killed at least 70 people in rebel-held territory. Syria denies it carried out the attack and Russia has warned that the cruise missile strikes could have "extremely serious" consequences. Secretary of State Rex Tillerson visited Moscow last week as tensions grew. "Well, when relations are at the lowest point, there's nowhere to go but up. So I think the secretary's visit to Russia was perfectly timed," McMaster said.

Tillerson Says Strategic Patience Has Failed With Iran, North Korea -- U.S. President Donald Trump has directed the National Security Council to review the international agreement on Iran's nuclear program and evaluate whether suspending sanctions "is vital to the national security interests of the United States." Secretary of State Rex Tillerson said the Trump administration was conducting a comprehensive review of its Iran policy across the entire U.S. government. He said this review must address all the threats posed by Iran, adding, "It's clear there are many." Tillerson noted Iran's continued support of Syrian President Bashar al-Assad's regime and its long-standing hostility toward Israel, and said Tehran has "one of the world's worst human rights records." On the international Iran nuclear deal, the Joint Comprehensive Plan of Action, Tillerson said it had failed to achieve its objective of a nuclear-free Iran. Tillerson made a rare appearance in front of reporters at the State Department, saying, "This deal represents the same failed approach of the past that brought us to the current imminent threat we face from North Korea. The Trump administration has no intention of passing the buck to a future administration on Iran. The evidence is clear Iran's provocative actions threaten the United States, the region and the world." Tillerson had revealed the Iran policy review in a letter Tuesday to House Speaker Paul Ryan.

Tillerson: Iran Left 'Unchecked' Could Follow North Korea's Path - NBC News: Secretary of State Rex Tillerson said Wednesday the United States will conduct a "comprehensive review" of its policy toward Iran, including the 2016 nuclear deal, which he said had merely delayed Iran's goal of becoming a nuclear state. "This deal represents the same failed approach of the past that brought us to the current imminent threat we face in North Korea," Tillerson said. "The Trump administration has no intention of passing the buck to a future administration on Iran. The evidence is clear Iran's provocative actions threaten the U.S., the region and the world." Tillerson notified Congress on Tuesday that despite finding that Iran was meeting the terms of the deal, the Trump administration was reviewing whether to break from the agreement, saying in part that Iran remains a leading state sponsor of terrorism.Wednesday, Tillerson ticked off what he called the abuses of the Islamic Republic point by point, accusing Iran of sponsoring terrorism in Syria, Iraq, Yemen and Lebanon and against Israel. Other grievances included the harassment of U.S. naval vessels, the conducting of cyber-attacks, the arbitrary detention of foreigners, including U.S. citizens, and the carrying out of ballistic missile tests in violation of U.N. resolutions. The Iran nuclear deal, which went into effect in January 2016, was an agreement among five world powers — Great Britain, France, Germany, Russia and China — and Iran. Although billions of dollars of Iran's assets were unfrozen in exchange for Iran's curbing its nuclear program, U.S. sanctions against the Islamic Republic because of its support of terrorism weren't lifted.

Did Al Qaeda Fool The White House Again? -- In Official Washington, words rarely mean what they say. For instance, if a U.S. government official voices “high confidence” in a supposed “intelligence assessment,” that usually means “we don’t have any real evidence, but we figure that if we say ‘high confidence’ enough that no one will dare challenge us.” It’s also true that after a U.S. President or another senior official jumps to a conclusion that is not supported by evidence, the ranks of government careerists will close around him or her, making any serious or objective investigation almost impossible. Plus, if the dubious allegations are directed at some “enemy” state, then the mainstream media also will suppress skepticism. Prestigious “news” outlets will run “fact checks” filled with words in capital letters: “MISLEADING”; “FALSE”; or maybe “FAKE NEWS.”Which is where things stand regarding President Trump’s rush to judgment within hours about an apparent chemical weapons incident in Syria’s Idlib province on April 4. Despite the fact that much of the information was coming from Al Qaeda and its propaganda-savvy allies, the mainstream U.S. media rushed emotional images onto what Trump calls “the shows” – upon which he says he bases his foreign policy judgments – and he blamed Syrian President Bashar al-Assad for the scores of deaths, including “beautiful little babies,” as Trump declared.Given the neocon/liberal-interventionist domination of Official Washington’s foreign policy – and the professional Western propaganda shops working for Assad’s overthrow – there was virtually no pushback against the quick formulation of this new groupthink. All the predictable players played their predictable parts, from The New York Times to CNN to the Atlantic Council-related Bellingcat and its “citizen journalists.”All the Important People who appeared on the TV shows or who were quoted in the mainstream media trusted the images provided by Al Qaeda-related propagandists and ignored documented prior cases in which the Syrian rebels staged chemical weapons incidents to implicate the Assad government.

Video Evidence of False Claims Made in the White House Intelligence Report of April 11, 2017 by Ted Postol -- Theodore A. Postol, Professor Emeritus of Science, Technology, and National Security Policy Massachusetts Institute of Technology  -This is my third report assessing the White House intelligence Report of April 11, 2017. My first report was titled A Quick Turnaround Assessment of the White House Intelligence Report Issued on April 11, 2017 about the Nerve Agent Attack in Khan Shaykhun, Syria and my second report was an Addendum to the first report. This report provides unambiguous evidence that the White House Intelligence Report (WHR) of April 11, 2017 contains false and misleading claims that could not possibly have been accepted in any professional review by impartial intelligence experts. The WHR was produced by the National Security Council under the oversight of the National Security Advisor, Lieutenant General H. R. McMaster.

New Evidence that Syrian Gas Story Was Fabricated by the White House -- Gaius Publius - (This piece is organized in two parts, the story to this point and the new evidence. To go directly to the new evidence, click here.)Since our last report on the Syrian “gas attack” story (see “Another Intelligence Group Makes the Case: Assad’s Responsibility Is Not Proved“), events have moved along. Nothing, though, has dismissed the doubts of those willing to entertain doubts that the story as told by the White House — and repeated by Democrats and Republicans alike — is baseless, a fabrication.First, British scientists were given samples from the alleged gas attack that contained traces of sarin. The presence of sarin had previously been doubted, since first-responders were videoed handling victims with their bare hands (see image at the top), actions that would have killed them if sarin were present on the victims’ bodies. On this evidence — the discovery of sarin in samples given to analysts — British UN Ambassador Matthew Rycroft concurs with the U.S. that Assad’s responsibility for a gas attack is “highly likely.” In other words, an estimation.Second, a small crater that was said to have been made by a sarin-containing munitions blast has been studied by Dr. Theodore Postol, professor emeritis at MIT, and he showed that the blast dispersal pattern is “more consistent with the possibility that the munition was placed on the ground rather than dropped from a plane.” Postol continues, “Analysis of the debris as shown in the photographs cited by the White House clearly indicates that the munition was almost certainly placed on the ground with an external detonating explosive on top of it that crushed the container so as to disperse the alleged load of sarin [downward].”  Dr. Postol’s report has been referenced in such pieces as this, by Robert Borosage writing at The Nation. Postol’s original document is available here. […] And now the new evidence. I’d like to print the follow-up report from Dr. Postol. It contains video evidence that indicates tampering with the “bomb site” by men wearing “Health Directorate” uniforms in rebel-held Idlib in the two or three days after the so-called “gas attack.Theodore Postol is the former Chair of the MIT Security Studies Department and was called as an expert witness in a lawsuit against the National Missile Defense Program. This is his area of expertise. According to Dr. Postol, this clear evidence should have been available to any competent intelligence professional. The attack was reported on April 4. The U.S. intelligence report claiming that Assad was responsible for a sarin attack was published April 11. In other words, Dr. Postol’s piece below supports the conclusion in my headline — that it indeed contains “evidence that the Syrian gas story was fabricated by the White House.”

The Nerve Agent Attack that Did Not Occur: Analysis of the Times and Locations of Critical Events in the Alleged Nerve Agent Attack at 7 AM on April 4, 2017 in Khan Sheikhoun, Syria -  by Theodore A. Postol, professor emeritus of science, technology, and national security policy at MIT - This analysis contains a detailed description of the times and locations of critical events in the alleged nerve agent attack of April 4, 2017 in Khan Shaykhun, Syria – assuming that the White House Intelligence Report (WHR) issued on April 11, 2017 correctly identified the alleged sarin release site.Analysis using weather data from the time of the attack shows that a small hamlet about 300 m to the east southeast of the crater could be the only location affected by the alleged nerve agent release. The hamlet is separated from the alleged release site (a crater) by an open field. The winds at the time of the release would have initially taken the sarin across the open field. Beyond the hamlet there is a substantial amount of open space and the sarin cloud would have had to travel long additional distance for it to have dissipated before reaching any other population center.Video taken on April 4 shows that the location where the victims were supposedly being treated from sarin exposure is incompatible with the only open space in the hamlet that could have been used for mass treatment of victims. This indicates that the video scenes where mass casualties (dead and dying) were laid on the ground randomly was not at the hamlet. If the location where the bodies were on the ground was instead a site where the injured and dead were taken for processing, then it is hard to understand why bodies were left randomly strewn on the ground and in mud as shown in the videos.The conclusion of this summary of data is obvious – the nerve agent attack described in the WHR did not occur as claimed. There may well have been mass casualties from some kind of poisoning event, but that event was not the one described by the WHR. The findings of this analysis can serve two important purposes:

  1. It shows exactly what needs to be determined in an international investigation of this alleged atrocity. In particular, if an international investigation can determine where casualties from the nerve agent attack lived, it will further confirm that the findings reported by the WHR are not compatible with the data it cites as evidence for its conclusions.
  2. It also establishes that the WHR did not utilize simple and widely agreed upon intelligence analysis procedures to determine its conclusions.

Assad: West Blocks Probe as It Would Show Idlib ‘Attack’, US Strike ‘False Flag’ - Western countries are blocking attempts to investigate the Idlib chemical incident because in the event of a probe it will be established that the "attack" was a false flag and lie, Syrian President Bashar Assad told Sputnik.   "We formally sent a letter to the United Nations, we asked them in that letter to send a delegation in order to investigate what happened in Khan Shaykhun," Assad said in an interview. "Of course till this moment they didn't send, because the West and the United States blocked any delegation from coming, because if they come, they will find that all their narratives about what happened in Khan Shaykhun and then the attack on Sha'irat airport was a false flag, was a lie," Assad stressed. Similarly, he said that in the wake of the first attack in Aleppo carried out by terrorists against the government army a few years ago, Damascus had asked the United Nations to send an investigation delegation "in order to prove what we said about the terrorists having gases used against our army." “And later many incidents happened in that way, and they didn't send any delegation. It's the same now," Assad noted. There was no chemical weapons attack in the Syrian province of Idlib, the reports of it were a false flag play which was supposed to justify a US missile strike on a Syrian armed forces’ airbase, Bashar Assad told Sputnik. "So, for us, there was no gas attack and no gas depot, it was a false flag play just to justify the attack on the Shairat base. That's what happened," Assad said.

Maxine Waters: Tension In Syria 'Phony,' A Ruse To Lift Oil Sanctions On Russia | The Huffington Post: Earning the moniker “Auntie Maxine” from adoring progressives, Congresswoman Maxine Waters has become a hero to the left for her unflinching and unrelenting criticism of Donald Trump and his allies. She did not disappoint them at Saturday’s Tax March in Washington, D.C.At the rally before the march, Waters vowed to fight every day until Trump is impeached and questioned the motives behind the U.S. attack on Syria. She believes Syria to be “phony tension between Donald Trump and Vladimir Putin, all being hyped up by the White House, still trying to distract us.”After her speech, I asked the congresswoman whether she believes Putin and Assad were colluding to help take the heat off of Trump from the investigations into his ties with Russia. She believes that Putin and Trump are “tied at the hip,” the tension is a charade, and that the end-game is getting the oil sanctions lifted for drilling in the Arctic. In February, Rep. Waters told me she believed that Trump colluded with Russia on lifting those sanctions during the presidential campaign.

Maxine Waters Loses Her Mind to “Anti-Russia Dementia” – Like the Rest of the Black Caucus -- Black Agenda Report -- When Maxine Waters goes gung-ho crazy for the War Party, it tells us that the Black political class -- overwhelmingly Democrats -- are utterly useless to any movement for peace and social justice. In the throes of a terminal case of “Anti-Russia Dementia,” otherwise known as “Putin Derangement Syndrome,” the California congresswoman told a Tax March crowd in front of the U.S. Capitol that President Trump and Russia’s Vladimir Putin somehow conspired to arrange both the chemical event that killed dozens in northern Syria and the U.S. missile strike on a Syrian military airfield that followed. In a interview with a Huffington Post reporter, Water said: “I don’t believe there’s any real tension” between Trump and Putin. “I think they’re putting on a show. And I think Putin is gonna come back and make it look as if he’s gonna hold the line somewhat on Syria now, and then want something in exchange for that -- and that exchange is, lift the sanctions.” Waters has clearly lost her mind, her brain operating at the cartoon level. But, her mental and moral disintegration differs only in degree from that of the Congressional Black Caucus as a body, which has been drifting to the dark side on war ever since the First Black President got his hands on the nuclear button. Even Barbara Lee, the only member of Congress to vote against the invasion of Afghanistan in 2001, appears to accept the manifestly false allegation that the Syrian military used chemical weapons in al-Qaida controlled Idlib province. She demands only that the U.S. Congress be allowed to play its part in the aggression. “  The Congressional Black Caucus as a body has been drifting to the dark side on war ever since the First Black President got his hands on the nuclear button.”

America Is the World's Biggest Terrorist Organization—Why Is That So Hard to Understand? - A few years ago, I asked a retired Iraqi Air Force officer what it felt like to be bombed periodically by the United States in the 1990s. Whenever US President Bill Clinton felt irritated, I joked, he seemed to bomb Iraq. The officer, a distinguished man with a long career serving a military whose political leadership he despised, smiled. He said with great lightness – ‘When our leadership said something threatening those words itself were taken to be terrorism; when the United States bombs, the world does not even blush.’ To me this is an intuitive statement.Amnesia is the mode of thought in the United States. Cluelessness about its belligerent history is now general. It would sound strange to ask why the North Koreans feel such palpable threat from the United States. Odd to raise the fact that it was the United States that brutally bombed North Korea in the 1950s, targeting its towns and cities as well as farms and dams. The data is inescapable. The United States dropped 635,000 tons of bombs on North Korea. This includes 32,557 tons of napalm – essentially a chemical weapon. As a comparison, it is fitting to see that in all of the Pacific sector of World War II, the United States dropped a mere 503,000 tons of bombs. The United States, in other words, dropped more bombs on North Korea during the ill-named ‘limited war’ than it dropped during the entire engagement against Japan during World War II. Three million Koreans died in that war, the majority in the North. North Korea has never attacked the United States. 

It’s time America explored how to end the multiple wars it has helped cause since 2001, rather than dropping more bombs | The Independent: Moan about Trump all you like, but his approach to Syria was always much more realistic than Hillary Clinton’s. ‘You are fighting Syria, Syria is fighting Isis, and you have to get rid of Isis,’ he said during his election campaign. ‘Now we’re backing rebels against Syria, and we have no idea who these people are’War-whoops and loud applause from foreign policy establishments and their media supporters have greeted President Trump’s missile strike in Syria, the dropping of the world’s largest non-nuclear bomb on Afghanistan and the dispatch of a naval task force in the direction of North Korea. This spurt in belligerence over the last week has as much to do with domestic American politics as any fundamental new development in the rest of the world. Trump needed to defuse the accusation that he was too close to President Putin and too tolerant of a Russian ally like Bashar al-Assad. The resort to military action was largely in keeping with the old Pentagon saying that “defence policy ends at the water’s edge”, meaning that it is politics inside, not outside the US, which is the real decision-maker. Whatever Trump’s precise motives, his sudden fondness for the use of armed force shows that what President Obama criticised as “the Washington playbook” is back in business as the guide for conduct of American foreign policy. “It’s a playbook that comes out of the foreign-policy establishment,” said Obama in an interview with Jeffrey Goldberg of the Atlantic Monthly last year. “And the playbook prescribes responses to different events, and these responses tend to be militarised responses.” The poison gas attack on Khan Sheikhoun that killed 87 people and the retaliatory firing by the US of 59 missiles at a Syrian airbase was the occasion, but not the cause, of the volte face in Trump’s foreign policy. Previously, he had defied the conventional wisdom of the powers that be in the US and in Britain and France on a host of issues, such as relations with Russia, Syria, China, Nato and the EU. There was something comical about the outrage expressed by self-declared experts at Trump’s new departures. Anti-Trump forces interpreted any contact, however fleeting, between any Russian and any member of the Trump team, past and present, as a sign of possible treachery in a way that would have made Senator McCarthy sigh with envy. Simple-minded though some of Trump’s declarations might appear, others were more realistic than anything said by Hillary Clinton or Senator John McCain.

Donald Trump's Syria Problem -- Donald Trump responded to the alleged use of chemical weapons by Syrian President Bashar al-Assad by lobbing some missiles at the Syrian air base from which the gas attack was allegedly launched. Some have described it as a fireworks display intended more as a message than a serious military strike, but that fireworks display was quickly rivaled by the fireworks that erupted on social media among Trump supporters following the strike. Opinions were decidedly mixed between those who enthusiastically supported the strike and those who saw it as a betrayal of Trump’s promise for a more America first foreign policy with very little middle ground in between. Many of Trump’s more “regular” Republican supporters saw the strike as evidence that a “new sheriff is in town.” In their minds Trump demonstrated with the airstrike that he will not be pushed around unlike President Obama who they perceived as “weak” on foreign policy. On the other hand, many of Trump’s most enthusiastic supporters were extremely disappointed with Trump’s decision and were not shy about saying so. For example, Anne Coulter, who was an early and enthusiastic supporter of Trump, expressed her dismay in no uncertain terms. Paul Joseph Watson of InfoWars announced that he was now off the Trump Train. So what explains this dichotomy of opinions? As I have explained elsewhere (see here and here), while Trump campaigned on a foreign policy agenda that was atypical for a Republican, especially if you were sensitive to nuance, the majority of rank and file Republican voters remain at least somewhat hawkish on foreign policy. There is, however, a segment of Trump supporters who hoped that Trump’s atypical rhetoric on foreign policy – America first, NATO is obsolete, Iraq was a disaster, no more regime change, etc. – did, in fact, signal a totally new direction. It is this segment that has been so dismayed by the strike on Syria which seems to signal that Trump has reverted to a more standard GOP position on foreign policy.

How to Keep Losing Wars in the Middle East -- Washington traded in George W. Bush’s expansive, almost messianic attitude toward his Global War on Terror for Barack Obama’s more precise, deliberate, even cautious approach to an unnamed version of the same war for hegemony in the Greater Middle East.   It’s hardly a brilliant observation to point out that, more than 15 years later, the entire region is a remarkable mess.  So much worse off than Washington found it, even if all of that mess can’t simply be blamed on the United States — at least not directly.  It’s too late now, as the Trump administration is discovering, to retreat behind two oceans and cover our collective eyes.  And yet, acts that might still do some modest amount of good (resettling refugees, sending aid, brokering truces, anything within reason to limit suffering) don’t seem to be on any American agenda. So, after 16 years of inconclusive or catastrophic regional campaigns, maybe it’s time to stop dreaming about how to make things better in the Greater Middle East and try instead to imagine how to make things worse (since that’s the path we often seem to take anyway). Here, then, is a little thought experiment for you: what if Washington actually wanted to lose? How might the U.S. government go about accomplishing that? Let me offer a quick (and inevitably incomplete) to-do list on the subject:  As a start, you would drop an enlarged, conventional army into Iraq and/or Syria. This would offer a giant red, white, and blue target for all those angry, young radicalized men just dying (pardon the pun) to extinguish some new “crusader” force.  It would serve as an effective religious-nationalist rallying cry (and target) throughout the region. Then you would create a news-magnet of a ban (or at least the appearance of one) on immigrants and visitors of every sort from predominantly Muslim countries coming to the United States.  It’s hardly an accident that ISIS has taken to calling the president’s proposed executive order to do just that “the blessed ban” and praising Donald Trump as the “best caller to Islam.”   Finally, you would feed the common perception in the region that Washington’s support for Israel and assorted Arab autocrats is unconditional.  To do so, you would go out of your way to hold fawning public meetings with military strongmen like Egyptian President Abdel Fattah al-Sisi, and suggest that, when it came to Israel, you were considering changing American policy when it comes to a two-state solution and the illegal Israeli settlements in Palestine.  Such policies would feed another ISIS narrative: U.S. support for illiberal despots and the failure of the Arab Spring is proof that practicing Muslims and peaceful Islamists will never successfully gain power through the democratic process.  Let’s take these three points in such a losing strategy one by one.

The World Is Getting a Taste of the Trump Doctrine - What to make of the sudden jump in "collateral damage" – i.e., the piling up of dead civilians in Syria, Iraq, Yemen, Libya, Somalia and Afghanistan, thanks to U.S. airstrikes? Do the out-of-the-blue missile attacks against a Syrian air base last Thursday and this week's deployment of a 21,600-pound, never-before-used "mother of all bombs" in Afghanistan signal that the White House has given the green light for what Donald Trump promised in 2016 – "I would bomb the shit out of ISIS" – with little regard for innocents caught in the blasts?Based on the results of a lengthy string of attacks, beginning just days after Trump took office in January, it sure looks that way. Despite his bomb-ISIS outbursts, Trump ran a neo-isolationist electoral campaign, repeatedly slamming Hillary Clinton for her vote in favor of the 2003 invasion of Iraq. Thus, his startling bout of muscle-flexing is a sharp departure from his America First posturing. The dropping of the GBU-43/B Massive Ordnance Air Blast (MOAB) in eastern Afghanistan, in the remote hills of Achin District in Nangarhar Province, unleashed a weapon of staggering power, one widely described as the largest non-nuclear explosive device in the entire American arsenal.  "This is not the war on terror but the inhuman and most brutal misuse of our country as a testing ground for new and dangerous weapons," former Afghan President Hamid Karzai wrote in a series of tweets.The MOAB is, perhaps, the perfect weapon to symbolize Trump's braggadocio and love for superlatives. More worryingly, however, the MOAB bombing, the Syria strike, and a wave of intense airstrikes from the Horn of Africa to South Asia seem to signal a president dazzled by his generals. Since taking office, it appears that Trump's fallen under the spell of Secretary of Defense Jim "Mad Dog" Mattis and General H.R. McMaster, his national security adviser, giving them unprecedented decision-making power to utilize the might of the U.S. armed forces with little or no White House oversight."  What I do is I authorize my military," Trump said following the MOAB blast, according to the Military Times. "We have the greatest military in the world, and they've done the job, as usual. We have given them total authorization, and that's what they're doing."

Is Trump bluffing overseas? - Perhaps he is.  The number of his veiled or unveiled threats against foreign actors seems to multiply every day.

  • 1.  The president said at his presser with the Italian that Iran has not lived up to the "spirit" of JCPOA.  What does that mean?  As I recall the agreement's finalization was immediately followed by cries from Congress that the Iranians should expect no lessening in hostility from the US.  Was that in the "spirit" of JCPOA?  This is ridiculous.  The bi-partisan warhawk nationalists in Washington want Iran on its knees begging for forgiveness,  The question asked should be - Or what?  US air strikes designed to fight a war that Israel wants but cannot accomplish?  A naval war in the Gulf?  Or what?
  • 2.  The president has said that North Korea "should behave."  Or what?  Some military gesture to demonstrate US disapproval of their nuclear weapons/ballistic missile programs?  Or a full blown war to the death on the peninsula?  Really?  Does Trump or the evidently mad duo of Mattis/McMaster fully grasp the scale of the destruction and people losses that would ensue?  Some of the people of SST have suggested that maybe NOKO could actually be bargained with if we adopted a different attitude toward the little bastards.  Really?  What a thought!
  • 3.  Tillerson went to Moscow to bring the Russians to heel on various matters and left with nothing to show for his trouble   NATO keeps moving assets into Eastern Europe to confront the Russian menace.  The prevailing idea in the Borgist foreign policy establishment in Washington and London seems to be that the US (with UK advice) must guide human events and any thought of national independence anywhere in the world must be stamped out.  Really?  How is that to be enforced?  With war? With yet more economic sanctions that drive Russia toward China?
  • 4.  Mattis (without producing evidence) insists that Syria has retained some indeterminate number of tons of chemical weapon materials.  This is a transparent effort to justify further aggressive action against Syria.   Will Mattis/McMaster justify direct US intervention there to create a "safe zone" in preparation for partition of the country or as a base for a drive on Damascus to unseat the government and install the jihadis?

All of this raises the question of why the Trump Administration is placing itself in position in which if we are defied we will have to fight a number of bloody wars simultaneously  Why? 

 Is Trump About To Flip Again: Ryan Says "TTIP Good For Global Order" --From Obamacare to NATO, and from Ex-Im Bank to Chinese currency manipulators, President Trump has shown he is comfortable changing his mind 'bigly'. Today's exuberant support for "TTIP as good for global order," from Speaker Ryan, following VP Pence's meetings in Japan, raises questions about whether Trump's executive order withdrawing from the Trans-Pacific Partnership (TPP) free trade agreement is the next big flip-flop.During his presidential campaign, Trump often criticized the TPP agreement and called it a "terrible deal," which is harmful for US workers. On January 23, Donald Trump signed an executive order withdrawing the United States from the Trans-Pacific Partnership (TPP) free trade agreement and promised to renegotiate the North American Free Trade Agreement (NAFTA). The Trump administration was expected to at least delay talks on the TTIP deal, according to media reports.And then today,. Speaker Ryan, according to Bloomberg News noted that "TTIP was good for global order," adding...We are more determined than ever to lead. We don't want China to write the rules of the 21st century global economy. We want to do that. We want a level playing field for our businesses. And yes, we want free trade deals, but they have to be smart trade deals. They need to help workers and raise wages. They need to create high-paying, sustainable jobs. The good news is that these are exactly the type of jobs you get from smart free trade agreements. And we must continue to sharpen tools to combat unfair trade practices.Now that Article 50 has been invoked, the UK and EU will determine the best path forward over the course of negotiations. We want the parties to come together and strike a lasting agreement. A strong UK-EU relationship is in all of our best interests.In that same vein, the United States will continue to work closely with our EU friends, and chart a path forward on TTIP negotiations. And while it's a jump from the Transatlantic Trade and Investment Partnership (TTIP) to the Trans-Pacific Partnership (TPP), as one analyst notes, given his recent backtracking, it's not beyond the realms of possibility...

 57 Percent of Americans Polled Told Gallup They Pay “Too Much” in Federal Income Taxes; Note, Though, That 45 Percent of Americans Pay No Federal Income Taxes at All. -- As Tax Day approaches (April 18 this year), many of us bemoan our tax bills coming due. Why is taxation such a charged issue? Many Americans are fuzzy on who and what are taxed and the reasons we pay taxes at all. A year ago, 57 percent of Americans polled told Gallup they pay “too much” in federal income taxes; note, though, that 45 percent of Americans pay no federal income taxes at all. We fight about taxes because we disagree about what is fair and what government should do. If we knew more, we’d still have disagreements, but at least our discussions would be more rational and produce more coherent policies. Tax law can be complex, but if high school students can get a handle on the basics, so can the adults who choose the politicians who implement it.Is a flat or a progressive tax fairer? It depends on your sense of justice — but before you can even answer that question, you need to know how each mechanism works. So students learn that the relative tax burden on individuals depends on which tax base is used. Sales taxes place a higher burden on lower-income people, because lower-income taxpayers generally spend a greater percentage of their income than higher income taxpayers do. A flat income tax is easy to understand: You pay a certain percentage of your income, no matter how much you make. With a progressive income tax, escalating rates apply as income increases. For example, if a married couple had $52,000 of taxable income in 2016, the return they file this year will show a tax liability of $6,872.50 (assuming no tax credits). They will pay 10 percent on their first $18,550 and 15 percent on the rest of their taxable income. Their marginal rate is 15 percent, but their effective, or average, tax rate is 13.2 percent.

US admits Trump tax reforms will be hit by healthcare setback -- The US Treasury secretary has conceded that the administration’s timetable for ambitious tax reforms is set to slip following setbacks in negotiations with Congress over healthcare.Steven Mnuchin said the target to get tax reforms through Congress and on President Donald Trump’s desk before August was “highly aggressive to not realistic at this point”.“It started as [an] aggressive timeline,” the former Goldman Sachs banker said in an interview with the Financial Times. “It is fair to say it is probably delayed a bit because of the healthcare.”Ahead of meetings with finance ministers and central bankers in Washington this week, Mr Mnuchin also rejected fears that the Trump administration may be embarking on a new round of currency wars over the strength of the dollar following the president’s public fretting last week. He stressed that the US did not intervene in currency markets, saying: “The president was making a factual comment about the strength of the dollar in the short term . . . There’s a big difference between talk and action.” Mr Mnuchin insisted he still expected the tax system to be reformed in 2017. But his words are a sign of the struggles Mr Trump has faced as he tries to overhaul Barack Obama’s healthcare system and ease corporate and personal income tax in the first year of his administration.

Likeliest outcome of tax reform is a deficit-financed tax cut for the rich that will expire in a decade -- Undeterred by their failure to repeal the Affordable Care Act (ACA), Republicans look set to move on to the next item in Paul Ryan’s “Better Way” agenda—tax reform. This post helps set the stage for the upcoming tax reform debate and explains why “tax reform” will in the end likely just become a deficit-financed tax cut for the rich and corporations that expires in 10 years—a decade of free money for groups that don’t really need it and a problem for policymakers to deal with in the future. Understanding why this deficit-financed, 10-year tax cut is the most likely outcome requires some understanding of the “budget reconciliation” process (apologies). Budget reconciliation allows the Republicans to avoid the Senate’s 60-vote threshold for a filibuster, and hence will almost surely be needed to pass any tax cut. To begin the reconciliation process, Congress first passes a budget resolution with topline spending numbers that includes reconciliation instructions. These instruct the relevant committees to make changes to mandatory spending or revenues in order to achieve some budgetary target—for instance, decreasing revenues or the deficit by so-many billion over a specified time period. Here, Republicans in Congress face a choice. They originally planned to use the fiscal year 2017 budget to repeal the ACA, and so wrote reconciliation instructions that were basically deficit neutral over the 10-year budget window. They could do this because, although repealing the ACA would mean large tax cuts for the top 1 percent, these could be paid-for with cuts to Medicaid and subsidies that helped people afford insurance in the ACA marketplace exchanges. If Republicans wanted revenue-neutral tax reform—perhaps following through on the popular mantra of “broaden the base, lower the rates”—they could simply repurpose those instructions. But this is unlikely to work for them.Read more

 Supply-side, trickle-down nonsense on the NYT oped page -- Jared Bernstein: There’s a robust debate to be had as to why the NYT published this op-ed on the alleged economic benefits of trickle-down tax cuts, as virtually every paragraph touts an alternative fact. It is the opinion page, I guess, and the authors advise (or at least advised) the president, so I can see why it’s there. But it does require debunking, so thanks NYT, for some make work. Here’s much of the article’s text, followed by my comments in italics: A few of the comments:... Here we have the first in a series of trickle-down claims. The alleged sequencing is: cut taxes of business and the wealthy, they invest more, that raises profits and productivity, and the benefits trickle down to the middle class. Every link in that chain is broken: tax cuts, even on investment income, do not correlate with greater investment, and they certainly are uncorrelated with faster productivity growth. Businesses already receive very favorable tax treatment on their investments; in fact, their tax burden on debt-financed investments can be negative. No question, tax cuts raise after-tax profitability, but absent much more worker bargaining power, those profits stay in the pockets of those at the top of the income scale. ...Here we have the “money” ‘graf: the straight-up claim that trickle down tax cuts will boost the earnings of the working class, which will help offset their cost—the Laffer curve in action. I guess I should give the authors credit for adding “if we are right,” though I’ll give you very long odds that the editors insisted on this addition. Because there’s no reason to ask if they’re right. They’re not, with the latest exhibit being the state of Kansas, an “experiment” derived by some of these very authors. BTW, I’ve endorsed my friend Kevin Hassett for his new job as a voice of economic reason in this administration. But I’ve been careful to note this flaw in his work and his thinking. In fact, the study they reference here has been thoroughly debunked in various places. ... Puh-lease. How stupid do these people think we are (rhetorical question!)? Their simple scheme—Trump wins, the rich get big tax cut—has turned out to be harder to pull off than they’d hoped. That’s a feature, not a bug, of our current political moment, even if it means we have to read a WSJ oped in the NYT.

Goldman Pours Cold Water On Trump's Fiscal Stimulus Plan -- Goldman Sachs' Chief US Political Economist Alec Phillips writes that tax reform faces a risk of failure, but tax cuts remain likely... in 2018 and investors need to stay realistic about the impact of fiscal stimulus. President Trump’s campaign proposals initially raised expectations of several forms of fiscal stimulus, driving investor optimism on both infrastructure spending and various elements of tax reform. However, we expect only tax cuts to have a meaningful effect on growth over the next couple of years. Three risks are behind this view: tax reform failure, fiscal constraints, and delayed enactment. First, tax reform faces a real risk of failure. If Republicans pursue revenue-neutral tax reform, they are likely to encounter the same challenges they encountered in passing their health legislation. Inclusion of controversial proposals like the border-adjusted tax (BAT) or even the repeal of corporate interest expense deductibility, for example, could sink the effort. Views on these issues do not follow traditional party lines, which could easily lead to some Republican opposition (we have already seen significant opposition to the BAT, for example). With few if any Democratic lawmakers likely to vote for the tax bill, Republicans would need nearly unanimous support from their own party.  In light of the challenges tax reform faces, we believe that President Trump, who did not emphasize revenue-neutrality during the campaign, is likely to eventually endorse more limited reforms that result in a net tax cut. However, the size of such a cut would be limited by fiscal constraints; centrist Republican lawmakers seem especially likely to balk at large tax cuts that would eventually require deep spending cuts to maintain fiscal sustainability. While Republican leaders have prognosticated that they might take the first vote on tax legislation as soon as May and enact a bill by August, the risk is skewed toward delays, in our view. We expect Congress to pass tax legislation sometime between 4Q2017 and 1Q2018. However, the potential fiscal impact is likely to become clear in the next couple of months, for two reasons. First, the White House is expected to submit a budget proposal to Congress in mid-May, and will need to clarify its intentions on the size of a tax cut at that point. Second, in order to pass tax legislation via the “reconciliation” process, Congress must first agree on a budget resolution providing instructions for the tax-writing committees to do so. These instructions must include a specific amount by which revenues should be reduced; once this figure is finalized, which we expect in May or June, a larger tax cut would not be possible without bipartisan support.

Treasury's Mnuchin: We're 'pretty close' to bringing forward 'major tax reform': The Trump administration is close to bringing forward "major tax reform," Treasury Secretary Steven Mnuchin said Thursday, days after he tempered expectations for how quickly it will pass. Mnuchin, who this week backed off of his earlier goal of passing tax reform by August, said the White House will unveil a plan "very soon." However, the Trump administration previously missed several of its deadlines for releasing its tax plan. In terms of timing, he said he hoped passing a tax overhaul will not "take till the end of the year." Mnuchin spoke at the Institute of International Finance Washington Policy Summit, where White House chief economic advisor Gary Cohn was set to appear later Thursday. In a Financial Times interview published Monday, Mnuchin said getting a bill to President Donald Trump's desk before August is "highly aggressive to not realistic at this point." He said in February that he wanted to see "very significant" tax reform passed by Congress' August recess. The business community has hoped Republicans can move quickly on overhauling the American tax system, a prospect that partly fueled stock market gains in the months following Trump's election. However, political realities have tempered expectations for changes to the tax system. Republicans attempted to pass legislation to replace the Affordable Care Act before moving to a tax reform bill. That effort failed late last month, and Mnuchin said the setback contributed to his assessment that passing a tax overhaul by August could be difficult.

Trump's Tax Cut Plan Will... Pay... For... Itself! -- Back during Steve Mnuchin's confirmation hearings for Treasury Secretary, he said he was surprised that IRS staffing had gone down. This just reduces the number of audits they can perform, and therefore the amount of tax revenue they collect from high earners. Just think about it. If you increased hiring, it would pay for itself!   But Mnuchin is a quick learner, and he never brought that subject up again. Instead, he's now talking about a much more acceptable kind of plan that pays for itself. The subject, of course, is tax cuts:Treasury Secretary Steven Mnuchin said the economic growth that would result from the proposed tax cuts would be so extreme — close to $2 trillion over 10 years — that it would come close to recouping all of the lost revenue from the dramatic rate reductions. Some other new revenue would come from eliminating certain tax breaks, although he would not specify which ones: The plan will pay for itself with growth,” Mnuchin said at an event hosted by the Institute of International Finance.  The Congressional Budget Office will have a very different take on this, and their take is the only one that matters. So why does Mnuchin even bother with this tired old charade? Maybe it's just reflex. While we wait to find out, however, here's a chart showing income tax receipts following the five most recent big changes to tax rates. You can decide for yourself if tax cuts pay for themselves or if tax increases tank the economy.

House Speaker Ryan sees long battle over tax reform | Reuters: The United States' first tax overhaul in decades may not pass Congress until well into 2017, House of Representatives Speaker Paul Ryan said on Wednesday, in a sign the timetable for the legislation has been pushed back. Revamping the U.S. tax code has become a new legislative test for President Donald Trump after a Republican push to repeal former President Barack Obama's signature healthcare law failed last month in a humiliating defeat for the party. Some Republicans in Congress had hoped to pass the tax overhaul before August, but party divisions over the legislation and difficulties in replacing Obamacare have slowed the process. "This will be done in 2017, that is our time line, we would like to get it done as soon as possible," Ryan told reporters during a visit to London that was part of a multi-nation trip aimed at strengthening U.S. economic and security ties with NATO allies. Ryan added: "As soon as possible for us is by the end of summer but we're going to take our time to get it right. We can clearly get this done by the end of summer but if it needs to go a little longer, we'll do that." Trump made tax reform a core campaign promise, saying he would simplify the tax code and cut tax rates in ways that could significantly increase government debt. Ryan has been pushing a plan that includes a border adjustment tax, or BAT, that would levy a 20 percent tax on imported goods. The provision has been attacked by some conservatives and Democrats who argue it would hurt consumers and some U.S. companies reliant on foreign goods.

How Best to Tax Business - Greg Mankiw -- Despite an uneven start, tax reform is on the agenda in Congress. And the ideas being considered, especially regarding business taxation, are not mere tweaks to our ossified system. They would profoundly alter how the government raises money and upend the incentives for private decision makers. This is fascinating to tax policy nerds like me. But it is important for everyone to understand. The motivating force behind business tax reform is that the statutory corporate tax rate in the United States is one of the highest in the world. The high rate encourages all kinds of perverse behavior, such as leaving money parked in overseas subsidiaries and inverting corporate structures to take advantage of lower rates abroad. The current corporate tax finds no fan in Kevin A. Hassett, the economist recently nominated by President Trump to lead the Council of Economic Advisers. Some of Mr. Hassett’s research suggests that our high corporate taxes may be so distortional that a cut in the rate might increase tax revenue. In another paper, Mr. Hassett finds that corporate taxes depress wages for manufacturing workers. In a world where capital is mobile and labor is not, capital escapes from high-tax nations, leaving workers behind to bear the burden of lower productivity and reduced incomes.  The Better Way plan, championed by House Speaker Paul D. Ryan and Representative Kevin Brady, the Republican chairman of the Ways and Means Committee, promises fundamental changes in the nature of business taxation, most of which would, in my view, be steps in the right direction. There are four key issues.

  • WORLDWIDE VS. TERRITORIAL Most nations aim to impose taxes on economic activity that takes place within their borders. Such a system is called territorial. By contrast, the United States has a worldwide corporate tax. If a company based in the United States produces a product abroad and then sells it abroad, our Treasury takes a cut of the profits when they are brought back home.
  • INCOME VS. CONSUMPTION Many economists have argued that taxes should be levied based on consumption rather than income. Consumption taxes would do less to discourage saving and investment and would thus be more favorable to economic growth. In addition, consumption taxes are arguably fairer: They tax the standard of living people enjoy rather than the value of what they produce.
  • ORIGIN-BASED VS. DESTINATION-BASED TAXATION The corporate tax system is now origin-based. It levies taxes on the profit from goods produced in the United States, regardless of where they end up. An alternative, proposed in the House bill, would be to tax all goods consumed in the United States, regardless of where they are made. This destination-based approach would tax imports and exempt exports, which is sometimes called a border adjustment. In this way, the business tax would resemble many of the value-added taxes used in Europe.
  • DEBT VS. EQUITY Now, firms can deduct interest payments to bondholders, but they cannot deduct dividend payments to equity holders. This treatment encourages firms to rely on debt rather than equity, making them more financially fragile than they would otherwise be.

GOP Targets Trillion-Dollar Tax Break for Democratic States - Conservative activists and House Republican leaders want to eliminate a trillion-dollar tax break that mostly benefits wealthy filers in Democratic states, a push that could further imperil President Donald Trump’s hopes of winning bipartisan support for a tax overhaul.  Ever since the inception of the federal income tax in 1913, taxpayers have been allowed to deduct the state and local income taxes they pay from their taxable income. Anti-tax crusaders, including Grover Norquist, the president of Americans for Tax Reform, say the deduction represents bad policy.  “When you allow people to deduct their state and local taxes against the federal tax, you in effect subsidize tax increases at the state and local level,” Norquist said. The deduction is a rare tax break for high earners that conservatives want to abolish and Democrats want to protect, a dynamic that scrambles the traditional partisan divide. “This is transferring money from low-tax states to high-tax states. So this doesn’t rank high on the list of deductions and preferences they like. The flipside of that is Democrats like the idea of states having more funds.”  Trump hasn’t taken a public position on the issue, and White House spokeswoman Natalie Strom declined to comment on his thinking. “He’s continuing to hear input from all sides” on a potential tax plan, she said, describing it as a high priority.Williams said the president, a wealthy New Yorker, has “almost certainly” benefited from the tax break in the past; Strom also declined to comment on that. Ditching the deduction would raise federal tax revenue by $1.3 trillion over 10 years, according to the Tax Policy Center, which found that 90 percent of that increase would be paid by taxpayers who earn $100,000 or more. The largest beneficiaries of the tax break are California, New York and New Jersey, all relatively high-tax blue states, which eat up more than a third of the nationwide benefits, according to the nonpartisan Committee for a Responsible Federal Budget.

'I Think I Will Get It Done': Trump's Renewed Health Care Push Catches Republicans Off Guard - President Donald Trump's focus on health care has the potential of leading to a second embarrassing defeat that would raise more questions about the new administration’s ability to shepherd complicated legislation through Congress.   The Wall Street Journal: Trump Shifts Back To Health Care After losing a fight to revamp the health-care system, President Donald Trump said last month he was prepared to put the setback behind him and move on to the next challenge, rewriting the tax code. Three weeks later, he said he is determined to resurrect the health-care bill even if it means delaying the tax overhaul, telling The Wall Street Journal in an interview: “I want to get health care done…I think I will get it done.” (Radnofsky, Nicholas and Rubin, 4/13)  In his efforts, the president is eyeing subsidies as a bargaining chip — The New York Times: Trump Threatens Health Subsidies To Force Democrats To Bargain In the weeks since President Trump’s attempts to replace the Affordable Care Act collapsed, the administration has debated what to do: Try again? Shore up the insurance marketplaces? Or let the whole system collapse? Mr. Trump has failed to get enough support from his own party, but he hopes to get the Democrats’ help by forcing them to the negotiating table with hints about the chaos he could cause. (Pear, 4/13)  Marketplace: President Trump Might Withhold ACA Subsidy Payments Under current law, the federal government repays some money to insurance companies for covering people with very low income. President Trump said he was still considering what to do about those payments. Bob Atlas, president of healthcare consultancy EBG Advisors, said legally speaking, Trump can do that. (Uhler, 4/13)

ObamaCare replacement deal hits major speed bumps | TheHill: House Republicans are throwing cold water on hopes there will be a vote next week on a revived ObamaCare repeal-and-replace bill. Rep. Mark Meadows (R-N.C.), chairman of the conservative House Freedom Caucus, and Rep. Tom MacArthur (R-N.J.), co-chairman of the centrist Tuesday Group, are nearing a deal on changes to the bill, and the White House is eager for a victory before President Trump’s 100th day in office. But GOP aides and some lawmakers say it seems doubtful the deal, as presented by MacArthur, could win approval in the House. They also note that there is not even legislative text yet to mark a deal, which makes the prospect of holding a vote next week even more unlikely. “The question is whether it can get 216 votes in the House, and the answer isn't clear at this time,” said a senior GOP aide, referring to the number of votes likely necessary to pass the legislation. “There is no legislative text and therefore no agreement to do a whip count on.” “I don’t know that the state of play has really changed over the recess,” said another House GOP aide. A White House aide also said they are “still in the same place we’ve been” with no timetable or set date for a vote.

White House pressures GOP leaders on Obamacare showdown next week - POLITICO: A frantic and impatient White House is pressuring House GOP leaders for another showdown vote on repealing Obamacare next week so it can notch a legislative win before President Donald Trump’s first 100 days in office. But while the outlines of a possible deal are starting to come together, it’s far from clear that House Republican leaders have found the sweet spot to pass their embattled alternative health plan. Story Continued Below The White House does not schedule House floor votes. And while some senior administration officials suggested Thursday that a vote will occur next week, multiple House GOP sources told POLITICO that is unlikely. Indeed, the vote is not currently on the calendar. Nor do Republican insiders think it’s even possible, as Congress will reconvene Tuesday after a two-week Easter recess. That would leave them with one day to whip votes — an unlikely time frame for such a heavy legislative lift. “The question is whether it can get 216 votes in the House, and the answer isn't clear at this time,” a senior GOP aide said. “There is no legislative text and therefore no agreement to do a whip count on.” The conflicting narratives suggest top administration officials and House Republican leaders are either miscommunicating — or, more likely, that White House sources are squeezing Speaker Paul Ryan and his team, telling them to move quickly. Notably, the same senior White House officials who suggested a vote would occur next week also said the text of a new deal will likely be circulated Friday "or by the weekend." The claim perplexed some GOP insiders who don’t expect legislative text for a few days, at the earliest.

Trump on ObamaCare repeal and preventing shutdown: 'I want to get both' | TheHill: President Trump voiced optimism on Thursday that Congress will move to repeal and replace ObamaCare and prevent a government shutdown as early as next week, brushing aside doubts emanating from Capitol Hill. “I want to get both, are you shocked to hear that,” Trump said at a press conference with Italian Prime Minister Paolo Gentiloni. “We're doing very well on healthcare,” he continued. “We will see what happens, but this is a great bill. There's a great plan, and this will be great healthcare. It is evolving.” Trump did not commit to a vote on ObamaCare repeal legislation next week, but said he would like to see that happen. “The plan gets better and better and better, and it has gotten really, really good,” he said. “A lot of people are liking it a lot. We have a good chance of getting it soon. I would like to say next week, but it will be — I believe we will get it, and whether it is next week or shortly thereafter.” Trump and congressional Republicans suffered a major defeat in March when leaders pulled legislation repealing ObamaCare from a scheduled floor vote after members of their own party said they could not support it. A combination of conservative lawmakers who wanted to lower premium costs and centrists who worried the bill would leave millions without health insurance opposed the bill. Since then, Rep. Mark Meadows (R-N.C.), the leader of the conservative Freedom Caucus, and Rep. Thomas MacArthur (R-N.J.), a member of the centrist Tuesday Group, have been seeking a compromise.

Republicans Said To Near New Healthcare Deal --After weeks of fits and starts, Obamacare repeal may be back on the table. According to the Huffington Post, the chair fo the House Freedom Caucus, Mark Meadows and Tuesday Group co-chairman Tom MacArthur have reached a tentative Trumpcare deal. But while the two Republican lawmakers say they are nearing a deal on changes to the ObamaCare replacement bill that could move the measure closer to passage, doubts remain.According to a summary of the amendment posted by Politico,  states would have the option to apply for waivers to allow them to repeal one of ObamaCare’s core protections for people with pre-existing conditions,. That means insurers would no longer be prevented from charging people with pre-existing conditions higher premiums because of their illness. The measure would also allow states to repeal ObamaCare’s essential health benefits, which mandate that insurers cover a range of health services, including mental health and prescription drugs.Additionally, benefits like prescription drug coverage, pregnancy and mental health services would be included again in the bill, but states could get a waiver for that too if they prove it would lower premiums, or provide some other benefit to people.Yet while the new agreement could find support among more conservatives, moderates are likely to remain an obstacle according to the Hill.  "There's no deal," said an aide to a moderate House GOP lawmaker. "I wouldn't be surprised if they started to lose more moderates" because of the new changes, he added.Many Republicans objected to similar changes that were discussed before the recess earlier this month. Rep. Patrick McHenry (R-N.C.), the chief deputy GOP whip, called similar changes earlier this month a “bridge too far for our members.”

Freedom Caucus May Be Ready To Flip As New ObamaCare Bill Sports "Significant Changes" -- Representative Dave Brat (R-Va), a Freedom Caucus member who voted against the first TrumpCare bill, appeared on CNN earlier this morning to suggest that he may be ready to support a new version of the bill that allows individual states to opt out of certain components of Obamacare that require minimum coverage levels and restrict insurers from charging more to patients with pre-existing conditions.  Per The Hill:"It's not really a new bill — it's the same fundamental bill, but a few pretty significant amendments to it," he said during an appearance on CNN's "New Day."He said the new plan, the text of which has not been written yet, would lower the cost of health insurance and return responsibility to individual states.Changes to the new bill would let states apply for waivers for certain ObamaCare regulations, such as a provision preventing insurers from raising an individual's premium based on that person's health."It just allows states to opt out of some of the [regulations] to bring down price. And so those are two of the big pieces. A couple little pieces on the regulatory framework, and then I think we can all get to yes," said Brat, who came to Congress after defeating former House Majority Leader Eric Cantor in a primary..@RepDaveBrat: New health care plan in GOP pipeline "the same fundamental bill" as one that faltered last month  Meanwhile, Trump, who is increasingly anxious to post some wins in his first 100 days, implied on Thursday that he was optimistic that Congress would be able to hold a vote on healthcare next week, as well as prevent a government shutdown.  "We're doing very well on healthcare,” he said at a news conference. "We will see what happens, but this is a great bill. There's a great plan, and this will be great healthcare. It is evolving."

ObamaCare repeal: Where the GOP-Trump plan stands right now | TheHill: A White House effort to win House approval next week for an ObamaCare repeal bill is running head-on into a divided GOP conference struggling to reconcile its differences. While centrist Rep. Tom MacArthur (R-N.J.) and conservative Rep. Mark Meadows (R-N.C.) say they are close to a deal, other Republicans say they are not a part of the agreement and that MacArthur is not bringing other centrists along with him. Republican lawmakers will hold a conference call on Saturday to discuss the issue. They’re also likely to confer on another problem: keeping the government open. Even as the conference seeks to revive ObamaCare repeal legislation, it faces an April 28 deadline to pass legislation that prevents a government shutdown. And hanging over everything is pressure from a Trump administration that wants to put more points on the board before its 100th day in office, April 29. Here’s where things stand on ObamaCare ahead of what could be a very busy week.

Bare Market: What Happens if Places Have No Obamacare Insurers? - NYT - The Obamacare marketplaces can be thought of as a government-run store. The government gives many customers subsidies, like gift cards, that they can use to buy insurance. But what happens if no companies want to sell their products in the store? That is the problem that could face Obamacare customers if no insurance carriers show up in a given area, a risk policy makers call the bare-market problem. That risk is growing as the administration sends negative signals about the future of the market. If all the insurers start leaving some stores, consumers there will find their options dwindling, and then their subsidies will become worthless. Most would end up uninsured. The problem could affect as few as dozens of customers — or spread more broadly to affect a substantial fraction of the approximately 11 million people currently enrolled in Obamacare coverage. The markets created by the Affordable Care Act have always relied on the voluntary participation of private companies. If the government set up the right conditions for the market, the thinking went, insurers would want to jump in. But, as Sarah Kliff at has reported, the law contained no real backup plan if that vision didn’t work out. So far, there are parts of Tennessee where none of this year’s insurers want to sell insurance next year. Other counties have only one carrier, and in some of them, that carrier is looking shaky. The Trump administration has taken actions that have worried insurers, and it has done little to reassure them. It pulled back on outreach and advertisement for this year. It issued an executive order suggesting it would weaken enforcement of a requirement that most Americans obtain health insurance. The president and his Department of Health and Human Services have issued statements assailing the health law and warning of imminent collapse. (Absent the policy uncertainty, there have been growing signs that the markets have stabilized.)

 Single-Payer Health Care Is Seeing Record Support in Congress  - Truthout --The primary Medicare for All bill has more support in Congress now than it has ever before. John Conyers' Medicare for All bill (HR 676), which he has introduced in each Congress since 2003, has seen a recent surge of new cosponsors -- 32 since March 8 and nine on April 3 alone. As of this writing there are 93 co-signers (and counting), representing more than 48 percent of the Democratic Caucus. This is the highest number of cosponsors ever, both in terms of members and as a percentage of the House Democratic Caucus. The count is up from just 62 cosigners -- 33 percent of Democrats -- in the last Congress, and an average of 37 percent since the bill was first introduced in 2003 (see chart). This is an astonishing development for many reasons. Just a year ago the Democratic establishment was recklessly (and disingenuously) maligning the policy to help keep Sen. Bernie Sanders from winning the Democratic Primary. Further, facing a large GOP majority, Democrats and activists have also been forced to "play defense" just to prevent Donald Trump and the GOP from kicking 24 million Americans off their insurance and doing away with essential benefits like mental health and emergency room visits. These, of course, are important benefits of the Affordable Care Act (ACA), which improved access to health insurance, but leaves about 30 million Americans uninsured. The ACA also can't control rapidly escalating health costs, a trend which has long been a central problem of our health system. Indeed, the need for reform beyond the ACA is becoming increasingly clear. A Monmouth poll from February showed that 25 percent of Americans view health care as "the biggest concern facing their family right now." Health care was, by far, the most cited concern, dwarfing issues like immigration (3 percent) and terrorism (2 percent).Public support for Medicare for All has been confirmed by pollsters for years. An April 6 poll from the Economist/YouGov showed 60 percent of the public support for the policy, including from a plurality of Republicans.

Health Care “Reform” by Insiders Who Benefit from the Status Quo: Media Fails to Report Conflicts of Interest - Perceptions that the US health care system is dysfunctional and needs major reform go way back.   Nonetheless, as we have discussed endlessly, most attempts at reform failed, and health care dysfunction seems to be getting worse. One big problem may be that we don’t understand how much discussion of health care reform is driven by those who benefit from the status quo.In the last few weeks I posted about two recent ostensibly authoritative pontifications.  One was about ways to address the worsening problem of physician burn-out (see this post). It was written by the CEOs of large, non-profit hospital systems, joined by the CEO of the American Medical Association.  The other was about a health care reform proposal from the prestigious National Academy of Medicine (see this post).  A rather uncritical article in the Washington Post hailed it as a “radical idea” because it was written by “doctors.” In both cases, I was skeptical, mainly because many of the proponents had conflicts of interest, mostly undisclosed, that suggested they were already benefiting mightily from the current system.  However, it gets worse.  While I thought my posts were based on reasonable efforts to find undisclosed conflicts of interest affecting the authors of these exhortations, within a few weeks I realized I had missed one important item affecting each.  The lesson is that the web of conflicts of interest that ensnares the insiders who run most of US health care is even more complex and adherent than any of us realizes. Dr Noseworthy, CEO of the Mayo Clinic, was the lead author of a post in HealthAffairs about reducing physician burnout.  (Oddly enough, none of the proposed action items seemed to involve increasing physician autonomy by reducing the power of managers over health care professionals.) Two weeks after Noseworthy and colleagues’ post appeared, an article on the Minnesota Public Radio website reported that Dr Noseworthy has just been nominated to a seat on the Merck board of directors.  Presumably the possibility of this nomination had been known at the time the post was published.

Trump fires surgeon general -- U.S. Surgeon General Vivek Murthy, an appointee of President Obama's, has been fired by the Trump administration.In a statement, the Department of Health and Human Services said Murthy had been asked to resign, and that he would be replaced temporarily by Rear Adm. Sylvia Trent-Adams, the current deputy Surgeon General. “Today, Dr. Murthy, the leader of the U.S. Public Health Service Commissioned Corps, was asked to resign from his duties as Surgeon General after assisting in a smooth transition into the new Trump Administration," the statement said."Dr. Murthy has been relieved of his duties as Surgeon General and will continue to serve as a member of the Commissioned Corps," the statement continued, adding that Health and Human Services Secretary Tom Price "thanks him for his dedicated service to the nation."Murthy had been surgeon general since 2014 and his sudden departure surprised employees at HHS, The New York Times reported.   Murthy called gun violence a health threat to the United States, however, which had won him opposition from the NRA.

 The Trump administration might squander its first year - Treasury Secretary Steve Mnuchin says the initial goal of completing tax reform before the August congressional recess is no longer feasible because of the delay in getting health-care reform completed. But that’s an excuse, not an explanation. The truth is that the administration is spending significant time during its first months in office figuring out what its real agenda is, including how to get that agenda through Congress, instead of trying to actually pass something. The risk is now very real that the first year of this presidency will come and go with little to show for it in terms of significant legislative changes. The seeds for this problem were planted in the campaign. Trump correctly understood that most voters aren’t interested in detailed policy proposals; he wasn’t interested in them, either. He preferred to criticize his predecessors and competitors and to promise broad improvement around populist themes. Trump and everyone around him seemed to think they could figure out “the what and the how” of governance once he got into office. The Trump campaign’s indifference to developing a ready-to-go first-year agenda, along with a realistic legislative strategy, is now hindering the administration. Top White House and agency officials are spending significant time and energy deciding what they want to accomplish rather than trying to accomplish it. The new team is also finding out how hard it is to get something done in the first year of a presidency without the benefit of a running start provided by the campaign.  The campaign released two different tax-reform plans — one in 2015, aimed at influencing the GOP primaries, and the other in 2016, aimed more at a general-election audience. But even with these plans, it was always clear that the candidate wasn’t really invested in them. Trump never fully embraced their details or described them to voters. He spoke in general terms about wanting to cut taxes, and that was it. He purposely left the impression that he might pursue something entirely different after the election. Which is what he is now doing — five months after he won the presidency. News reports indicate that he has directed his staff to start over on a reform plan because he is unsatisfied with the options they brought to him. Producing a completely revised approach on taxes is extremely complex, requiring sophisticated modeling and analytical work. Consequently, a new plan is now likely to be weeks, if not months, away from being ready.

Why Renegotiating NAFTA Could Disrupt Supply Chains – NY Fed - Supply chains have become increasingly interlinked across the U.S.-Mexico border. The North American Free Trade Agreement (NAFTA), allowing tariff-free commerce between the United States, Canada, and Mexico, has facilitated this integration. Some critics of NAFTA are concerned about the bilateral trade deficit and have proposed stricter rules of origin (ROO), which would make it more cumbersome for firms to access the zero tariff rates they are entitled to with NAFTA. We argue that measures that make it costlier for U.S. firms to import will also hurt U.S. exports because much of U.S.-Mexican trade is part of global supply chains.  The existing fragmentation of production in NAFTA reduces production costs by providing low-cost intermediate inputs to U.S. firms. Lower production costs mean domestic consumer prices and the cost of U.S. exports are also pared down. Thus U.S. exports are boosted because U.S. companies are more competitive.  In order to be eligible for the duty-free imports under NAFTA, member countries must abide by rules of origin, which detail the conditions under which a product qualifies for NAFTA preferences. These are complex rules, applied on a product by product basis, and include requirements to ensure there is sufficient value added within the member countries. Tightening rules of origin, which effectively raises the cost of trade, is unlikely to increase trade or lower the trade deficit, but is very likely to disrupt supply chains.

 U.S. Exporters Could Face High Tariffs without NAFTA – NY Fed - An underappreciated benefit of the North American Free Trade Agreement (NAFTA) is the protection it offers U.S. exporters from extreme tariff uncertainty in Mexico. U.S. exporters have not only gained greater tariff preferences under NAFTA than Mexican exporters gained in the United States, they have also been exempt from potential tariff hikes facing other exporters. Mexico’s bound tariff rates—the maximum tariff rate a World Trade Organization (WTO) member can impose—are very high and far exceed U.S. bound rates. Without NAFTA, there is a risk that tariffs on U.S. exports to Mexico could reach their bound rates, which average 35 percent. In contrast, U.S. bound rates average only 4 percent. At the very least, U.S. exporters would be subject to a higher level of policy uncertainty without the trade agreement.   U.S.-Mexican Trade under NAFTA Since joining NAFTA in 1994, the U.S. share of trade with Mexico has grown, as shown in the chart below. Mexico’s share has risen to 14 percent of total exports and imports. In the same time frame, the U.S. share of trade with China has increased even more rapidly, although no free trade agreement with China is in place. Mexico’s export and import shares are the same, but China accounts for a much bigger share of U.S. imports than of U.S. exports.

Will Economic Illiteracy Trigger a Trade War? by Jeffrey Sachs – Nearly 100 days after US President Donald Trump took office, he and his commerce secretary, Wilbur Ross, continue to commit an economic fallacy that first-year economics students learn to avoid. They claim that America’s current-account deficit (or trade deficit), which is in fact the result of America’s low and falling saving rate, is an indicator of unfair trade practices by Germany and China, two current-account surplus countries. Their embrace of economic ignorance could lead to disaster.  The current-account balance, measuring the balance of trade in goods, services, net factor income, and transfer payments from abroad, is equal to national saving minus domestic investment. That’s not a theory. It’s an identity, save for any statistical discrepancy between gross national product (GDP) and gross national income (GNI). It’s true whether you are liberal or conservative, populist or mainstream, a Keynesian or a supply-sider. Even Trump and all his deal making can’t change that. Yet he is threatening a trade war because of deficits that reflect America’s own saving-investment imbalance.  A country runs a current-account deficit if investment exceeds national saving, and runs a surplus when investment is less than national saving. For a country with a balanced current account, a deficit can arise if its investment rate rises, its saving rate falls, or some combination of the two occurs.   There is no particular reason why a reduction of foreign trade barriers or an increase in US trade barriers would have any first-order effects on the US saving and investment rates, and therefore on the US current-account balance. To reduce its current-account deficit, the US must either save more or invest less in its economy.

AG Sessions says he's 'amazed' a judge 'on an island in the Pacific' can block Trump's immigration order - Attorney General Jeff Sessions said this week he was amazed that a judge in Hawaii could block President Donald Trump's executive order halting immigration from several majority Muslim countries.Sessions made the comments in an interview with "The Mark Levin Show" Tuesday evening that was put online Wednesday."We've got cases moving in the very, very liberal Ninth Circuit, who, they've been hostile to the order," Sessions said. "We won a case in Virginia recently that was a nicely-written order that just demolished, I thought, all the arguments that some of the other people have been making. We are confident that the President will prevail on appeal and particularly in the Supreme Court, if not the Ninth Circuit. So this is a huge matter. I really am amazed that a judge sitting on an island in the Pacific can issue an order that stops the President of the United States from what appears to be clearly his statutory and Constitutional power." Last month, a federal judge in Hawaii, Judge Derrick Watson, issued an order that blocked Trump's ban on travelers from several Muslim-majority countries. The Department of Justice is currently appealing the decision.

Torn apart: the American families hit by Trump's immigration crackdown -- ‘Bad hombres.” Those are the people Donald Trump says he is targeting for deportation under his immigration policy – the people he calls “illegal aliens”, the gangbangers, violent criminals and drug dealers who threaten public safety and undermine national security. But a very different pattern is emerging on the ground. In communities from Maryland to California and Oregon, immigration lawyers are reporting that individuals are being picked up with minimal or no criminal records who pose no risk at all to anyone.   More than 90% of removal proceedings initiated in the first two months of the Trump administration have been against people who have committed no crime at all other than to be living in the country without permission. Early figures on deportation arrests show that the number of people with no criminal record who have been picked up has doubled, dragging people who were previously considered harmless into the deportation net. William Stock, president of the American Immigration Lawyers Association, said that Trump had clearly widened the focus, emboldening federal agents of Immigration and Customs Enforcement (Ice) in turn to expand their activities.  “The president says one thing and his homeland security officials in the field do something different. He says he is focused on serious criminals but Ice is deporting anyone who is undocumented.” Ice told the Guardian that it is prioritizing cases that fall into seven categories, from those charged with a criminal offence to individuals who “pose a risk to public safety or national security”. But the agency pointedly added that “while criminal aliens and those who pose a threat to public safety will continue to be a focus, DHS [Department of Homeland Security] will NOT exempt classes or categories of removable aliens from potential enforcement. All those in violation of the immigration laws may be subject to immigration arrest, detention and removal from the United States.” In other words, no one is exempt. To explore the human toll of what appears to be a nascent but potentially significant redirection in immigration efforts, the Guardian contacted four families who have been tapped for deportation. Here are their stories:

Most Texans do not want Trump’s border wall — President Donald Trump will have to mess with Texas if he wants to build his "big, beautiful" wall.  According to a new poll from the nonpartisan Texas Lyceum, residents of the Lone Star State overwhelmingly oppose Trump's planned border wall and support a path to citizenship for undocumented immigrants.Of 1,000 Texans surveyed, 90% support a path to citizenship, while 61% oppose the proposed wall and 58% disapprove of the way the president has handled immigration overall. While Texas — which comprises  1,254 miles of the country's 1,900 mile border with Mexico — is traditionally deeply conservative, the survey results suggest Republicans and Democrats could find common ground on immigration if they can move past the politics.  "What you see in immigration reform is that it's very similar to the Affordable Care Act," Texas Lyceum research director Joshua Blank said . "All the partisan predisposition that goes with the health care law comes into play. Republicans are against it and Democrats are for it. But when you look at the actual provisions of what it may entail, Republicans are generally pretty favorable."

Trump to sign executive order on ‘Buy American, Hire American’ - President Donald Trump will act on one of his signature campaign promises today when he signs an executive order aimed at promoting “Buy American, Hire American” practices. The order, which Trump will sign in Wisconsin this afternoon, will direct Commerce Secretary Wilbur Ross to lead an investigation into government procurement practices at federal agencies, with a focus on rooting out weak monitoring, enforcement and compliance efforts. It will also task four agencies with re-examining all programs under which workers enter the United States from abroad. The executive order also directs the Commerce Department and the Office of the U.S. Trade Representative to “comprehensively assess” the procurement provisions of all free-trade agreements as well as the World Trade Organization’s Government Procurement Agreement. The goal, a senior administration official said, is to “determine which deals may actually be working for America and which may not.” “If it turns out America is a net loser because of those free trade agreement waivers,” the official said, “these waivers may be promptly renegotiated or revoked.” “It is simply unfair for government contracts to be awarded to low bidders that use dumped or injuriously subsidized, foreign-source content to push out domestic producers,” the official continued. “This portion of the executive order is an innovative step to stop the foreign cheaters from using taxpayer funds to steal our jobs, to shutter our steel mills and offshore our factories.”  The “Hire American” side of things will focus primarily on guest worker visa programs — and, namely, the H-1B program, which allows companies to bring specialized foreign workers to the U.S. on a temporary basis. The order proposes amending the H-1B program to favor higher-skilled and higher-paid workers and directs the departments of Labor, Justice, Homeland Security and State to examine their various programs and explore various ways to crack down on “fraud and abuse.” Read more about the executive order from yours truly here.

Donald Trump moves towards imposing tariffs on steel imports -- The US has set the stage for a global showdown over steel, launching a national security investigation that could lead to sweeping tariffs on steel imports in what would be the first significant act of economic protectionism by President Donald Trump. The decision to use a 1962 law allowing the US government to limit imports that threaten its security readiness is intended to deliver on Mr Trump’s campaign promises to bolster heavy industry and “put new American steel into the spine of this country”, officials said on Thursday. But it risks setting off trade tensions with China just days after Mr Trump avoided another conflict by backing down on a promise to label Beijing a currency manipulator, citing in part its help in dealing with North Korea. Mr Trump called the move a “historic day for American steel” but insisted it “has nothing to do with China”. “Steel is critical to both our economy and our military. This is not an area where we can afford to become dependent on foreign countries,” he added. The new push on steel came as Christine Lagarde, the head of the International Monetary Fund, repeated a warning that protectionism represented a serious threat to global growth. But Ms Lagarde, who has been locked in a rhetorical battle over protectionism with Mr Trump’s commerce secretary, Wilbur Ross, sought to reach out to the White House by acknowledging a need for changes in global trade. Echoing some of Mr Trump’s criticism of the multilateral system, the former French finance minister said there were increasing signs countries were violating global trading rules. She also concurred with the Trump administration’s recent criticism of Germany, saying that addressing Berlin’s trade surplus was “highly desirable”.

Trump Signs Order Granting Steel Import Sanctions On "National Security" Grounds --  At noon, Donald Trump will sign an executive order calling for a probe whether imports of foreign-made steel are hurting U.S. national security. The order will revive a decades-old, rarely used law to explore imposing new barriers on steel imports, in this case aimed loosely at China. Trump will sign the memorandum related to section 232 of the Trade Expansion Act of 1962 at an event in the White House that will include leadersd of several U.S. steel companies; the law will allow the president to impose restrictions on imports for reasons of national security. Trump’s directive will ask Ross to conduct the probe “with all deliberate speed and deliver the results to the president with his recommendations."An official cited by Reuters sad that there are national security implications from imports of steel alloys that are used in products such as the armor plating of ships and require a lot of expertise to create and produce. The move is another step in Trump's "America First" policies in which he has tried to boost U.S. manufacturers and preserve American jobs. It comes as he tries to coax China into taking a more active role in reining in North Korea's nuclear and missile programs. While an official said that the directive is not aimed at a specific country but is "product oriented", in recent years the US has seen a substantial increase in imports of Steel and related products from China, which has been dumping its exports around the globe, although in recent months has been either warehousing the product domestically, or using it as part of the latest housing bubble.As the WSJ adds, the U.S. government hasn’t used the law to impose penalties since the creation of the World Trade Organization in 1995, which discourages such unilateral sanctions.

Trump Will Take Aim at Tech Outsourcing in H-1B Visa Review - President Donald Trump will take aim at information-technology outsourcing companies Tuesday when he orders a review of H-1B visa programs to favor more skilled and highly paid applicants.An administration official who briefed reporters in advance named Tata Consultancy Services, Cognizant Technology Solutions Corp. and Mphasis Corp. as examples of outsourcing companies that would likely have fewer visas approved as the administration’s changes are adopted. The H-1B work visa program channels thousands of foreign workers to the U.S. technology industry.Trump will announce the order during a trip to Wisconsin along with instructions to federal agencies to examine their purchasing systems to more effectively favor buying American goods. Two administration officials previewed the orders for reporters on condition of anonymity because they didn’t represent the agencies most directly involved in the policies.Trump campaigned on a promise to use the powers of the presidency to encourage companies to buy American products and hire American workers, and the officials portrayed the order as a step toward fulfilling the pledge. The H-1B visa system has been criticized following high-profile examples of American workers being replaced by lower-paid foreigners through the program.The new order asks agencies to propose ideas to direct visas -- which are currently distributed by lottery -- to the most skilled and highly paid applicants. It doesn’t dictate any specifics about how to achieve the goal. The administration ultimately would like to get rid of the lottery system, one of the officials said.  How much the president can change the program without Congress’s involvement is a matter of debate. The administration has significant leeway in deciding how to carry out the law. It could, for instance, give priority to employers who rely less heavily on holders of H-1B visas. Several bills have been proposed in Congress to end the lottery system.

Trump to overhaul visa program for high-skilled workers | TheHill: President Trump will sign an executive order on Tuesday that aims to overhaul the H1-B visa program used by tech companies to bring high-skilled workers to the U.S. Trump will travel to a manufacturing plant in Kenosha, Wis., to sign the order, which the administration says will make it more difficult for U.S. companies to look overseas for workers to fill middle-income jobs. At a background briefing with reporters, senior administration officials described the current H1-B visa program as a lottery system that indiscriminately hands out work visas to contracting firms that recruit low-skilled, low-wage workers to replace working-class domestic laborers. They say a new system is needed to ensure that the program returns to its original purpose of bringing in high-skilled, high-paid workers to fill more specialized or technical roles.Trump campaigned heavily on the issue, at times bringing workers he described as victims of the system on stage with him. Tuesday’s executive order won’t make immediate changes to the system, but will direct the Labor, Justice, Homeland Security and State departments to undertake a wholesale review of the H1-B visa program and to put forth recommendations that can be achieved administratively or through legislation. That could mean adjusting the wage scale the government uses to assess applicants, giving preference to workers with advanced degrees, or taking “a more vigorous stance” in enforcing violations of the program in an effort to root out fraud and abuse. One senior administration official described “abuse” of the program as any company that “brings in a worker not because you need their skill or talent, but for the purpose of undercutting the American worker” by seeking out cheap foreign labor. The executive order is not expected to address the number of visas that are given out annually. Rather, it is intended to raise the qualifying criteria for applicants so that only top earners with specific skill sets are considered. An administration official claimed that the “lion’s share” of the visas are presently used for “entry-level positions.”

Trump orders review of visa program to encourage hiring Americans | Reuters: President Donald Trump on Tuesday ordered a review of the U.S. visa program for bringing high-skilled foreign workers into the country, putting technology firms and the outsourcing companies that serve them on notice that possible changes may be ahead. Seeking to carry out a campaign pledge to put "America First," Trump signed an executive order on the H-1B visa program. It was vague on many fronts, and did not change existing rules, but one objective, said Trump aides, is to modify or replace the current lottery for H-1B visas with a merit-based system that would restrict the visas to highly skilled workers. Indian nationals are the largest group of H-1B recipients annually. Such a change could affect companies, such as Tata Consultancy Services Ltd, Cognizant Tech Solutions Corp and Infosys Ltd, that connect U.S. technology companies with thousands of foreign engineers and programmers. None responded to requests for comment. Trump announced the order and made remarks at a visit to the headquarters of Snap-On Inc, a tool maker in Wisconsin. In addition to addressing the visas issue, he also ordered a review of government procurement rules favoring American companies to see if they are actually benefiting, especially the U.S. steel industry. "With this action, we are sending a powerful signal to the world: We're going to defend our workers, protect our jobs and finally put America first," Trump said. Trump was a businessman before he was elected president last year, and his companies have been criticized for using visa programs to fill positions at Trump properties with foreign workers. Trump-branded products are also made overseas.

Emirates reduces flights on five U.S. routes as restrictions hit demand | Reuters -  Emirates, the largest international airline by passenger traffic, said on Wednesday it was cutting flights on five U.S. routes after restrictions imposed by President Donald Trump's administration weakened demand from the Middle East. Since taking office, Trump has signed two executive orders banning refugees and citizens from several Muslim-majority countries from visiting the United States. Although both moves were blocked by U.S. judges, some travelers have been deterred. The U.S. administration also introduced new security measures in March banning electronic devices larger than a mobile phone from being taken into aircraft cabins on direct flights to the United States from several Middle East locations. "The recent actions taken by the U.S. government relating to the issuance of entry visas, heightened security vetting and restrictions on electronic devices in aircraft cabins have had a direct impact on consumer interest and demand for air travel into the U.S.," an Emirates spokeswoman said. "Over the past three months, we have seen a significant deterioration in the booking profiles on all our U.S. routes, across all travel segments," the Emirates spokeswoman said. Rival carrier Etihad Airways said it had not seen any significant change in demand and had no plans at present to reduce flights to the six U.S. cities it serves. Fellow Gulf carrier Qatar Airways had no immediate comment when asked about any plans it had for its U.S. routes.

 Beat-Up Travelers: Estimating Trump's Hit to US Tourism - It won't be long now until we have a reasonably accurate read on how much travel to the US has been affected so far by the rampant xenophobia incited by Donald Trump. At month's end, GDP for first-quarter 2017 should indicate the hit to this services trade. What's there to like about traveling to the US unless you're a masochist? You've got Muslim Ban 1.0 and 2.0, extreme vetting, being forced to give up device passwords (or get waterboarded?), invasive pat-downs, Indian nationals being shot and killed, Vietnamese migrants being forcibly dragged off planes...the list goes on and on. Foreigners being sensible people who don't appreciate being discriminated against, shot, dragged, detained, having their private parts fondled and so forth, it's no surprise that news reports about falling tourist arrivals in the US have been plentiful. Here are two more guesstimates on the negative impact as we await the month-end GDP figure. First, the Washington PostDemand for flights to the United States has fallen in nearly every country since January, ­according to Hopper, a travel-booking app that analyzes more than 10 billion daily airfare price quotes to derive its data. Searches for U.S. flights from China and Iraq have dropped 40 percent since Trump’s inauguration, while demand in Ireland and New Zealand is down about 35 percent. The result could be an estimated 4.3 million fewer people coming to the United States this year, resulting in $7.4 billion in lost revenue, according to Tourism Economics, a Philadelphia-based analytics firm. Next year, the fallout is expected to be even larger, with 6.3 million fewer tourists and $10.8 billion in losses. Miami is expected to be hit hardest, followed by San Francisco and New York, the firm said. It may be 9/11 all over again for an industry just recently recovered from the United States' initial foray into enhanced foreign traveler harassment:

Ajit Pai, F.C.C. Chairman, Moves to Roll Back Telecom Rules - NYT — Ajit Pai, the chairman of the Federal Communications Commission, is taking the next steps to unwind Obama-era rules and other regulatory efforts that had restricted the abilities of telecommunication companies and broadcasters.With two items up for vote on Thursday that are expected to pass, Mr. Pai is carrying forward a swift Republican attack on telecom rules. The rollback will empower big telecom and media firms that have lobbied aggressively for deregulation, but consumer groups say it may also eventually put consumers at risk of higher prices and fewer options for services and media.Since being appointed by President Trump in January to lead the commission, Mr. Pai has abolished a plan to open the cable box market, suspended several participants from a program for low-income broadband subsidies, and chipped away at net neutrality, which guarantees consumers equal access to all internet content. A proposal to roll back net neutrality rules is expected as soon as this month.“In just three months, he’s taken many steps to reduce choices for consumers, make services more expensive or roll back the rights people thought they had online,” Phillip Berenbroick, the senior policy counsel at Public Knowledge, a left-leaning consumer group, said of Mr. Pai.  The two specific items to be voted on Thursday include a plan to make it easier for broadband providers to charge other businesses higher prices to connect to the main arteries of their networks. The action would clear the way for internet service providers like AT&T and CenturyLink to raise connection fees charged to hospitals, small businesses and wireless carriers in many markets where there is little or no competition for so-called backhaul broadband service.

Hearing first arguments as member of the Supreme Court, Gorsuch jumps right in - New Justice Neil M. Gorsuch was an active, aggressive and somewhat long-winded questioner in his debut Monday at the Supreme Court, making his presence known during a series of complicated cases about legal procedures.Gorsuch waited barely 10 minutes into the first of three hour-long cases before kicking off what became a long chain of questions. There is no expectation at the high court that new justices are to be seen and not heard, but the 49-year-old rookie seemed to push the envelope a bit. Gorsuch asked more questions at his first oral argument — 22 — than did any of his fellow justices at their first appearances, according to Adam Feldman, a scholar who studies all things empirical about the Supreme Court. Before Monday, Justice Sonia Sotomayor had been the leader with 15 questions.And, according to Feldman’s count, Gorsuch was wordier than all of his colleagues during their first time out, save for Chief Justice John G. Roberts Jr. and Justice Elena Kagan, who had joined the court after representing the government there as its chief lawyer.In short order, Gorsuch showed he could be polite and still deliver a jab reminiscent of the justice he replaced, the late Antonin Scalia.At one point, Christopher Landau, a Washington lawyer representing a former federal worker trying to navigate a complicated law governing grievance procedures, said, “We’re not asking this court to break any new ground.” “No, just to continue to make it up,” Gorsuch shot back with a grin, indicating he believed previous court decisions had strayed from the text of the law.

Gorsuch's First Big High Court Vote Allows Arkansas Execution -  Justice Neil Gorsuch took his first major action on the U.S. Supreme Court by casting the deciding vote to let Arkansas begin executing a group of death-row inmates. In a series of orders Thursday night, the high court cleared the state to execute Ledell Lee, one of eight convicted murderers that Arkansas has been trying to put to death before one of its lethal-injection drugs expires at the end of the month. Arkansas executed Lee minutes after the court rejected the last of his requests.

Jeff Sessions Is Keeping Junk Science in America’s Courts - Much of the "forensic science" used to convict people of crimes in the United States turns out not to be science at all. After a number of scandals showed forensic techniques developed by prosecution experts to be either flawed or completely bogus, the Obama administration took steps toward comprehensive reforms to address the crisis of junk evidence and wrongful convictions. But this week, Attorney General Jeff Sessions announced he is suspending those efforts. Trump's pick to be America's top lawyer has a nasty civil rights track record  It's hard to overstate how bad the junk forensics problem is. Take microscopic hair analysis: The FBI found that 26 of its 28 such analysts overstated the likelihood of matches over a 20-year period. As of March 2015, the FBI had found erroneous testimony in 96 percent of the 268 cases it reviewed in which hair analysts testified against defendants. In 33 of those cases, the defendant received the death penalty – 14 were executed or died in prison prior to the review. FBI Director James Comey also recommended governors order reviews of cases in which hair analysis was used to convict defendants, because the FBI trained hundreds of examiners in its faulty techniques, and those examiners testified in state cases. Then there's bite-mark analysis, which isn't scientifically valid, but has been used to convict 25 innocent people who have been exonerated and an unknown number who haven’t. Forensic dentists can't even determine whether an injury is a human bite mark with any consistency, let alone whether a particular human inflicted it.  And the FBI abandoned unreliable examinations of bullet lead meant to show crime-scene bullets matched other bullets owned by defendants only after providing such testimony in more than 2,500 cases, over a period of decades. Even when the science is sound, junk practitioners have botched simple blood tests and mixed up DNA samples; even fingerprint analysts have shockingly high error rates.

Democrats fear that Trump has barred key federal workers from speaking to them -  Democrats in Congress are accusing the Trump administration of ordering officials in federal departments and agencies to withhold information they need to carry out their duties, such as preparing for committee hearings. Party leaders say officials have routinely provided documents and detailed explanations of programs in the past, but now at least two ranking Democrats on congressional committees say their staff members were told directly by workers in agencies that they could no longer speak with them. The issue started in January and grew into such a concern that House Minority Leader Nancy Pelosi (D-Calif.) asked Rep. John Sarbanes (D-Md.) to track Democrats’ correspondence to the executive branch that have gotten no response. So far, Sarbanes said, there are more than 100 cases from the House.“House Democrats have sent more than 100 letters to the Trump administration seeking answers to urgent questions … and received no response,” said Ashley Etienne, a spokeswoman for Pelosi’s office. “If there is a concerted effort by the Trump administration not to respond to House Democrats … we will take appropriate action to address it.” The Trump administration did not respond to a request from The Washington Post to address the allegations of an apparent gag order, but at least one administration spokeswoman denied that her department forbids officials to speak to minority-party lawmakers. Although responding to letters from lawmakers in the opposition party is a common courtesy practiced by previous administrations, they don’t always respond to every one. Each of the letters Sarbanes shared with The Post were written in March, and some appeared to require time for an adequate response.

WikiLeaks - Vault 7: Projects - Weeping Angel - Today, April 21st 2017, WikiLeaks publishes the User Guide for CIA's "Weeping Angel" tool - an implant designed for Samsung F Series Smart Televisions. Based on the "Extending" tool from MI5/BTSS, the implant is designed to record audio from the built-in microphone and egress or store the data. The classification marks of the User Guide document hint that is was originally written by the MI5/BTSS and later shared with the CIA. Both agencies collaborated on the further development of the malware and coordinated their work in Joint Development Workshops.

FBI Admits It Was Not The Russians - Launches Manhunt For "Insider" Who Leaked CIA Docs To WikiLeaks Having exclaimed that WikiLeaks is "a non-state hostile intelligence service often abetted by state actors like Russia," laying the blame for every embarrassing leak at Moscow's footsteps, the FBI and CIA have admitted that they are searching for an "insider" (not a Russian) who exposed thousands of top-secret documents that described CIA tools used to penetrate smartphones, smart televisions and computer systems. As CBS News reports, a manhunt is underway for a traitor inside the Central Intelligence Agency.Sources familiar with the investigation say it is looking for an insider -- either a CIA employee or contractor -- who had physical access to the material. The agency has not said publicly when the material was taken or how it was stolen.Much of the material was classified and stored in a highly secure section of the intelligence agency, but sources say hundreds of people would have had access to the material. Investigators are going through those names.The trove was published in March by the anti-secrecy organization WikiLeaks. In his first public comments as director of the CIA just last week, Mike Pompeo railed against WikiLeaks and its founder Julian Assange. “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,” he said.

Russia denies Reuters report think tank drew up plan to sway U.S. election | Reuters: Russia dismissed as false on Thursday a Reuters report that said a government think tank controlled by President Vladimir Putin had developed a plan to swing the 2016 U.S. presidential election in Donald Trump's favor. Reuters reported on Wednesday that the Moscow-based Russian Institute for Strategic Studies (RISS) had provided the framework and rationale for what U.S. intelligence agencies have concluded was an intensive effort by Russia to interfere with the Nov. 8 election. The Reuters report cited three current and four former U.S. officials who had acquired two documents prepared by the institute. Russia has repeatedly denied interfering in the U.S. election. The Kremlin and RISS did not respond to requests for comment on the documents before Wednesday, but on Thursday the think tank issued a statement saying the report was false. "It seems, that in their conspiratorial consciousness the authors of this conceit did not weigh reality against their coveted fantasies, in order to once again draw attention to the theme ... of Russia's 'participation' in the pre-election campaign in the United States," said RISS Director Mikhail Fradkov.

It's Not Over - House Intel Panel Calls Comey, Clapper, Rogers, Brennan, & Yates To Testify On Russia -- Just when you thought it was over - after Trump 'Tomahawks' Putin's pal Assad, and Tillerson trounces Lavrov - and the media had stopped the constant "Russia did it" narrative, the House Permanent Select Committee on Intelligence (which seems like as big an oxymoron as can occur) has called numerous current (and former) officials to testify once again on Russia's "active measures during the 2016 election." As The Hill reports, the Yates hearing would be scheduled after the Comey and Rogers appearance, slated for May 2. Former CIA Director John Brennan and former Director of National Intelligence James Clapper have also been invited to testify with Yates. The timing of the two hearings has been a point of fierce partisan contention on the panel and has been one of many fights that has threatened to explode the committee's investigation.  The open panel, featuring Yates, had previously been scheduled in March, but was canceled by committee chair Devin Nunes (R-Calif.).The Washington Post reported at the time that the White House sought to block her from testifying, a charge that Press Secretary Sean Spicer has denied.Nunes said that the hearing had been nixed to make room for a closed-door briefing with Comey and Rogers — but Democrats argued that Nunes was attempting to prevent a testimony expected to be damaging to the president. The week before, Comey in an open setting had revealed the existence of the FBI’s investigation into ties between President Trump’s campaign and Russia.

 Democracy to Pathocracy: The Rise of the Political Psychopath -- Twenty years ago, a newspaper headline asked the question: “What’s the difference between a politician and a psychopath?”The answer, then and now, remains the same: None.  There is no difference between psychopaths and politicians.Nor is there much of a difference between the havoc wreaked on innocent lives by uncaring, unfeeling, selfish, irresponsible, parasitic criminals and elected officials who lie to their constituents, trade political favors for campaign contributions, turn a blind eye to the wishes of the electorate, cheat taxpayers out of hard-earned dollars, favor the corporate elite, entrench the military industrial complex, and spare little thought for the impact their thoughtless actions and hastily passed legislation might have on defenseless citizens.Psychopaths and politicians both have a tendency to be selfish, callous, remorseless users of others, irresponsible, pathological liars, glib, con artists, lacking in remorse and shallow.Charismatic politicians, like criminal psychopaths, exhibit a failure to accept responsibility for their actions, have a high sense of self-worth, are chronically unstable, have socially deviant lifestyle, need constant stimulation, have parasitic lifestyles and possess unrealistic goals.It doesn’t matter whether you’re talking about Democrats or Republicans. Political psychopaths are all largely cut from the same pathological cloth, brimming with seemingly easy charm and boasting calculating minds. Such leaders eventually create pathocracies—totalitarian societies bent on power, control, and destruction of both freedom in general and those who exercise their freedoms.

The Real Trump Agenda: Helping Big Business - The New Yorker: What with U.S. aircraft carriers sailing in the wrong direction, Attorney General Jeff Sessions describing Hawaii as “an island in the Pacific,” and Sarah Palin, Ted Nugent, and Kid Rock larking around in the Oval Office, it’s been a pretty typical week for the Trump Administration: jaw-dropping, mind-addling, hard to keep up with. With all the chaos and dysfunction at the top, the Administration’s many pro-corporate regulatory initiatives are being somewhat overlooked by both the media and the public at large. This is wrong: these are decisions and actions that will have harmful consequences, and Trump’s own supporters will be among those hurt.Consider the Environmental Protection Agency, where Scott Pruitt, the former Oklahoma Attorney General who has long served as a protector of the oil and gas industry, is busy hiring fellow-climate-change skeptics to help him carry out Trump’s edict to dismantle the Obama Administration’s Clean Power Plan. The end result seems certain to be increased carbon emissions. Pruitt is a lightning rod, so the E.P.A. gets a fair amount of attention from news outlets, even, occasionally, from television news programs. This isn’t the case for other agencies whose missions have also tilted sharply right since January, such as the Federal Communications Commission. In 2013, when Barack Obama appointed Tom Wheeler, a former lobbyist for the cable industry, to chair the F.C.C., many commentators, myself included, expressed concern. Wheeler resigned in January. To replace him, Trump promoted Ajit Pai, another Obama appointee to the F.C.C., but one whom Mitch McConnell, the Senate Majority Leader, had recommended. Under Pai’s leadership, the F.C.C. has already taken numerous steps to roll back regulation and preserve or enhance the power of monopolistic providers like A.T. & T., Verizon (where Pai once worked), and Comcast. On Thursday, the agency moved to eliminate price caps on broadband services marketed to heavy users of data, such as businesses, hospitals, and schools. This change followed decisions to end a program designed to help poor people obtain broadband access, and to reverse an initiative that would have allowed cable customers to buy their own set-top boxes.

How Harvard Business School Helped Turn Steve Bannon into a Monster  -- “I don’t recognize any of what Bannon is saying from our days at Harvard Business School,” Arthur Zwern, a technology entrepreneur and fellow classmate from the Harvard Business School Class of 1985, told me recently. Like so many people who have attended H.B.S.—eminences from Michael Bloomberg to Jamie Dimon, from Stephen Schwarzman to Sheryl Sandberg, and even George W. Bush—Zwern was having a hard time reconciling how his alma mater, the acknowledged pinnacle of business education, could have shaped the economic nationalist views of Donald Trump’s chief strategist.Many H.B.S. alumni simply want to disown Steve Bannon. Bannon, for his part, often seems to want to disown his alma mater, too. The story he loves to tell about his Harvard years casts him as an outsider, a married Navy Officer, older than his classmates, from a blue collar background. In other words, he might have been among them, but he wasn’t one of them. Bannon has spun the story out in countless ways in recent years. When he stirs up resentment about “elites” and “the Establishment,” he is ostensibly talking about the people of H.B.S.—names like former Treasury secretary Hank Paulson, who orchestrated the bailout of the banks that makes Bannon so angry. When Bannon says that working people are “tired of being dictated to by what we call the party of Davos,” he appears to be taking aim at them again. The line he draws between himself and his classmates couldn’t be clearer. It’s a useful myth, however, because it conceals his essential similarity with his fellow students.   At its simplest, the H.B.S. stamp is not an economic ideology as much as an attitude, a permanent validation that starts at the moment of acceptance. “[They] told us that simply by getting into H.B.S., ‘You’ve won,’ ”It was H.B.S., not anything that came before it, that conferred the ‘winner’ tag on all of us.” Harvard may not want to claim Bannon as one of its own, and vice versa, but he has all of the attributes. H.B.S. provides its alumni with a license to lead, teaches them that they belong in charge, whether of a mayonnaise company or the nation. A Harvard Business School graduate sees his power, and wealth, and goodness, as part of the natural order of things.

If Trump Fired Bannon, Would He Seek Revenge? - POLITICO Magazine - When Steve Bannon vacated a home in Florida in 2015, his landlord complained that an entire Jacuzzi had apparently been coated in acid. After conservative media star Dana Loesch left Bannon’s employ at Breitbart News in 2012, she filed a suit against the website, alleging a plot to “sabotage” her career. When Bannon failed to take over the Biosphere 2 ecology experiment in 1993, he “vowed profanely to take revenge” on a scientist who crossed him, according to the woman’s lawyer. And when Bannon was breaking up with his second wife, she accused him of grabbing her by the throat and threatening to take away their children, while his lawyer reportedly threatened that she would end up with “no money” if the resultant domestic abuse case went to trial. Parting ways with Donald Trump’s chief strategist, it seems, is rarely a simple proposition. But with Trump undercutting Bannon in recent interviews and speculation running rampant that he could soon lose his job amid vicious West Wing infighting, the White House may soon be doing just that. ..I asked friends and foes alike to imagine how, should Bannon get the boot, the pugnacious populist might exact his revenge. Taken together, their suggestions amount to an epic, Kill Bill-style revenge saga that starts with Bannon leaking personal dirt on his enemies to the tabloids, using the megaphone of Breitbart News to exacerbate divisions inside the administration, and siccing an army of internet trolls on his adversaries to harass and defame them. It ends with Bannon using Cambridge Analytica data to identify and primary their vulnerable allies in Congress, then releasing a “Where Trump Went Wrong” documentary on the eve of the November midterms and finally—in this revenge fantasy’s epic climax—running against Trump himself in 2020.

Ivanka Trump Reportedly Won China Trademarks The Day She Dined With Chinese President Xi Jinping -- Ivanka Trump, leader of a retail brand bearing her own name and adviser to her father, President Donald Trump, won provisional approval of three trademarks from China on the same day she dined with Chinese President Xi Jinping and his wife, The Associated Press reported on Tuesday.  The president hosted Xi and his wife at his Mar-a-Lago estate in early April. Ivanka Trump and her husband, Trump adviser Jared Kushner, were present throughout the weekend and sat next to the couple at dinner.  Ivanka Trump has distanced herself from her retail brand since her father won the presidential election in November 2016, but sales of her products have continued to surge. The brand, which she still owns, saw a spike in sales in the weeks after her father’s inauguration and after White House counselor Kellyanne Conway urged consumers to “go buy Ivanka’s stuff.”When Nordstrom announced it would no longer carry Ivanka Trump’s line, the president posted a negative tweet about the company, showing no apparent interest in separating himself from his family’s businesses while serving in the White House.Trump and his children have been criticized for conflicts of interest since his election. The president has brushed off that criticism, arguing that he can’t have a conflict of interest.“The law’s totally on my side, the president can’t have a conflict of interest,” Trump said in November 2016.According to the AP, Ivanka Trump Marks LLC applied for at least nine new trademarks in the Philippines, Puerto Rico, Canada and the U.S. after the election. Ivanka Trump’s attorney said in a statement she “has had no involvement with trademark applications submitted by the business.”

How Billionaire Trump Adviser Evades Ethics Law While Shaping Policies That Make Money For His Wall Street Firm - As Donald Trump develops his economic policy, Blackstone CEO Stephen Schwarzman has emerged as one of the new president’s most influential advisers — one who has boasted of his work shaping the administration’s agenda. An International Business Times review of Trump policies and Blackstone investments show that Schwarzman’s rise to political prominence has coincided with recent White House moves that could enrich his company. The moves that help Blackstone have occurred while Schwarzman has been able to simultaneously sculpt federal policy and circumvent conflict-of-interest laws. In recent weeks, Trump has moved to halt a Department of Labor rule that could complicate Schwarzman’s dream of expanding Blackstone’s business into the multi-trillion-dollar market of retail retirement savings products. Trump has also promised to roll back Dodd-Frank regulations passed in the wake of the financial crisis — a cause Blackstone has lobbied on and that could benefit the larger private equity industry. The Trump administration has also — just when Blackstone has taken steps to move into infrastructure investing — floated infrastructure investment concepts that could direct government spending through Wall Street intermediaries. And as Blackstone has worked to expand its investments in oil and gas drilling, the new administration is preparing to try to loosen environmental regulations that restrict fossil fuel exploration.  Meanwhile, even though Trump campaigned on a promise to end a special “carried interest” tax break that enriches private equity executives like Schwarzman, the White House has yet to offer such a plan — or endorse existing legislation to end the tax break.

Corporate Lobbyists Funnel Cash To House Democrats Amid Push To Pass Trump’s Business Initiatives - Corporate lobbyists are taking on a larger role in the Democratic Party’s fundraising efforts as it seeks to regain control of Congress, according to documents reviewed by MapLight and International Business Times. The cash infusion comes as House Democrats face pressure to break from their party and support Trump administration initiatives that could benefit the lobbyists’ clients. A filing last week by the Democratic Congressional Campaign Committee (DCCC) shows four corporate lobbyists raised more than $380,000 for the organization -- the primary campaign arm for Democratic House candidates -- between January and March. The three-month figure is nearly four times as much as the amount lobbyists raised for the DCCC during the entire 2016 election cycle. In all, the DCCC reported raising $31 million in the first quarter of 2017. Since the election, the question of whether Democrats should embrace or spurn business interests has been a point of contention in the lingering feud between the party’s centrist officials, most of whom backed Hillary Clinton’s 2016 presidential campaign, and supporters of Sen. Bernie Sanders, a Vermont independent who challenged the former secretary of state for the Democratic nomination. Last year, the Democratic National Committee ended its ban on lobbyist donations, which was put in place by former President Barack Obama. The decision angered many Sanders voters, who saw it as a move to boost Clinton’s fundraising in the primary race. In the wake of Clinton’s loss to Trump, progressives have pushed the party once again to reject lobbyist cash. Although the DCCC never prohibited lobbyist donations, the committee reported only about $100,000 in funds bundled by lobbyists in all of 2015 and 2016, according to a MapLight review of campaign finance records.

New SEC Alums Swarm ‘Revolving Door’ to Financial, Law Firms - More than half the high-ranking SEC officials who left the agency since January 2016 landed at law and financial firms, with Debevoise & Plimpton LLP leading the pack. Debevoise, private equity manager Blackstone Group LP and other firms hired 15 of the 26 Securities and Exchange Commission officials Bloomberg BNA tracked since their departures were announced in 2016 and 2017. Firms tout the expertise their recently acquired colleagues gained at the agency. Government watchdogs, however, cite concerns about the possible influence these individuals have over their former co-workers, their commitment to the agency’s mission during their SEC tenure and the possible misuse of government employment as a stepping stone to a bigger paycheck in the private sector. “There are huge problems with the revolving door at the SEC,” Craig Holman, progressive advocacy group Public Citizen’s government affairs lobbyist, told Bloomberg BNA.  Bruce Yannett, Debevoise’s deputy presiding partner and chair of the firm’s White Collar & Regulatory Defense Practice Group, told Bloomberg BNA he doesn’t “buy the revolving-door argument at all.” Two of the firm’s three new attorneys from the SEC—former Chairman Mary Jo White and enforcement director Andrew Ceresney—returned to partnerships they held before joining the commission.

Wall Street banker Cohn moving Trump toward moderate policies | Reuters: In a White House marked by infighting, top economic aide Gary Cohn, a Democrat and former Goldman Sachs banker, is muscling aside some of President Donald Trump's hard-right advisers to push more moderate, business-friendly economic policies. Cohn, 56, did not work on Republican Trump's campaign and only got to know him after the November election, but he has emerged as one of the administration's most powerful players in an ascent that rankles conservatives. Trump refers to his director of the National Economic Council (NEC), as "one of my geniuses," according to one source close to Cohn. More than half a dozen sources on Wall Street and in the White House said Cohn has gained the upper hand over Trump's chief strategist, Steve Bannon, the former head of the right-wing website Breitbart News and a champion of protectionist trade opposed by moderate Republicans and many big companies. Cohn is a key administration link to business executives and White House sources say he will lead the charge for Trump on top domestic priorities such as tax reform, infrastructure and deregulation. "Gary's singular focus is tax reform and he's working to try and get that done in 2017," said Orin Snyder, a partner at law firm Gibson Dunn and a long-time friend of Cohn. "He is working to implement the president's twin goals of economic growth and job creation. The tax plan will also include a reduction in the corporate rate, but also tax relief for middle- and low-income Americans." Some conservatives fear Cohn may push through a tax plan that is unnecessarily complicated and argue that including tax relief for middle- and low-income Americans would not spur economic growth as much as cuts focused entirely or mostly on businesses and entrepreneurs.

 Has Former Goldman Sachs President, Gary Cohn, Gone Rogue on Glass-Steagall? -- Pam Martens   Until Donald Trump tapped him to be the Director of the National Economic Council, Gary Cohn had worked at Goldman Sachs for a quarter century, rising to the position of President of the firm and second only to its CEO, Lloyd Blankfein. Cohn walked out of Goldman in December with approximately $285 million, comprised mainly of Goldman stock, some of which had been granted early vesting. Since his exit from Goldman, Cohn has wasted no time in selling large chunks of his Goldman shares according to his financial disclosures. Against this backdrop comes the widely reported news that on April 5 Cohn met with Senators serving on the Senate Banking Committee and expressed support for bringing back a modern-day version of the depression era Glass-Steagall Act – legislation which was passed as a result of the Wall Street collapse of 1929 to 1933, which erased 90 percent of the market’s value. (Yes, 90 percent.) That legislation created Federally-insured deposits and barred insured commercial banks from being affiliated with Wall Street investment banks. It protected the U.S. financial system for 66 years until its repeal in 1999 under the Bill Clinton administration. It took only nine years after its repeal for Wall Street to implode in the same epic fashion as the ’29 crash. The only reason that Wall Street survived at all from 2008 to 2010 was that the Federal Reserve was secretly funneling a cumulative $16 trillion in almost zero rate loans to any Wall Street bank, foreign or domestic, that could fog a mirror and claim to be viable. On top of that, the Fed engaged in a toxic securities cleanup program benignly known as Quantitative Easing, where it bought up Wall Street’s dodgy mortgage-backed securities, putting the mess on its own balance sheet — where much of it remains to this day. Theories abound as to why a long-tenured veteran of Goldman would want to earn the ire and backlash of his colleagues on Wall Street by taking on such an unpopular Wall Street position as breaking up the biggest banks on Wall Street and forcing them to shed their commercial banking operations. Goldman itself became a bank holding company at the peak of the financial crisis in 2008, allowing it to borrow with abandon from the Fed.

Dodd-Frank Was Designed to Fail – and Trump Will Make it Worse --  William K. Black -- William Cohan’s April 14, 2017 column in the New York Times discusses Daniel Tarullo’s swan song talk on bank regulation.  Here are the key passages from that column for the first half of my discussion. Much to the relief of Wall Street executives, who feared and hated him in equal measure, Daniel K. Tarullo left his powerful perch on the Federal Reserve Board of Governors last week, but not before delivering one last lecture on how big banks should be regulated in his absence. Once described as the “Wizard of Oz,” for the power he wielded behind the scenes, Mr. Tarullo was appointed to the Federal Reserve by President Barack Obama in January 2009. At the Fed, Mr. Tarullo took over the important responsibility of regulating the big Wall Street banks, a job that, understandably, had been the purview of the president of the Federal Reserve Bank of New York. The oversight moved to Washington from New York in the wake of the financial crisis. Cohan was writing about a different subject, one I discuss briefly in the second half of this article, so he did not discuss the insanity described in these four paragraphs.  Here is the short version of that insanity.

  • 1.) The Clinton and Bush administrations, collectively, destroyed effective financial regulation. Tarullo’s sad euphemism is “the U.S. regulatory system had not worked particularly well before the crisis.”
  • 2.) As you can tell from that sad euphemism, in a supposedly honest swan song, Tarullo is not the kind of enforcer who inspires real “fear” or “hatred” from an industry. The “Wizard of Oz” is an apt moniker “for the power he wielded behind the scenes” – for the Wizard of Oz was a pathetic huckster. 
  • 3.) As weak as Tarullo was, he was in fact far tougher than his predecessor who was responsible for regulating Wall Street’s commercial banks, which “understandably, had been the purview of the president of the Federal Reserve Bank of New York.” That president was the most abject financial regulatory failure in my Nation’s history – which is a powerful insult given how many U.S. presidents deliberately appointed scoundrels because the president knew that they would fail to even try to be effective regulators.

Who was that NY Fed “president” who was the worst-of-the-worst regulators that was so culpable in devastating our Nation?  That scoundrel must have had his reputation destroyed and been recognized as unfit to serve even as a dogcatcher in a one-dog town.  That would be the result if we did not live in the modern era of American crony capitalism.  In that real world, our presidents promote our worst scoundrels precisely because the scoundrels deliberately refused to honor their oath of office and regulate Wall Street.  In our real (depraved) world the new President Obama promoted the disgraced Timothy Geithner from his position as the president of the NY Fed to the top financial position in the world – Secretary of the Treasury.

House panel to hold hearing on Dodd-Frank overhaul plan next week — The House Financial Services Committee will hold a hearing on a GOP Dodd-Frank overhaul plan next Wednesday as Chairman Rep. Jeb Hensarling, R-Texas, hopes to have a panel vote on the bill by the end of the month. “Republicans are eager to work with the president to end and replace the Dodd-Frank mistake with the Financial CHOICE Act because it holds Wall Street and Washington accountable, ends taxpayer-funded bank bailouts, and unleashes America’s economic potential,” Hensarling said in a press release.

Financial Choice Act Hearing Date Is Set -- Jeb Hensarling, House Financial Services Committee Chairman, said Wednesday that he will hold a hearing to discuss the Financial Choice Act, his bill to replace Dodd-Frank, on April 26. The Financial Services Committee approved the Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs (CHOICE) Act in September.  The Committee plans to discuss the updated version of the bill, dubbed Financial Choice Act 2.0, at the April 26 hearing.“Republicans are eager to work with the President to end and replace the Dodd-Frank mistake with the Financial CHOICE Act because it holds Wall Street and Washington accountable, ends taxpayer-funded bank bailouts, and unleashes America’s economic potential,” Hensarling, R-Texas, said in a statement announcing the hearing. “We want economic opportunity for all, bailouts for none. We want real consumer protections that will give you more choices. Our solution grows the economy from Main Street up, creates more opportunities for working families to get ahead, and levels the playing field with no more Wall Street bailouts.” Hensarling announced on April 12 his plan to reintroduce his Choice Act in a matter of weeks, stating in a comment provided by a spokesperson that he looks forward to “working with the president and his administration to eliminate Dodd-Frank and replace it” with the Choice Act 2.0.

Get ready: Congress fires up Dodd-Frank, CFPB overhaul -- The Dodd-Frank doomsday clock just ticked a little closer to midnight. The Republican-crafted plan to overhaul the country’s financial regulatory system and overturn many provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act is now one step closer to becoming a reality, as House Financial Services Committee Chairman Jeb Hensarling, R-TX, announced Wednesday that the Committee will hold a hearing to discuss the updated version of the Financial CHOICE Act on Wednesday, April 26 at 10:00 a.m. Eastern.And for the first time, Hensarling revealed the full version of the Financial CHOICE Act of 2017.Hensarling is the shepherd of the Financial CHOICE Act, having first introduced a different version of the act last year.The bill aimed to replace Dodd-Frank with a “pro-growth, pro-consumer” alternative that would end “too-big-to-fail” bailouts, bring significant reforms to the Consumer Financial Protection Bureau, and provide some regulatory relief for certain financial institutions.That bill made its way out of the House Financial Services Committee but never came up for a full vote in the House of Representatives.Then, earlier this year, rumors began to circulate that Hensarling planned to reintroduce a more aggressive version of the Financial CHOICE Act.  Last week, the financial industry got its first look at the Financial CHOICE Act 2.0, which would bring serious changes not only to the CFPB, but to the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and the National Credit Union Administration as well. One of the main changes of the Financial CHOICE Act 2.0 (previewed here) is that under the bill, the director of the CFPB would be fireable at will, rather than for cause only, as it stands now.

Trump To Sign Executive Orders On Corporate Inversions and Dodd-Frank Regulations - As pressure mounts on Trump to post some victories within the totally arbitrary window of the "First 100 Days" of his administration, the President is expected to join Treasury Secretary Steven Mnuchin later this afternoon to sign a combination of executive orders and memos targeting the reduction of tax regulations and certain components of Dodd-Frank.  Per a statement from the White House, one of Trump's new executive orders will seek to undo tax rules put in place in the last year of Obama's presidency that were designed to limit so-called 'corporate inversions' which allows U.S. traded companies to recognize income in lower cost countries like Ireland.  Per Bloomberg:Under President Barack Obama, Treasury sought to rein in U.S. companies’ attempts to shift their profit offshore by proposing rules that would curb so-called “earnings stripping” and inversions -- mergers in which U.S. companies transfer their tax address overseas to low-tax countries like Ireland to cut their tax bills. Some of those rules, first proposed in April 2016, sought to restrict lending among subsidiaries of the same corporate parent, a technique that can create income in low-tax countries and tax-deductible interest payments in the U.S. The proposed rules met a barrage of criticism from corporations and tax lawyers, who complained that they went too far by banning common, everyday cash-management practices that have nothing to do with tax avoidance.  Other actions expected today include a memo that will require a review of the Financial Stability Oversight Committee’s designation process for systemically important banks and a review of the orderly liquidation authority granted to the Federal Deposit Insurance Corp. (FDIC) under Dodd-Frank.  Under Dodd-Frank, the FDIC is granted the power to wind down the biggest banks but Trump's memo is expected to call for a study on whether enhanced bankruptcy authority is a better alternative for failing financial companies.

 In Latest Populist Betrayal, Trump Executive Order Unchains Wall Street Greed  -- In yet another Wall Street giveaway, President Donald Trump on Friday afternoon took executive action to chip away at Dodd-Frank financial regulations and roll back rules aimed at reducing corporate tax avoidance. Lisa Gilbert, vice president of legislative affairs for watchdog group Public Citizen, described the orders signed Friday at the Treasury Department as "nothing more than special favors for the same Wall Street banks that crashed our economy in 2008 and put millions of Americans out of work."According to ABC News, Trump signed "two presidential memoranda on the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, which former President [Barack] Obama signed in response to the 2007-2008 financial crisis." They order two six-month reviews of what the Los Angeles Times called "pillars" of Dodd-Frank: the Orderly Liquidation Authority and the Financial Stability Oversight Council.The first was established "to create a process for winding down a large, failing financial company in a way that protects taxpayers from large bailouts such as the ones paid out in the aftermath of the 2008 financial crisis," as the Washington Post explains. The second "called on federal regulators to identify which financial institutions were large enough to merit enhanced regulation, as their collapse could destabilize the economy as a whole," according to the Post."Republican Treasury Secretary Hank Paulson conceived the Financial Stability Oversight Council as a forum for catching financial risks that fall through the cracks between the various regulatory agencies," said Public Citizen financial policy advocate Bartlett Naylor on Friday. "The biggest bailout in the financial crash went to insurance firm AIG, which fell through one such crack. An executive order that questions this oversight can signal to firms intent on high-risk financial ventures that playtime is back." Trump previously signed an order directing a roll-back of Dodd-Frank overall.  Trump also signed an executive order directing Treasury Secretary Steven Mnuchin to review "all significant 2016 tax regulations to determine if they impose an undue financial burden on taxpayers, are needlessly complex, create unnecessary requirements, or exceed what's allowed under law."

Dodd-Frank is not the enemy. Bad loans are – BankThink - At the heart of the industry-supported push to roll back the Dodd-Frank Act are claims by Republican politicians and industry representatives that the 2010 reform law has been killing lending. These assertions, however, should be backed by data. According to the most recent Federal Reserve Bank of New York data, not only did aggregate household debt in the U.S. increase substantially in the fourth quarter of 2016, it did so across all loan types; residential mortgages, credit cards, student debt and auto loans all rose. As of Dec. 31, total U.S. household indebtedness was $12.58 trillion, a $226 billion (1.8%) increase from the third quarter of 2016.  In fact, Americans are just 0.8% below the peak level of $12.68 trillion in household debt from the third quarter of 2008. Before they seek to unwind the post-crisis regulations, politicians should remember that 2008 was not a great year. Those concerned about mortgage loans not rising fast enough should take note that there were $617 billion in newly originated mortgages in the last quarter of 2016, the highest level seen since the third quarter of 2007.  Delinquencies for residential mortgages, which account for 67% of total U.S. household debt, are mostly unchanged. Only 1.6% of mortgage balances were 90 or more days delinquent. However, the continued rise in credit cards, student debt and auto loans, is worrisome. In its G-19 Consumer Credit report released in early April, the Federal Reserve Board announced that Americans’ aggregate credit card debt reached $1 trillion dollars for the first time since December 2008. Credit card debt outstanding is now almost on par with auto loans ($1.1 trillion) and student loans ($1.4 trillion).  The Fed’s survey of senior bank loan officers, released in January, shows they are concerned about weakening credit quality. Nearly 37% of large banks expect the quality of their credit card loans to deteriorate somewhat in 2017, and over 38% expect auto loan quality to deteriorate. Credit card lending has become a leading driver of loan growth for commercial banks.  Standard and Poor’s/Experian Consumer Credit Default Index showed that the bank card default rate climbed 9 basis points in March, and has now increased for five consecutive months, standing at 3.31%. That rate is up 39 basis points year over year. Rather than claiming that lending is not rising fast enough, politicians and lobbyists should be aware that the biggest bank lenders are all experiencing credit quality deterioration in their credit card portfolios.

Midsize banks on Dodd-Frank relief: Raise the asset thresholds -- When it comes to federal regulations resulting from the Dodd-Frank Act, midsize banks often feel stuck in a Catch-22. They face enhanced regulatory requirements from the law since they are above a crucial $10 billion asset cutoff, yet they are several times smaller than the regional leaders and Wall Street giants able to create economies of scale to more easily absorb higher compliance costs. 

Mnuchin targets FDIC's Orderly Liquidation Authority, Volcker Rule as top reg priorities -— Treasury Secretary Steven Mnuchin criticized provisions in the Dodd-Frank Act allowing regulators to unwind failing financial institutions and barring banks from proprietary trading, saying fixes to those measures would be included in regulatory recommendations to the president due this summer.  Speaking Thursday during a conference by the Institute of International Finance, Mnuchin said the Treasury is working on compiling recommendations from regulators and the regulated community — including large and small banks, nonbank financial companies and others — to generate a unified set of policies to present to the president as part of an executive order issued in February.

Trump invites trouble in targeting FDIC resolution powers -- President Trump is expected to sign a memorandum Friday asking for a review of Federal Deposit Insurance Corp. powers to unwind a failing large bank, becoming the latest torchbearer in a yearslong effort by the GOP to revamp the controversial provision of the Dodd-Frank Act. Yet the president and Treasury Secretary Steven Mnuchin, who is tasked with carrying out the review, are courting significant risks in targeting the authority, including the complexity in replacing it and fears it could heighten — rather than diminish — concerns about “too big to fail.” Earlier this week, Mnuchin argued that the FDIC’s orderly liquidation authority could lead to perceptions that a bank is “too big to fail.” But in remarks on Friday to reporters, he acknowledged that eliminating those powers would have to go hand in hand with bankruptcy reform. “The bankruptcy code right now doesn’t work — so if entities were to go through bankruptcy, I think it is important that we have necessary changes to the bankruptcy code," he said. But crafting a bankruptcy reform that is capable of unwinding a large bank without sparking a market panic, like the one seen in 2008 when Lehman Brothers declared bankruptcy, is easier said than done. Supporters of the FDIC’s orderly liquidation authority — who have included such prominent figures as former Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Lawrence Summers — argue that no amount of bankruptcy reform will work. Indeed, they see it as making “too big to fail” worse. “The bankruptcy code is a fabulous insolvency framework, but it works most effectively for companies that have stable asset values, and are not dependent on continuous access to the financial markets,” said Michael Krimminger, a former general counsel at the FDIC who has testified to Congress in defense of orderly liquidation authority. “If the only available process for large financial companies is the bankruptcy code, you increase the possibility of a bailout in the future.”

FSOC is too political to be taken seriously – BankThink - The Financial Stability Oversight Council is a political body masquerading as an analytical one. A dubious creation of the Dodd-Frank Act, it reflects that law’s urge to expand the power of bureaucrats, in turn reflecting the implausible credo that they can control “systemic risk” because they know the financial future better than other people. They don’t. The expected result of a committee of heads of federal agencies chaired by the Treasury secretary is a politicized process. This was undoubtedly the case with the council’s attempt to designate MetLife as a “systemically important financial institution.” It should not be surprising that a U.S. District Court judge threw out the designation, ruling that it was “arbitrary and capricious,” and “hardly adhered to any standard when it came to assessing MetLife’s threat to financial stability.” In dissenting from the council’s action on MetLife, S. Roy Woodall — the FSOC’s statutorily required independent member with insurance expertise — said the designation relied on “implausible, contrived scenarios.”Decisions concerning “systemic risk,” an unclear term in any case, cannot be purely analytical and objective. They involve generalized and debatable theories. They are, to a significant extent, inherently judgmental, subjective and political. The FSOC effectively sits as a miniature, unelected legislature. That is a bad idea. The fundamental problem is the structure of the FSOC as designed by Dodd-Frank. To begin with, it is chaired by the Treasury secretary, a senior Cabinet member who always has major partisan interests at stake. No company can be considered for SIFI status without the Treasury secretary’s approval. This means that, by definition, the FSOC’s work is not a disinterested, analytical process. An administration is positioned to pick winners and losers. Under the Obama administration, MetLife was in the crosshairs, but Fannie Mae, Freddie Mac and Berkshire Hathaway were off-limits.Meanwhile, most other FSOC members are heads of independent regulatory agencies, strongly motivated by bureaucratic self-interest to defend their jurisdictional turf from intrusions by the others, and to defend their regulatory records from criticism.

Killing CDFIs would make a bad situation worse for small business -- Small-business growth and job creation positively impacts the U.S. economy, but a gap exists in small businesses’ access to cost-effective credit, hurting their ability to subsist, much less thrive. When faced with unexpected expenses, limited credit options for a small business puts its survival in question. A recent Trump administration budget proposal would widen the credit gap for small businesses even more. Unfortunately, traditional lenders have not always been able to meet these credit needs. More than 70% of small businesses seek loans under $250,000, but these relatively small-dollar loans are often the least cost-effective for banks to lend. Traditional lenders are often wary of these types of loans due to high default risks and the significant cost of underwriting. When small businesses are not able to quickly access capital from their banks, they often turn to high-cost lenders. Some lenders will charge interest rates ranging from 25% to over 70% based on the applicant’s information. Their terms are often obscure and filled with egregious fee structures, trapping small-business owners in a dependency cycle and limiting the positive impact they can have on economic development. Another option does exist, one often overlooked by small businesses. Community development financial institutions are able to lend to borrowers that do not meet traditional lenders’ “bankability” metrics. Particularly in the impact lending space, CDFIs are creating access to credit for borrowers that would otherwise turn to alternate lenders. Instead of excessively high fees and confusing terms, CDFIs offer accessible rates, transparent terms, and even education and other support to enhance the likelihood of a business’ success. But under the White House budget blueprint released earlier this year, the Trump administration recommends ending federal funds to CDFIs as a cost savings measure for the federal government. Unfortunately, without CDFIs serving as the lender of last resort, more small businesses will move to high-risk, high-cost lenders.  Under the CRA, regulators require financial entities to address the credit needs of the communities they serve, particularly in disadvantaged areas of their geographic footprint. Through this transaction with a CDFI, the small-business owner gets a loan and the bank’s investment counts toward satisfying CRA requirements.

What banks need to know about a Quarles Fed appointment -- Randal Quarles, the latest front-runner for the vice chair of banking supervision at the Federal Reserve Board, would represent a moderate, mainstream Republican choice that is likely to be welcomed by the financial services industry.

Bad actors in the financial industry want the fiduciary rule weakened - In a comment submitted to the Department of Labor, EPI Policy Director Heidi Shierholz argues that there is no basis for revising the fiduciary rule at this time. Instead, DOL should implement the rule as planned and conduct a detailed review in three to five years to assess its impacts and determine if any revisions are needed based on data from the actual experience of implementation. The fiduciary rule requires that financial professionals giving advice to people saving for retirement act in the best interest of their clients, and not steer them into investments that pay a higher commission but offer a lower rate of return. The financial industry wants the rule weakened because they profit handsomely from being able to legally fleece retirement savers. Acting on a directive from President Trump, DOL has delayed implementing the rule for 60 days—a move that will cost retirement savers $3.7 billion over the next 30 years—and is now considering whether to weaken the rule.“People who work hard to save for retirement need and deserve to know that when they go to a financial adviser, they are receiving honest advice, not a sales pitch,” said Shierholz, “The initial rulemaking process was unbelievably thorough. Any further information DOL gets during this request for comment is not going to meaningfully change the department’s ability to forecast the effects of the rule. This examination is a blatant attempt to weaken a rule that provides important protections for people who are saving for retirement.” In her comments, Shierholz, who served as chief economist at DOL in the Obama administration, points out that the rule has already been thoroughly analyzed and vetted. The 382 page economic analysis concerning the likely impact of the rule was the end-product of an exhaustive, six-year process that incorporated the feedback from four days of hearings, more than 100 stakeholder meetings, thousands of public comments, and a detailed review of the academic literature. Ultimately the department found that the rule will “support consumer choice, and deliver substantial gains for retirement investors and economic benefits that more than justify its costs.”

Deutsche Bank Fined $157MM After Its Traders Were Found To Still Use Chat Rooms To Rig FX Trading --Another day, another fine for the bank that no matter what, just can't play by the rules.On Thursday, the Federal Reserve fined Deutsche Bank $156.6 million for violating foreign exchange rules and running afoul of the Volcker Rule, suggesting it was likely trading FX out of its own account in violation of Dodd-Frank.In levying the FX fine on Deutsche Bank, the Fed said it found "deficiencies in the firm's oversight of, and internal controls over, FX traders who buy and sell U.S. dollars and foreign currencies for the organization's own accounts and for customers."Additionally, and stunningly, years after it became clear that FX chat rooms are about the worst possible idea for currency traders, the Fed said Deutsche Bank failed to detect and address that its traders were still "using electronic chatrooms to communicate with competitors about their trading positions." The order requires Deutsche Bank to improve its senior management oversight and controls relating to the firm's FX trading.As further detailed in the C&D order, during the four year review Period:

  • Deutsche Bank lacked adequate governance, risk management, compliance, and audit policies and procedures to ensure that Deutsche Bank’s Covered FX Activities complied with safe and sound banking practices and applicable internal policies;
  • FX traders in the spot market at Deutsche Bank routinely communicated with FX traders at other financial institutions through chatrooms on electronic messaging platforms accessible by traders at multiple institutions;

Fed officials are "requiring the firm to cooperate in any investigation of the individuals involved in the conduct underlying the FX enforcement."  Separately, the Fed said it "found gaps in key aspects of Deutsche Bank's compliance program for the Volcker rule, which generally prohibits insured depository institutions and any company affiliated with an insured depository institution from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private equity fund."

Alleged NSA hack of Swift service bureau revives ‘back door’ debate - Reports that the National Security Agency infiltrated bank servers through a Swift service bureau highlight a recurring concern for financial institutions about the unintended consequences of U.S. government snooping. The leaks that came out late last week from a hacking collective called Shadow Brokers indicate that the NSA exploited vulnerabilities in Microsoft Windows systems to break into servers at EastNets, a Dubai company that provides outsourced Swift connectivity to 260 financial institutions and corporations. From there, Shadow Brokers’ documents suggest, the NSA was able to access computers used by some Middle Eastern bank members of Swift, the Society for Worldwide Interbank Financial Telecommunication. The NSA’s goal, according to The New York Times, was to track money movements and thereby gain insight into “potential terrorist groups or government officials.”The most immediate danger for U.S. banks (and any Windows user, for that matter) — that the weaknesses in Microsoft code still exist, rendering every internet-connected computer running Windows open to hacking — has passed. Microsoft said patches for all the vulnerabilities were issued more than a month ago, so any company that is up to date on Windows patching is safe from these. But the U.S. government’s insistence on using so-called back doors to access financial and customer information remains a concern. The same tools the NSA uses to prop open doors to such information could be used by cybercriminals and nation-states with more sinister motives. And it also raises privacy issues for companies and consumers that don’t want the government watching their every move.  “Governments are constantly going after different networks for espionage and national security purposes,” said John Carlson, chief of staff at the Financial Services Information Sharing and Analysis Center, an industry trade group. “That’s a reality we recognize.”

Hacker documents show NSA tools for breaching global money transfer system | Reuters: Documents and computer files released by hackers provide a blueprint for how the U.S. National Security Agency likely used weaknesses in commercially available software to gain access to the global system for transferring money between banks, a review of the data showed. On Friday, a group calling itself the Shadow Brokers released documents and files indicating NSA had accessed the SWIFT money-transfer system through service providers in the Middle East and Latin America. That release was the latest in a series of disclosures by the group in recent months. Matt Suiche, founder of cybersecurity firm Comae Technologies, wrote in a blog post that screen shots indicated some SWIFT affiliates were using Windows servers that were vulnerable at the time, in 2013, to the Microsoft exploits published by the Shadow Brokers. He said he concluded that the NSA took advantage and got in that way. "As soon as they bypass the firewalls, they target the machines using Microsoft exploits," Suiche told Reuters. Exploits are small programs for taking advantage of security flaws. Hackers use them to insert back doors for continued access, eavesdropping or to insert other tools. "We now have all of the tools the NSA used to compromise SWIFT (via) Cisco firewalls, Windows," Suiche said. Reuters was not able to independently verify the authenticity of the documents released by the hackers. Microsoft acknowledged the vulnerabilities and said they had been patched. Cisco Systems Inc has previously acknowledged that its firewalls had been vulnerable. Cisco and the NSA did not reply to requests for comment. Belgium-based SWIFT on Friday downplayed the risk of attacks employing the code released by hackers and said it had no evidence that the main SWIFT network had ever been accessed without authorization.

 Should banks be criminally liable for not reporting fishy emails? -- Since Congress passed the Bank Secrecy Act in 1970, banks and other financial institutions have had a legal obligation to report suspicious customer activity to the government or risk regulatory penalties and even criminal prosecution. The purpose is to enlist banks in the fight against narcotics trafficking, tax evasion, terrorist financing and other criminal activity. Federal authorities have imposed billions of dollars in penalties against banks and other institutions that allowed crimes to be carried out on their watch. This past February, the Financial Crimes Enforcement Network proposed a new rule that has the potential to significantly alter the reporting requirement, adding a new category for flagging suspicious “cyberevents.” Unlike the other categories on the standard "suspicious activity report," or SAR, which pertain to misuse of a financial institution’s accounts by customers or employees, the “cyberevent” category requires institutions to detect and report all varieties of digital mischief, whether directed at a customer’s account or at the bank itself. For example, the new proposed SAR form has specific instructions to report the use of malware, or even receipt of a suspicious email address or file name.  The effect of this proposed change is potentially massive. Financial institutions will be required to detect and report cyberevents as a matter of federal criminal law. This is a significant shift in focus from traditional SAR filing, which has been centered on suspicious customer or employee activity. The new requirement will impose substantial burdens on financial institutions, especially in light of the significant infrastructure that has already been built up around BSA compliance. Already, banks spend millions on this compliance. Last year, financial institutions filed over 2.3 million SARs — a number that is sure to go up significantly with the new cyberevent reporting requirement. In responding to the proposed changes, for example, one large bank publicly estimated that the proposed changes to the SAR form (including the new cyberevent reporting) would cost it an additional $9.6 million every year.

Investor-State Dispute Settlement (ISDS) Suits Become Favored Hedge Fund Investment -- Investor-state dispute settlement (ISDS) provisions in bilateral investment treaties (BITs) and free trade agreements (FTAs) have effectively created a powerful and privileged system of protections for foreign investors that undermines national law and institutions.  ISDS allows foreign corporations to sue host governments for supposedly causing them losses due to policy or regulatory changes that reduce the expected profitability of their investments. Very significantly, ISDS provisions have been and can be invoked, even when rules are non-discriminatory, or profits come from causing public harm. ISDS will thus strengthen perverse incentives for foreign investors at the expense of local businesses and the public interest. In recent years, ISDS provisions of investment treaties, free trade and other agreements have increasingly provided an investment opportunity to make money by speculating on lawsuits, winning huge awards and forcing foreign governments, and taxpayers, to pay. Financial speculators have increasingly purchased corporations deemed capable of profitably bringing winnable ISDS claims, sometimes using ‘shell companies’. Some hedge funds and private equity firms even finance ISDS cases as third parties, with ISDS itself the raison d’etre for such investments. Such ‘third-party funding’ of ISDS claims has been expanding quickly as financing such claims has proven to be very lucrative.Third-party financing reduces litigation costs to the corporations themselves, making it easier, and thus encouraging them to sue. Foreign corporations typically do not have to declare receiving third-party funding for an ISDS case. Not surprisingly then, the ISDS claims-financing industry is booming as different types of investors have been attracted by and drawn into financing lawsuits, treating ISDS claims as speculative assets. The International Council for Commercial Arbitration estimates that at least three fifths of those considering ISDS claims have inquired about possible third-party financing before pursuing them. Financing firms provide clients with litigation packages from the outset, advising on what treaties to exploit and which law firms to hire, even recommending arbitrators. While bondholders do not actually develop productive capacities or sell services in a host country, they too can resort to ISDS arbitration to maximize returns to their debt purchases. Thus, bond-holders who have lost value can use the ISDS back door to sue countries for compensation, thus encouraging a new speculative investment option for ‘vultures’. Hence, ISDS allows investors with little connection to the ‘aggrieved’ initial investment to benefit financially as well.

The fearless market ignores perils ahead - FT - In 1992, a Bob Dylan-loving finance professor called Robert Whaley uprooted his family from the US and moved to a tiny hamlet in bucolic Burgundy. There he spent six months laying the groundwork for the finance industry’s most popular representation of terror. Its formal name is the Chicago Board Options Exchange Volatility Index, or Vix for short. But for thousands of traders, investors and financiers it eventually became known as Wall Street’s “fear gauge”, a clean numeric representation of how relaxed or horrified financial markets are. Volatility was once merely a mathematical measure for investors of how sharply markets moved. Today, volatility is a complex multibillion-dollar market in its own right, played by everyone from sophisticated hedge funds to gum-chewing day traders. And Vix has become a rock star index, even inspiring a best-selling thriller about an artificial intelligence-powered hedge fund called Vixal-4 that runs amok. But Vix is also one of the finance industry’s biggest enigmas. This should be a moment of potential peril for markets, with US interest rates rising, heightened geopolitical tension and a populist outsider in the White House. Yet Vix has remained largely tranquil. Despite nudging higher last week, if the current performance is sustained, the gauge’s average level this year would be the lowest in its 24-year history.“The big mystery of the year has been the disconnect between the chaos in Washington and the calmness in markets,” says Adam Sender, head of Sender Company and Partners, a hedge fund.In part, Vix has been becalmed because the US stock market has been remarkably placid. The S&P 500 recently enjoyed its longest run of avoiding big drops of more than 1 per cent in over two decades. But the evaporation of volatility also reflects profound structural changes that have taken place since the financial crisis, such as the primacy of central banks and the big shift into exchange traded funds.

Markets Start to Ponder the $13 Trillion Gorilla in the Room -- After heading into the uncharted territory of quantitative easing, the world’s central banks are starting to plan their course through the uncharted waters of quantitative tightening. How the Federal Reserve, European Central Bank and -- eventually -- the Bank of Japan handle the transition could make the difference between a global rerun of the 2013 "taper tantrum," or the near undetectable market response to China’s run-down of U.S. Treasuries in recent years. Combined, the balance sheets of the three now total about $13 trillion, equating to greater than either China’s or the euro region’s economy. Former Fed Chair Ben S. Bernanke -- who triggered the 2013 sell-off in risk assets with his quip on tapering asset purchases -- has argued for a pre-set strategy to shrink the balance sheet. Current Vice Chairman Stanley Fischer says he doesn’t see a replay of the 2013 tantrum, but the best laid plans of central bankers would soon go awry if markets can’t digest the great unwinding. "You know what they say about mountaineering right? The descent is always more dangerous than the ascent," said Stephen Jen, London-based chief executive of hedge fund Eurizon SLJ Capital Ltd. "Shrinking the balance sheet will be the descent." Economists and investors are stepping up analysis of the implications of balance-sheet contraction after minutes of the Federal Open Market Committee meeting last month showed officials favor kicking off the process as soon as this year.

Argument analysis: Justices stay late to hear argument about deadlines for investors opting out of securities class actions -SCOTUSblog -- The justices started off their new colleague Neil Gorsuch with a hard day of work, staying after lunch yesterday to hear a third oral argument in a single day for the first time since October. And this for a securities case. Now, if you are not a securities lawyer, you might have assumed from the question presented that California Public Employees’ Retirement System v. ANZ Securities involves some tediously intricate question about securities procedure, likely to leave the justices dozing after lunch. But in truth it is not really all that complicated. Indeed, as class-action cases in the Supreme Court go, this is about as simple as it gets. The basic question is one that any reader can appreciate: If a plaintiff files a class action complaint that includes your claims, does that count as your complaint if you decide to “opt out” of the class action? Or do you have to file your own complaint before the deadline for filing expires?The Supreme Court has addressed a similar question before, in its 1974 decision in American Pipe & Construction v. Utah. The court held in that case that the class complaint did count as the claim of the individual claimants for purposes of statutes of limitation; specifically, it held that the class complaint “tolled,” or suspended, the statute of limitations so that the individual’s later complaint was timely. In the securities laws, though, there are two different kinds of filing deadlines. The first, statutes of limitation, are relatively short and run from the time when the claimant discovers the problem that gives it a right to sue; the second, statutes of repose, are relatively long and run from the date of the violation in question. We know from American Pipe that the class-action complaint tolls the statute of limitations. The question here is whether the same rule applies to statutes of repose. And on that question the argument suggests a bench that is far from settled.During the argument of Thomas Goldstein (representing CalPERS, which tried to opt out of the class action after the expiration of the statute of repose), at least two of the justices (Justices Samuel Alito and newcomer Neil Gorsuch) seemed settled on the idea that the statute simply cannot be read to permit the late opting out. They emphasized the statutory command that no new “action” can be brought after the three-year deadline.

Justices Appear Reluctant to Close Debt Collection Loophole --  A Supreme Court argument on Tuesday explored a gap in a federal debt collection law, one that consumer groups say allows some debt collectors to engage in abusive tactics. But the justices did not seem inclined to fill the gap. When Congress enacted the Fair Debt Collection Practices Act in 1977, it imposed strict regulations on firms that collected other companies’ debts. But it did not address the activities of businesses like banks, credit card companies and car dealerships that collect their own debts. That distinction failed to anticipate an increasingly popular business model, in which companies buy distressed debt outright and then try to collect it. “The industry has evolved in a way that has raised these sorts of questions,” Chief Justice John G. Roberts Jr. said. “This is not something that Congress was addressing.” The case, Henson v. Santander Consumer USA, No. 16-349, concerns car loans made by CitiFinancial. At first, Santander Consumer USA serviced the loans, collecting payments and pursuing borrowers who were behind in their payments. Santander later bought CitiFinancial’s defaulted loans outright and started to try to collect. Several borrowers sued, saying Santander had violated the debt collection law by making false statements and by communicating directly with consumers it knew were represented by a lawyer. Santander responded that the law did not apply to it. The main legal question in the case was the meaning of a phrase in the law, which defines a debt collector as one who regularly collected debts “owed or due another.”

CFPB Sues Ohio Law Firm Over Debt-Collection Practices -- For the second time this year, the Consumer Financial Protection Bureau has accused a law firm of using overly aggressive debt collection tactics.The CFPB filed a complaint in Cleveland federal district court alleging that the firm Weltman, Weinberg & Reis misrepresented in millions of letters and phone calls that lawyers were involved in collecting the debts, even though attorneys at the firm had not typically reviewed the consumers’ accounts.“Debt collectors who misrepresent that a lawyer was involved in reviewing a consumer’s account are implying a level of authority and professional judgement that is just not true,” CFPB Director Richard Cordray said in a statement. “Weltman, Weinberg & Reis masked millions of debt collection letters and phone calls with the professional standards associated with attorneys when attorneys were, in fact, not involved. Such illegal behavior will not be allowed in the debt collection market.”Weltman Weinberg, which bills itself as a “full-service collections firm” with more than 65 lawyers, is based in Cleveland. The firm has offices in Pennsylvania, Michigan, Illinois and Florida. “We fundamentally disagree with the CFPB’s allegations and believe that this lawsuit is the result of our firm’s refusal to be strong-armed into a consent order,” Weltman Weinberg managing partner Scott Weltman. “We are a law firm that is legally allowed, under federal and state law, to provide collection and legal services. We are being truthful with consumers and factually accurate when we use our name and our company’s letterhead for proper debt collection activity."  

 CFPB’s Cordray still fails to see nuances in small-dollar lending – BankThink - If you were hoping that the Consumer Financial Protection Bureau had learned from the million-plus comments submitted to the agency on its proposed small-dollar lending rule, then you would have been disappointed to hear CFPB Director Richard Cordray’s recent testimony before the House Financial Services Committee.  The CFPB’s prevailing mindset is apparently not affected by convincing evidence regarding options for borrowers looking for small-dollar credit. In the hearing, Cordray doubled down on the bureau’s comingling of legal and illegal small-dollar lending, as well as the refusal to acknowledge the negative consequences of effectively banning regulated lenders.  First and foremost, there is no such thing as a state without payday lending. Cordray noted in his testimony that 14 states ban payday loans, adding that people in these states “seem to get by just fine.” However, on the day of Cordray’s hearing, at least 11,600 consumers in these 14 states went online seeking a payday loan, according to data from the nonprime credit bureau Clarity Services Inc. Further, in the fourth quarter of 2016, an estimated 2.7 million payday loan applications were submitted online from these same states. The consumers in these states presumably turned to a lender that marketed loans illegally, including offshore lenders. The CFPB’s proposed rule limiting access to legal small-dollar loans would do nothing to protect these consumers. The bureau’s own consumer complaint portal data has for years blurred the line between legal and illegal lenders, unfairly lumping state-licensed and regulated businesses together with unscrupulous, unregulated enterprises. Nearly one-third of complaints attributed to payday lending come from the 14 states without legal, licensed lending. These complaints received by the bureau are often lodged against unregulated institutions — many of which are phantom companies — rather than the state-licensed and regulated businesses that my organization represents.

Fintech Puts Payday Lending Old Wine in New Bottles - American Banker is at it again this week with a piece about an allegedly new “Fintech” product brought to you by Lyric Financial.  While that enterprise’s name gives an air of whimsical jollity – and readers are advised to keep that sense of music and poetry in mind for tougher times below – nothing could be further from the truth. The reason for the alarm is that this particular example of financial services industry cheerleading is for a product that looks especially dubious. Personally, I rate it as just horrid. The Lyric Financial website is remarkably content-free, particularly for specific product features and details of terms and conditions. Apart from the cloying trendiness which it is far too early in the morning to stomach, it’s very hard to find out what the deal really is. But I did suss out what was afoot – I’ll cover that in a moment. First, though, a little more about what sort of operation we’re dealing with here.The “Terms” page shows they are operating in the US jurisdiction (even that basic point was hard to determine) although the ownership structure isn’t mentioned at all. You’re subjected to mandatory binding arbitration, which for a sophisticated product aimed at financially unsophisticated customers is a very bad sign. The arbitrator is the “American Arbitrations Association (AAA)” and – get this – you have to pay your own fees! (which are, of course, AAA’s fees, and they can charge what they like). There is a prohibition on class action type of complaints, you have to arbitrate as an individual.  The actual product/service provided is your basic common-or-garden variety factoring. What is factoring? Well, put simply, it is invoice discounting. Let’s say for the sake of example Yves does some work for me. When finished, she invoices me $1000 for what had been completed. In a factoring arrangement,  Yves then takes the invoice to the factoring services provider who “discounts” her invoice and gives her a percentage of the face value, let’s say 90 cents  on the dollar or $900 in cash. This might help Yves’ cash flow as she can meet expenses which are due now rather than waiting for me to settle the invoice by sending her the original $1000. For the factoring services provider, so long as I settle the invoice within the terms (usually 30 days or some other specific date in the future) they get to make a nice profit.

What doesn't kill online lenders can only make them stronger – video - Following a wave of layoffs, credit concerns and funding issues in 2016, marketplace lenders entered 2017 on "much stronger footing," says Sam Hodges, co-founder and U.S. managing director at Funding Circle.

How is ATM fraud still a thing? | American Banker -- With all the technology advances they’ve made, why can’t banks keep the ATM, a product of the 1960s, safe from attack? The number of payment cards compromised at U.S. ATMs and merchants monitored by FICO swelled 70% in 2016. Compromises of ATMs and merchant devices themselves in the U.S. rose 30%, following a sixfold increase in 2015. (FICO monitors about two-thirds of all PIN-based debit card transactions in the U.S.; it does not separate incidents at ATMs from those at POS terminals.) That’s not counting the ATMs that are hacked remotely through software, nor a rash of recent cases in which criminals used a power drill and a $15 homemade gadget that digitally triggers the ATM’s cash dispenser to empty the machines. “Over the past 24 months there has been a significant increase in ATM attacks involving credit card and card skimming at ATMs, and it is following the global pattern,” said Owen Wild, global marketing director for enterprise fraud and security for financial services at the manufacturer NCR. One reason ATM fraud persists is that attacks are getting more sophisticated, as well as more frequent. ATM crime has always run an interesting gamut, from people physically picking up ATMs and loading them into their trucks, to attempts to blow up the machines, to skimming devices that are increasingly hard to detect to sophisticated malware that can dive into the software used to run ATMs and manipulate it to spew out cash at machines. The attacks are most easily done at unattended machines in remote locations and convenience stores. Skimming — use of a card reader to steal information from a card’s magnetic stripe — remains the most common type of attack.

Legislative challenge to prepaid rule is an affront to consumers – BankThink - A group of Republicans senators is still trying to use the Congressional Review Act to challenge the Consumer Financial Protection Bureau’s prepaid card rule. Yet much of the financial services industry does not appear to be on board with their effort. For good reason.The common-sense rule, which would go into effect in one year under a CFPB proposal to delay its implementation, gives prepaid cards the same protections against fraud and unauthorized charges that debit cards already have, and adds new fee disclosures to combat the hidden fees — including, on a few cards, overdraft fees — that have plagued prepaid and payroll cards.Yet lawmakers led by Sen. David Perdue, R-Ga., have mounted a legislative attempt to overturn the rule employing the rarely used Congressional Review Act, which allows Congress and a sitting president to reverse regulations issued in the previous administration with simple majority support. The CFPB released its final rule in October, and the time to challenge it runs out in May. Lawmakers led by Sen. David Perdue, R-Ga., have mounted a legislative attempt to overturn the Consumer Financial Protection Bureau’s prepaid card rule employing the rarely used Congressional Review Act. Bloomberg NewsHowever, the prepaid card and banking industries have largely passed on backing the move, prompting questions over who is pushing for it. The largest prepaid card company, Green Dot, supports the CFPB rule. Trade groups such as the American Bankers Association, the Credit Union National Association, the Independent Community Bankers of America and the Network Branded Prepaid Card Association have not come out in support of the Congressional Review Act challenge. Neither have major prepaid card issuers like American Express or JPMorgan Chase. Providing consumers and employees with clearer information about fees and prepaid card choices will not only help card users, but also will help banks, credit unions and employers that offer low-fee cards.

Congress killed consumer data privacy. Industry should revive it – BankThink - President Trump this month signed into law a measure that overturned an Obama-era internet privacy regulation. The previously adopted rules, which had yet to take effect, would have required telecommunications companies to obtain user consent before collecting personal information on consumers’ online activities. With the overturning of this regulation, internet service providers will now be the de facto controller of data privacy standards for fintech businesses and consumers. In the past, the internet giants of the world like Facebook, Google and Amazon typically set industry standards and best practices on privacy that were later adopted by many in the fintech industry. Then, consumers were able to choose the platforms that best adhered to their privacy preferences. For example, they could refrain from using platforms like Facebook and could turn off cookies to avoid being tracked by services like Google. But under this new system, that choice is somewhat irrelevant. Consumers wanting to access the internet cannot choose to stop using their ISP. Far from providing equal market opportunities, the Trump administration’s attitude toward data privacy regulations serves only a discrete group of large U.S. corporations by giving them total control over private consumer information for advertising purposes.  On a global level, repealing the Obama-era law will also have a disparate impact on American disruptors in the fintech and banking industry — companies that already face a fragile environment for facilitating international trade and innovation. Weakening privacy rules sends a clear signal to the world that the current administration does not respect the privacy of its citizens. In general, the U.S. government has indicated that it will not regulate the activities of U.S. corporations when it comes to consumers’ rights to privacy. This is a marked difference from the direction that most other governments are taking, especially in Europe and Asia, where the dramatic expansion of internet users is accompanied by a growing number of regulatory frameworks and rules.

Ag lenders gird for battle over guaranteed loan program -- A potential cut to the Department of Agriculture’s discretionary spending would be ill-timed for farmers and their lenders. The Trump administration’s budget proposal, while thin on details, would reduce the agency’s discretionary funding by more than a fifth. That could threaten the agency’s federal loan guarantee program, which last year provided nearly $4.3 billion in assistance to help farmers buy agricultural necessities such as real estate, equipment and fertilizer.

Will Banks Allow Another Slew Of Oil Bankruptcies? - Last week, U.S. banks boosted the borrowing bases for several independent energy companies, lifting spirits in the industry. The move was taken as a sign that lenders are beginning to share in the optimism that oil and gas producers have been enjoying since the beginning of the year, with prices staying above $50. While some banks seem to be sharing some of the optimism, others are more cautious. A recent analysis from Bloomberg Gadfly’s Lisa Abramowicz reveals that a lot of energy companies with revolving credit lines are tapping deep into these resources. Abramowicz cites data from Bloomberg Intelligence that shows at least 11 companies have used up more than two-thirds of their credit lines. Banks, Abramowicz says, do not like this, so they may well decide to cut the credit lines of companies they consider risky. They can afford to—exposure to the oil and gas industry is more modest than it was three years ago, and Abramowicz argues that lenders can afford to let some smaller companies go under. The latest Haynes & Boone borrowing base survey reveals that banks believe a fifth of energy companies will see their borrowing bases cut this year. The industry is a bit more pessimistic, seeing the portion of companies to suffer credit line cuts at 27 percent. Now, this could be interpreted in two ways. One is the optimistic way, which basically comes down to “It’s just 20 percent, the other 80 percent are doing well.” That’s certainly true, and the latest demonstration of the optimistic view came less than a moth before Haynes & Boone released their survey. However, the overall optimism seems to hinge on two factors: low production costs across the shale patch and OPEC’s imminent decision to extend its production output agreement for six more months. There may be a problem with the first one, giving reason to doubt the optimism. While drillers are passionately talking about the tech improvements that have boosted their efficiencies and brought down costs, some – mostly from the oilfield service sector – argue that it was actually low service prices that led to the production cost drop. Energy companies will be announcing their new credit agreements in the coming weeks, and oilfield service providers will likely continue to raise the prices of their services, affecting producers’ margins. All in all, the situation remains uncertain even though on the surface all is looking good for U.S. oil and gas.

Lawmakers push for tougher disclosures on energy loans - — Lawmakers from both political parties are showing an interest in improving disclosures for loans used to upgrade home heating and cooling systems, including the installation of solar panels, an idea that has some in the industry increasingly nervous. Members of Congress in the House and Senate have introduced bills that would require home improvement contractors to provide Truth in Lending Act disclosures to homeowners considering Property Assessment Clean Energy loans, known as PACE loans.

Worried About Concentration? Then Worry About Rent-Seeking - The apparent increase in U.S. industrial concentration has raised growing concerns about weakening competition and inflated profits. Attention to this issue typically focuses on whether insufficient antitrust enforcement has abetted unhealthy accumulations of market power to the detriment of consumer welfare. Here, however, we want to explore another possibility—namely, that government may be actively contributing to increased concentration as well as failing to rein it in. Many lines of evidence point to a trend in recent decades toward fewer and bigger firms. At the macro level, between 1997 and 2012 the share of total industry revenue accounted for by the 50 biggest firms in that industry rose in three-fourths of the broad nonfarm business sectors tracked by the Census Bureau. More fine-grained analysis shows trends toward higher concentration in industries as diverse as banking, agribusiness, hospitals, wireless providers, and railroads. As industries grow more top-heavy, they are also becoming more profitable. Post-tax profits as a percentage of GDP bounce around quite a bit from year to year, but from a trough of 3 percent in the mid-1980s they have climbed above 11 percent as of 2013. According to research by Jason Furman and Peter Orszag, the run-up in profit margins has been highly concentrated. While returns for the median firm have risen gently over the past 30 years, returns at the 90th percentile of profitability have skyrocketed: from under 30 percent in the mid-’80s to over 100 percent in the past few years. And these fat profits at the top are unusually persistent: 85 percent of firms with returns on invested capital above 25 percent in 2003 were still enjoying returns above 25 percent in 2013. The combination of growing concentration and outsized profits raises the question of whether the former is causing the latter. But here things get complicated. Concentration can be measured in many different ways, and there is no clear, stable relationship between any of those measures and what we actually care about—whether firms experience robust competitive pressure from existing and potential rivals. Indeed, sometimes a shift toward fewer, bigger firms in an industry can mean greater dynamism and efficiency: think of the retailing sector, where the displacement of small mom-and-pop stores by national big-box chains has brought huge gains for consumers. Conversely, think about industries like funeral homes, where regulation-driven deconcentration prevents the entry of larger firms with innovative and cost-reducing business models.

Wells Fargo’s Board Investigation of Itself Amounts to a Farce – video - NEP’s Bill Black appears on The Real News and explains how the Wells Fargo scandal is emblematic of the bank’s corporate culture and that the fined executives are only scapegoats. You can view the video with a transcript here.

 OCC missed several chances to spot, fix Wells Fargo sham accounts -- The Office of the Comptroller of the Currency failed to investigate complaints about abusive sales practices at Wells Fargo despite first learning of potential issues more than a decade ago, according to the agency’s internal investigation of its handling of the scandal. The report, released Wednesday, paints a scathing portrait of the OCC, acknowledging that it missed red flags, failed to pay proper attention to whistleblowers and did not follow up on problems it detected. For example, in 2010—six years before regulators revealed that Wells’ employees had been creating fake accounts to meet aggressive sales goals—the agency’s examiners interviewed top bank officials about more than 700 complaints Wells had received about the gaming of sales incentives. Yet the OCC failed to undertake an investigation, focusing more on the process of handling complaints than on what was being alleged. "The OCC did not take timely and effective supervisory actions after the bank and the OCC identified significant issues with complaint management and sales practices," the report by the OCC's Office of Enterprise Governance and Ombudsman said. "Over the course of this seven year period, there were opportunities for the OCC to escalate supervisory action to resolve this issue." The report gets to the heart of how Wells’ activities were allowed to go on for so many years without the bank’s management or regulators becoming aware of it, even though there were hundreds of whistleblower complaints drawing attention to it.  The OCC’s internal investigation, undertaken at the behest of Comptroller Thomas Curry, showed that the agency missed several opportunities to detect and correct problems. Starting in 2005, the bank’s board received regular audit reports indicating that there were high levels of internal complaints and employee terminations related to “sales integrity violations.” The OCC’s examiners didn’t appear to pick up on the issue until 2010, and even then gave it short shrift.

Buffett likely voted shares to back Wells Fargo board | Reuters: Wells Fargo & Co's largest investor, Warren Buffett, has likely already voted his shares to support the bank's recommendations at its contentious annual shareholder meeting next week, a representative told Reuters on Wednesday, which include reinstating most of the board's directors. The prominent billionaire's conglomerate, Berkshire Hathaway Inc (BRKa.N), owns nearly 10 percent of Wells Fargo and Buffett personally owns shares as well. Many investors follow Buffett's lead because of his decades-long track record of profitable investments. Wells Fargo, the fourth-largest U.S. bank, has for months been embroiled in a scandal that involves thousands of former employees creating as many as 2 million accounts in customers' names without their permission. The matter has already subsumed former Chief Executive John Stumpf, who resigned in October. Now the board, whose members include new CEO Tim Sloan, is facing opposition in the shareholder vote next week after proxy advisers recommended rejecting many of them. Buffett's assistant, Debbie Bosanek, told Reuters that Buffett supports management and the board, and that he has likely voted shares held by him and Berkshire to reflect that view. Berkshire held nearly 10 percent of Wells Fargo's outstanding shares as of year-end, but has decided to sell some to avoid breaching the 10 percent threshold that would require special regulatory permission.

Goldman Sachs crashes to bottom of the class as bets turn sour - FT  - Was Goldman Sachs — of all banks — wrongfooted by the Trump trade?  Since the election of Donald Trump in November, the Wall Street bank has seen several senior executives decamp to Washington: none of them more influential than Gary Cohn, the bank’s former president now serving as Mr Trump’s top economic adviser.  Despite that apparent edge, the bank was the only one of the US’s top six banks to report disappointing earnings for the first quarter. While rivals were boosted by brighter performances from bond-trading units, Goldman’s revenues from debt trading were basically flat.  Analysts and traders say the bank may well have made a big bet that went wrong during the first quarter: the assumption that Mr Trump’s talk of boosting growth would push up interest rates, and thus push down the price of trillions of dollars of corporate bonds.  That was true enough immediately after Mr Trump won the contest, as yields on double A-rated US corporate bonds rose sharply as prices fell, all the way from three months’ maturity to 30 years. But between the beginning of January and the end of March prices rose for bonds of between five and ten years to maturity, pushing down yields, as investors began to question their assumptions on the pace and scale of interest-rate increases from the Federal Reserve.

#BlackLivesMatter Introduces a New Visa Debit Card, and Revives the Toxic Old Myths of Black Capitalism - Black Agenda Report - There’s a box of odious and discredited myths which hold that African Americans have less wealth and higher rates of poverty, joblessness and other negative social indicators because we ain’t thrifty, because we don’t save and invest like some other folks, because we don’t spend our cash with black businesses, and we just do not properly manage our collective wealth. Quite simply, these propositions are fake economics, zombie fake economics, killed and disproven many times but still walking among us. Now these disreputable myths have been embraced by portions of the #BlackLivesMatter movement.During this year’s Black History Month, the #BlackLivesMatter folks rolled out, in partnership with OneUnited Bank, their officially branded #BlackLivesMatter debit card, which features the striking portrait of “Amir,” an African boy flanked by the iconic images of 1968 Olympians Tommie John and John Carlos, fists in the air. The accompanying mini-blizzard of press releases, stories and statements, some accompanied by the hashtag #BlackMoneyMatters, double down again and again on the pernicious nonsense that black banks and the marshaling of black spending power are solutions to the economic distress of black families and communities.Morgan State University’s Dr. Jared Ball, a former collaborator of ours at Black Agenda Report and a prolific scholar whose current work can be found at, has done more to document and explain the bogus economics of “black spending power” and similar contraptions than anybody alive. Ball wrote a long and thoughtful Facebook post this morning on the news that #BlackLivesMatter is leveraging its brand for this Visa card and claiming the whole thing is about black economic empowerment. Here’s how Dr. Ball begins his deconstruction of this hard to kill myth at

 Plunging Used Car Prices Wreak Havoc On Rental Car Bondholders --- Once hedge fund darlings, almost no one is more perfectly aligned to get obliterated by falling used car prices than America's auto rental companies, Hertz and Avis.  As Bloomberg notes today, on a combined basis, Hertz and Avis dump about 400,000 vehicles per year into the used car market and operate fleets that are multiple times larger.  And with used car prices plunging, bondholders are starting to get slightly anxious about the collateral impact of writing down billions of dollars worth of capital assets.Debt issued by Hertz Global Holdings Inc. and Avis Budget Group Inc., which had traded at or above par in recent years, tumbled to new lows earlier this month amid signs that used-vehicle prices are dropping twice as much as expected. That’s bad news for companies that collectively have to dispose of about 400,000 vehicles a year, and especially for Hertz, whose junk-rated debt is teetering close to a downgrade.Hertz and Avis typically buy the cars outright from manufacturers or get them on a contract with a buyback agreement. The latter, called program cars, cost more because manufacturers assume the resale price risk. Vehicles that Avis and Hertz buy outright are called risk cars because rental companies make their own assumptions about what the cars will be worth when it’s time to sell. Combined with closely held Enterprise Holdings Inc., the three companies control more than 95 percent of the U.S. rental fleet, according to Manheim. Program cars made up only 20 percent of Hertz’s U.S. fleet last year, according to a company filing, less than half the 44 percent for Avis’s total fleet. Hertz will try to buy more of those this year, Chief Financial Officer Tom Kennedy told investors during a February earnings call.

Regulators Accuse Subprime Mortgage Servicer of Years of Abuses -Federal and state regulators unleashed a fusillade of lawsuits and enforcement orders on Thursday against the Ocwen Financial Corporation, a large mortgage servicer, aimed at curbing what they said had been years of flagrant and repeated abuses, including illegal foreclosures, deceptive fees and extensive mishandling of customers’ home loan payments.Some of the regulatory orders directly questioned Ocwen’s ability to continue operating, and the market responded accordingly: Shares of the company fell 54 percent, closing at $2.49 per share.Twenty-two state mortgage regulators filed enforcement orders intended to limit or freeze Ocwen’s ability to acquire new mortgage loans to service in their states. Servicing a loan involves billing customers and funneling payments to the lender; Ocwen, which is not a bank, specializes in doing so for subprime mortgages — home loans issued to people with less-than-stellar credit.Wall Street’s mishandling of subprime home loans was a major catalyst of the 2008 financial crisis, in which Ocwen was a player, scooping up troubled loan portfolios to service. But the latest round of accusations stems from activity in recent years.  In a statement, Ocwen said it was “proud of its corporatewide commitment to a culture of integrity, transparency, compliance and service.”

CFPB, 20 states take sweeping actions against Ocwen -- Ocwen Financial and its subsidiaries faced a slew of accusations from federal and state regulators on Thursday, as the Consumer Financial Protection Bureau and Florida accused it of widespread servicing errors, while 20 states led by North Carolina filed separate cease-and-desist orders against the firm for improper handling of consumer escrow accounts. Taken together, the actions sent Ocwen's stock price tumbling 55% to $2.43 a share by midday, and raised questions about whether the firm could survive. Ray Grace, North Carolina's commissioner of banks, said in a legal filing that the cost to reconcile the firm's mistakes on escrow accounts meant that "Ocwen continuing as a going concern would be in doubt." The actions cap years of state and federal investigations into Ocwen. The once highflying mortgage servicer grew quickly after the financial crisis only to get caught by regulators for allegedly violating mortgage servicing standards. The CFPB said it had uncovered "substantial evidence" that Ocwen has engaged in significant and systemic misconduct "at nearly every stage of the mortgage servicing process." “Ocwen has repeatedly made mistakes and taken shortcuts at every stage of the mortgage servicing process, costing some consumers money and others their homes,” CFPB Director Richard Cordray said in a press release.  Ocwen called the CFPB lawsuit "politically motivated" and vowed to fight in court.“Ocwen strongly disputes the CFPB’s claim that Ocwen’s mortgage loan servicing practices have caused substantial consumer harm. In fact, just the opposite is true," said John Lovallo, an Ocwen spokesman. "The substantive allegations in today’s suit are inaccurate and unfounded. Indeed, the company is unaware of the CFPB conducting any detailed review of Ocwen’s loan servicing files. Rather, the CFPB suit is primarily based on the CFPB’s flawed review of data and its self-serving conclusion about isolated instances where Ocwen self-identified ways we can do better."The CFPB alleged that Ocwen botched basic servicing functions by sending inaccurate monthly statements to borrowers, improperly crediting payments, and mishandling taxes and insurance in escrow accounts. The CFPB claims Ocwen sold mortgage servicing rights to other servicers without fully disclosing or correcting errors, in violation of CFPB servicing standards enacted in 2014. The agency claimed that Ocwen loaded inaccurate and incomplete information into a proprietary technology system and used the faulty in formation to service loans. Ocwen tried "manual workarounds" but often failed to correct inaccuracies and produced even more errors.

Too Little, Too Late Lawsuit Against Predatory Servicer Ocwen Demonstrates Failure to Address Servicing Abuses --  Yves Smith -  So here it is, 2017, and finally we have a meaningful action against a predatory servicer, Ocwen. As we’ll discuss below, the Consumer Financial Services Protection Bureau said its suit alleged misconduct at every stage of Ocwen’s business. Ocwen’s stock fell 40% on the day. Yet why has this taken so long? Ocwen was long known to be a particularly abusive servicer in a field rife with misconduct. New kid on the block Benjamin Lawsky, at the New York Department of Financial Services, went after Ocwen, alone, in 2014. As we wrote thenLawsky has forced the resignation of the chairman and CEO of a mortgage servicer, Ocwen over a range of borrower abuses in violation of a previous settlement agreement, including wrongful foreclosures, excessive fees, robosigning, sending out back-dated letters, and maintaining inaccurate records. Lawsky slapped the servicer with other penalties, including $150 million of payments to homeowners and homeowner-assistance program, being subject to extensive oversight by a monitor, changes to the board, and being required to give past and present borrowers access to loan files for free. The Ocwen consent order shows Lawksy yet again making good use of his office while other financial services industry regulators are too captured or craven to enforce the law. Mind you. abusive foreclosure practices were a major topic in 2010 and 2011, including banks foreclosing on people who didn’t have mortgages, telling borrowers to become delinquent to qualify for assistance programs like HAMP while having procedures almost certain to produce a foreclosure (like losing their paperwork pretty much all the time), not crediting payments so as to make borrowers late and impermissible foreclosures on active-duty servicemembers. Many of the horror stories were incredible, like banks foreclosing on borrowers of burned-down homes by virtue of refusing to accept settlements from insurers and a bank refusing to take a cash payment from a borrower in the branch who had done so for years, assuring a delinquency and eventual foreclosure.  The extent and severity of mortgage servicing misconduct was well known, yet the Obama administration threw its weight behind a “get out of liability nearly free” card in the form of a mortgage settlement that included a servicer settlement that Adam Levitin derided as the equivalent of scolding a child in public, then taking him inside and giving him hugs and kisses. The reason nothing got better, particularly at Ocwen, was no accident.

Regulators' silence on new HMDA rule is deafening -- As banks prepare to comply with a Consumer Financial Protection Bureau rule adding new reporting requirements under the Home Mortgage Disclosure Act, much attention has been paid to how expanded data points such as “interest rate” and “credit score” will affect fair-lending compliance. But the impact does not stop there. The CFPB noted in its 2015 rule, which takes effect Jan. 1, that “the new data will also help to assess certain financial institutions’ performance under the” Community Reinvestment Act. It seems likely that examiners conducting CRA reviews to evaluate a lender’s efforts meeting the credit needs of its community will utilize the updated reporting on mortgage activity. Yet the CFPB does not enforce the CRA. The prudential regulators that do — the Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency — have yet to weigh in on how the revised mortgage reporting requirements will affect institutions’ performance on CRA exams.  The consumer bureau recently issued clarifications on implementing the new HMDA requirements, but they still offer no clarity on how regulators will use the new data to grade CRA compliance. Home mortgage lending is at the heart of many banks’ CRA efforts and HMDA reports are the primary tool used to assess the adequacy of a bank’s lending to lower-income individuals and communities. The new reporting changes could have a significant impact on which loans on a bank’s balance sheet get CRA credit, and which do not. For example, while lenders will have to add reporting on home equity lines of credit, the new HMDA requirements eliminate reporting of unsecured home improvement loans. Assuming that the prudential regulators will use the HMDA report in CRA exams, for many banks the end result of this subtraction will be the appearance of a reduced proportion and smaller volume of mortgage-related loans to lower-income borrowers and neighborhoods.  Now, only home improvement loans secured by a dwelling will be reported, eliminating small, unsecured home improvement loans from the HMDA record. These unsecured loans are an important way some banks serve lower-income homeowners. This is especially true in many older urban neighborhoods where, because of low property values, prudential restrictions on loan-to-value ratios limit banks’ ability to make home improvement loans on a secured basis. Loans not secured by a dwelling are generally simpler to originate and more affordable. But they will no longer be reflected in a bank’s HMDA data.

 Fannie-Freddie Plan Would Create Utilities, Add Competitors - Fannie Mae and Freddie Mac would be turned into shareholder-owned utilities and face competition from new companies under a trade group’s mortgage-finance overhaul plan that could eventually require about $200 billion in private capital.The Mortgage Bankers Association proposal released Thursday calls for the U.S. government to remain involved in the housing market, putting its guarantee behind mortgage-backed securities that the firms issue but no longer backstopping the companies themselves.The proposal comes as Congress and President Donald Trump’s administration ramp up work on what to do about Fannie and Freddie, which have been in government-managed limbo for more than eight years. What the government decides to do will have huge ramifications for the $10 trillion mortgage market, about half of which is backed by the two companies.“There are two options here for anybody in the process,” said MBA President David Stevens. “You can kick and scream on how you want the game to be played differently or you can play the game. We’re staying in the game on this one.” Stevens said he believes statements made by the Trump administration and lawmakers make a serious legislative effort probable within the next year. The process could help determine whether any value is realized by holders of Fannie’s and Freddie’s old common and preferred shares, including funds managed by Paulson & Co., Pershing Square Capital Management and Fairholme Funds as well as individual investors. On a call with reporters, Stevens said senior members of the Trump administration had signaled to MBA that they support a legislative process to overhaul Fannie and Freddie. Some investors and others have advocated for the Treasury Department and the companies’ regulator, the Federal Housing Finance Agency, to release them from government control without legislation. At a conference in Washington on Thursday, Treasury Secretary Steven Mnuchin said that housing-finance reform was a priority for the administration, along with tax reform and regulatory relief. “We need housing reform. We have to fix -- we have two entities, Fannie Mae and Freddie Mac, that are sitting under government control -- we’ve got to figure out how to reform housing finance so we don’t have taxpayers at risk and yet we have liquidity,” Mnuchin said.

Black Knight: Mortgage Delinquencies Declined in March to 11 Year Low -- From Black Knight: Black Knight’s First Look at March Mortgage Data: Delinquency Rate Drops to 11-Year Low; Prepayments Up 20 Percent from February’s Three-Year Low

• Delinquencies declined 14 percent month-over-month, hitting their lowest level since March 2006 and the fourth lowest point since the turn of the century
  • Total non-current inventory – all loans 30 days or more past due or in active foreclosure – fell below 2.3 million, the lowest volume in 11 years
  • After hitting a three-year low in February, prepayment speeds (historically a good indicator of refinance activity) rose 20 percent in March; still 26 percent below last year’s level
  • Foreclosure starts were up 4.15 percent for the month, but Q1 2017’s 189,000 starts represented an 18 percent decline from Q1 2016
According to Black Knight's First Look report for March, the percent of loans delinquent decreased 14.1% in March compared to February, and declined 11.4% year-over-year.The percent of loans in the foreclosure process declined 4.6% in March and were down 29.2% over the last year. Black Knight reported the U.S. mortgage delinquency rate (loans 30 or more days past due, but not in foreclosure) was 3.62% in March, down from 4.21% in February.The percent of loans in the foreclosure process declined in March to 0.88%.  The number of delinquent properties, but not in foreclosure, is down 231,000 properties year-over-year, and the number of properties in the foreclosure process is down 183,000 properties year-over-year.

  MBA: Mortgage Applications Decrease in Latest Weekly Survey --From the MBA: Mortgage Applications Decrease in Latest MBA Weekly SurveyMortgage applications decreased 1.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 14, 2017. This week’s results do not include an adjustment for the Good Friday holiday. .. The Refinance Index increased 0.2 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 1 percent lower 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 its lowest level since November 2016, 4.22 percent, from 4.28 percent, with points decreasing to 0.35 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The first graph shows the refinance index since 1990.

NAR: "Existing-Home Sales Jumped 4.4% in March" --From the NAR: Existing-Home Sales Jumped 4.4% in MarchTotal existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, ascended 4.4 percent to a seasonally adjusted annual rate of 5.71 million in March from a downwardly revised 5.47 million in February. March's sales pace is 5.9 percent above a year ago and surpasses January as the strongest month of sales since February 2007 (5.79 million).  Total housing inventory at the end of March increased 5.8 percent to 1.83 million existing homes available for sale, but is still 6.6 percent lower than a year ago (1.96 million) and has fallen year-over-year for 22 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (unchanged from February). This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993. Sales in March (5.71 million SAAR) were 4.4% higher than last month, and were 5.9% above the March 2016 rate. The second graph shows nationwide inventory for existing homes. According to the NAR, inventory increased to 1.83 million in March from 1.75 million in February. Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory. Inventory decreased 6.6% year-over-year in March compared to March 2016. Months of supply was at 3.8 months in March. This was above consensus expectations. For existing home sales, a key number is inventory - and inventory is still low.

Existing-Home Sales "Roared Back" in March -- This morning's release of the March Existing-Home Sales increased from the previous month to a seasonally adjusted annual rate of 5.71 million units. The February count was downwardly revised from 4.48 million to 5.47 million. The consensus was for 5.60 million. The latest number represents a 4.4% increase from the previous month and a 5.9% increase year-over-year.Here is an excerpt from today's report from the National Association of Realtors.Lawrence Yun, NAR chief economist, says existing sales roared back in March and were led by hefty gains in the Northeast and Midwest. "The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home last month," he said. "Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain. Sales will go up as long as inventory does." [Full Report] For a longer-term perspective, here is a snapshot of the data series, which comes from the National Association of Realtors. The data since January 1999 was previously available in the St. Louis Fed's FRED repository and is now only available from January 2013. It can be found here.  Now let's examine the data with a simple population adjustment. The Census Bureau's mid-month population estimates show a 16.9% increase in the US population since the turn of the century. The snapshot below is an overlay of the NAR's annualized estimates with a population-adjusted version.

Existing Home Sales Soar To 10-Year Highs  --  Following February's 3.9% drop, March existing home sales roared back (up 4.4% MoM - the fastest growth since Dec 2015) to the highest since Feb 2007 at 5.71 million SAAR. Inventories tumbled (for the 22nd month in a row) and prices rose (for the 61st month in a row) as affordability issues remain ignored (for now). It seems, unlike 2013, that rising rates are not affecting demand for existing homes at all... (yet) The Details

  • March sales rose in three of four regions, including a 3.4 percent increase in the South and a 1.6 percent drop in the West
  • At the current pace, it would take 3.8 months to sell the homes on the market, unchanged from February; Realtors group considers less than a five months’ supply as consistent with a tight market
  • Single-family home sales increased 4.3 percent last month to an annual rate of 5.08 million
  • Purchases of condominium and co-op units rose 5 percent to a 630,000 pace
  • First-time buyers accounted for 32 percent of all sales in March, unchanged from February
  • Homes sold in 34 days, compared with 45 days in February and 47 days in March 2016

The median existing-home price for all housing types in March was $236,400, up 6.8 percent from March 2016 ($221,400). March's price increase marks the 61st consecutive month of year-over-year gains.

A Few Comments on March Existing Home Sales A few key points:
1) As usual, housing economist Tom Lawler's forecast was closer to the NAR report than the consensus.  See: Lawler: Early Read on Existing Home Sales in March  "I project that US existing home sales as estimated by the National Association of Realtors ran at a seasonally adjusted annual rate of 5.74 million in March"

2) Warmer weather in February might have boosted sales for March and early April.
3) Inventory is still very low and falling year-over-year (down 6.6% year-over-year in March). More inventory would probably mean smaller price increases, and less inventory somewhat larger price increases.
I expect inventory will be increasing year-over-year by the end of 2017. The following graph shows existing home sales Not Seasonally Adjusted (NSA).Sales NSA in March (red column) were the highest for March since 2006 (NSA). Note that sales NSA are now in the seasonally strong period (March through September).

Housing Starts decreased to 1.215 Million Annual Rate in March --  From the Census Bureau: Permits, Starts and Completions Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,215,000. This is 6.8 percent below the revised February estimate of 1,303,000, but is 9.2 percent above the March 2016 rate of 1,113,000. Single-family housing starts in March were at a rate of 821,000; this is 6.2 percent below the revised February figure of 875,000. The March rate for units in buildings with five units or more was 385,000.  Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,260,000. This is 3.6 percent above the revised February rate of 1,216,000 and is 17.0 percent above the March 2016 rate of 1,077,000. Single-family authorizations in March were at a rate of 823,000; this is 1.1 percent below the revised February figure of 832,000. Authorizations of units in buildings with five units or more were at a rate of 401,000 in March. The first graph shows single and multi-family housing starts for the last several years.Multi-family starts (red, 2+ units) decreased in March compared to February.  Multi-family starts are up year-over-year. Multi-family is volatile.Single-family starts (blue) increased in March, and are up 9.3% year-over-year.  The second graph shows total and single unit starts since 1968.  The second graph shows the huge collapse following the housing bubble, and then - after moving sideways for a couple of years - housing is now recovering (but still historically low),
Total housing starts in March were below expectations.  However February starts were revised up slightly.  Still a decent report. 

New Residential Housing Starts in March Below Expectations - The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for March new residential housing starts. The latest reading of 1.215M was below the forecast of 1.250M. Revisions were made to the previous two months.  Here is the opening of this morning's monthly report:  Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,260,000. This is 3.6 percent (±2.8 percent) above the revised February rate of 1,216,000 and is 17.0 percent (±1.2 percent) above the March 2016 rate of 1,077,000. Single-family authorizations in March were at a rate of 823,000; this is 1.1 percent (±1.9 percent)* below the revised February figure of 832,000. Authorizations of units in buildings with five units or more were at a rate of 401,000 in March. Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,215,000. This is 6.8 percent (±12.5 percent)* below the revised February estimate of 1,303,000, but is 9.2 percent (±9.1 percent) above the March 2016 rate of 1,113,000. Single-family housing starts in March were at a rate of 821,000; this is 6.2 percent (±10.0 percent)* below the revised February figure of 875,000. The March rate for units in buildings with five units or more was 385,000. [link to report] Here is the historical series for total privately-owned housing starts, which dates from 1959. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

New Residential Building Permits: Increase in March, Better Than Forecast -  The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for March new residential building permits. The latest reading of 1.260M was an increase from 1.216M in February and above the forecast of 1.250M. February was revised upward. Here is the opening of this morning's monthly report:  Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,260,000. This is 3.6 percent (±2.8 percent) above the revised February rate of 1,216,000 and is 17.0 percent (±1.2 percent) above the March 2016 rate of 1,077,000. Single-family authorizations in March were at a rate of 823,000; this is 1.1 percent (±1.9 percent)* below the revised February figure of 832,000. Authorizations of units in buildings with five units or more were at a rate of 401,000 in March. Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,215,000. This is 6.8 percent (±12.5 percent)* below the revised February estimate of 1,303,000, but is 9.2 percent (±9.1 percent) above the March 2016 rate of 1,113,000. Single-family housing starts in March were at a rate of 821,000; this is 6.2 percent (±10.0 percent)* below the revised February figure of 875,000. The March rate for units in buildings with five units or more was 385,000. [link to report] Here is the complete historical series, which dates from 1960. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.

Comments on March Housing Starts -- The housing starts report released this morning showed starts were down in March compared to February, and were up 9.2% year-over-year compared to March 2016. Note that multi-family is frequently volatile month-to-month, and has seen especially wild swings over the last six months. This first graph shows the month to month comparison between 2016 (blue) and 2017 (red).Starts were up 9.2% in March 2017 compared to March 2016, and starts are up 8.1% year-to-date. My guess is starts will increase around 3% to 7% in 2017. This is a solid start to 2017, however the comparison was pretty easy in March. Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment). These graphs use a 12 month rolling total for NSA starts and completions. The blue line is for multifamily starts and the red line is for multifamily completions. The rolling 12 month total for starts (blue line) increased steadily over the last few years - but has been moving more sideways recently. Completions (red line) have lagged behind - but completions have been generally catching up (more deliveries). Completions lag starts by about 12 months. I think most of the growth in multi-family starts is probably behind us - in fact multi-family starts probably peaked in June 2015 (at 510 thousand SAAR) - although I expect solid multi-family starts for a few more years (based on demographics).The second graph shows single family starts and completions. It usually only takes about 6 months between starting a single family home and completion - so the lines are much closer. The blue line is for single family starts and the red line is for single family completions. Note the exceptionally low level of single family starts and completions. The "wide bottom" was what I was forecasting several years ago, and now I expect a few years of increasing single family starts and completions.

 NAHB: Builder Confidence decreased to 68 in April --The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 68 in April, down from 71 in March. Any number above 50 indicates that more builders view sales conditions as good than poor.From NAHB: Builder Confidence Holds Firm in April Builder confidence in the market for newly-built single-family homes remained solid in April, falling three points to a level of 68 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) after an unusually high March reading.  “Even with this month’s modest drop, builder confidence is on very firm ground, and builders are reporting strong interest among potential home buyers,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.  “The fact that the HMI measure of current sales conditions has been over 70 for five consecutive months shows that there is continued demand for new construction,” said NAHB Chief Economist Robert Dietz. “However, builders are facing several challenges, such as hefty regulatory costs and ongoing increases in building material prices."  ...All three HMI components posted losses in April but remain at healthy levels. The components gauging current sales conditions fell three points to 74 while the index charting sales expectations in the next six months dropped three points to 75. Meanwhile, the component measuring buyer traffic edged one point down to 52.

Homebuilders Could Be Losers in Early Test of Trump Trade Policy   - A long-simmering trade dispute between the U.S. and Canada over lumber is heating up, increasing the cost of building houses and causing American businesses to hunt for supplies in other countries.  A detente between the normally friendly neighbors expired in October, and a new agreement isn’t on the horizon. That’s contributed to a more than 20 percent surge in wood prices since the U.S. election and has the U.S. poised to impose tariffs that may send prices even higher. Since the early 1980s, the U.S. has argued with Canada over how much softwood lumber the country’s suppliers can sell in the U.S. and at what price. The two nations have negotiated temporary agreements in previous years over softwood, which comes from trees that have cones, like pine or spruce, and is preferred by builders for constructing home frames. But hammering out a new deal has been slow-going for the Trump administration, which still doesn’t have its chief trade negotiator in place.  “It’s similar to the impact if you go to buy gas one day and decide not to buy it when it was three dollars, and then you go back first thing in the morning and it’s four dollars. Except you’re buying $10,000 worth of gas.” After the latest deal lapsed, a group including U.S. timber companies petitioned an independent government agency and the U.S. Commerce Department for duties on lumber imports from Canada, saying the country unfairly subsidizes its own industry, costing profits and jobs. Those taxes, the first of which is expected to be announced by the end of April, could total more than 30 percent. President Donald Trump has been highly critical of existing trade deals and has called for the renegotiation of the North American Free Trade Agreement, which could ultimately include the wood dispute. Trump picked Robert Lighthizer to be the next U.S. Trade Representative in January, and his nomination is pending before the Senate. Lighthizer said at his confirmation hearing last month that he views the lumber dispute as the top trade issue between the U.S. and Canada. Oregon Democratic Senator Ron Wyden told Lighthizer the fight is the “longest-running battle since the Trojan War.”

AIA: Architecture Billings Index increased in March -  This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: Architecture Billings Index continues to strengthenThe first quarter of the year ended on a positive note for the Architecture Billings Index (ABI).  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the March ABI score was 54.3, up from a score of 50.7 in the previous month. This score reflects a sizable increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 59.8, down from a reading of 61.5 the previous month, while the new design contracts index dipped from 54.7 to 52.3.  “The first quarter started out on uneasy footing, but fortunately ended on an upswing  entering the traditionally busy spring season,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “All sectors showed growth except for the commercial/industrial market, which, for the first time in over a year displayed a decrease in design services.”
• Regional averages: Midwest (54.6), South (52.6), Northeast (52.4), West (50.2)
• Sector index breakdown: multi-family residential (54.6), mixed practice (53.7), institutional (52.9), commercial / industrial (49.8)

NMHC: Apartment Market Tightness Index remained negative in April Survey ---From the National Multifamily Housing Council (NMHC): Apartment Markets Sluggish in the April NMHC Quarterly SurveyDespite moderate improvements over the first quarter of 2017, all four indexes of the National Multifamily Housing Council’s (NMHC) Quarterly Survey of Apartment Market Conditions remained below the breakeven level of 50. The Market Tightness (41), Sales Volume (30), Equity Financing (42), and Debt Financing (41) all indicated continued softening conditions in apartment markets even as demand for apartment residences remains strong.“Although all four indexes rose in April, they remain below the breakeven level of 50,” said Mark Obrinsky, NMHC’s Senior Vice President of Research and Chief Economist. “After years of lagging behind the increase in apartment demand, new supply is finally coming online in sufficient quantity to alter this supply-demand imbalance. In particular, class A supply in many urban core submarkets has led to increased concessions to fuel lease-up activity. Even so, occupancy rates remain close to historic highs. “In the investment market, some of the weakness in property sales is seasonal, but respondents reported caution on the part of buyers as well as debt and equity capital sources – in particular in regard to construction lending. Increased uncertainty about the outlook for interest rates and cap rates also appears to be playing a role.” The Market Tightness Index increased from 25 to 41, as one-fifth of respondents (20 percent) reported tighter conditions than three months ago, up from eight percent in January. Over one-third (38 percent) noted looser conditions. While this marks the sixth consecutive quarter of overall declining conditions, it does mark an uptick from the previous quarter.

 Desperate Malls Turn to Concerts and Food Trucks –m Malls are fighting for shoppers with one thing their web rivals can’t offer: parking lots. With customer traffic sagging, U.S. retail landlords are using their sprawling concrete lots to host events such as carnivals, concerts and food-truck festivals. They’re aiming to lure visitors with experiences that can’t be replicated online -- and then get them inside the properties to spend some money.“Events draw people to come to the shopping center,” said Craig Herkimer, whose company, KevaWorks Inc., is working with big landlords including GGP Inc. and Simon Property Group Inc. to produce outdoor events. “They generate revenue for the owner and offer a chance for cross-promotion, so they can try and drive more customers into the stores.” Mall owners across the country are grappling with record store closings and declining rents. Retail property values are down 3 percent in past six months, as all other types of commercial real estate showed gains, according to the Moody’s/Real Capital Analytics indexes. A Bloomberg gauge of publicly traded mall landlords has tumbled 15 percent in the past year through yesterday, the worst performance among U.S. real estate investment trusts. Inc. and other internet retailers continue to grow, while department stores including Sears Holdings Corp. and Macy’s Inc. have been closing hundreds of locations. Payless Inc., the discount shoe seller, is among the latest to announce a massive shuttering -- of 400 stores -- as part of a bankruptcy plan.“We expect to see a trend of more closings,” said Carol Kemple, an analyst at Hilliard Lyons. “Most retailers, if they’re still standing in September, will probably try to make it through the holiday season.”

  Americans are swamped in $1 trillion of credit card debt -- Rising credit card interest rates are pushing Americans deeper into a long-term debt trap. Americans now owe $1 trillion in credit card debt, with an average monthly balance of about $9,600 for borrowers who don’t pay their cards in full each month. A year ago, a credit card holder making only minimum payments shelled out about $1,185 in annual interest, on average, said Ben Woolsey of After three quarter-point hikes by the Federal Reserve — a cost that banks pass on almost immediately to card holders — credit card borrowers are now forking over $1,254, or $69 more a year, in interest, on average. Two more rate hikes are on the table for 2017, which would bring the total to $1,301, or $116 a year in interest. One hundred and sixteen dollars — the cost of a dozen roses on Valentine’s Day, or about 20 Cronuts — may not sound like much. But when consumers only make minimum payments, credit card balances balloon. And recent interest rate hikes come as ordinary Americans are already struggling with surging prices for essentials. Income gains aren’t large enough to keep pace. Wages for an ordinary working person — for example, a nurse — have risen 21 percent in the past decade to about $2,412 a month, according to Bureau of Labor Statistics data. By contrast, medical costs rose 57 percent, food prices spiked 36 percent and housing costs jumped 32 percent since 2003, according to online personal finance Web site NerdWallet.

Delinquent Auto Loans At 8-Year High -- If you are having trouble making your auto loan payments, recent data from the New York Federal Reserve suggests that you are not alone. According to the New York Fed, delinquent auto loans have reached levels not seen in over eight years. Auto loan delinquencies of greater than thirty days or more reached $23.27 billion, the highest value since the $23.46 billion registered in Q3 2008. The seriously delinquent fraction of these loans, defined as those at least ninety days past due, reached $8.24 billion. As bad as that sounds, the delinquency level is only at 3.8% a fraction of the $1.16 trillion in total outstanding auto loans. Higher delinquency rates may just be an artifact of overall improvement in the auto industry. The Fed report noted that $142 billion in auto loans were generated in the final quarter of 2016, pushing 2016 totals to the greatest number in the entire eighteen-year history of the Fed's data collection.  In their previous report, the New York Fed raised concerns about the rising delinquency rate among subprime borrowers with relatively low credit scores, creating a crude parallel to housing. As with housing, extension of credit to borrowers at higher risk simply means that higher levels of defaults and repossessions are likely. The Fed data does show an increase in seriously delinquent auto loans, from 3.6% to 3.8% over the course of the fourth quarter, but in the broader view, these rates are not out of line, nor do they appear to be driven by increasing subprime loans. Fed data breaks down the overall auto loan originations by credit score range, and that data shows the dollar value of originations with credit scores below 620 has been shrinking steadily over the last two quarters. These originations fell from approximately $30 billion in the second quarter of 2016 to approximately $25 billion by the fourth quarter.

What Default Rates on Subprime Auto Loans Are Telling Us - About 17% of all U.S. consumers are likely to default on a loan payment over the next year, according to a recent report from UBS. More interesting, perhaps, is who these defaulters are. The UBS Evidence Lab reports that the group's profile is "middle and upper income, younger, male, urban, and concentrated in the coastal regions." The UBS researchers also found evidence that defaults on auto loans are likely to spread to more nonprime defaults on credit cards and personal loans.About 16% of all auto loans outstanding are subprime, amounting to $179 billion out of total auto loans of around $1.07 trillion. Overall subprime debt totals $1.25 trillion in mortgages, student loans and auto loans.Subprime borrowers (i.e., those with a credit score below 600) have been on investors' radar screens for at least a year. Now, however, there is evidence that near-prime and prime borrowers are also defaulting more. Some 23% of U.S. banks have forecast an increase in consumer loan delinquencies in 2017, the most in 10 years. And because the banks have been more selective in lending to prime borrowers, it is reasonable to conclude that if high-quality borrowers are about to default, the situation is likely to be worse for subprime borrowers.The Federal Reserve's January report on its survey of senior loan officers shows nearly 37% of large banks expect the quality of their credit card loans to deteriorate somewhat in 2017, and just over 38% expect auto loan quality to deteriorate. The root causes of the rise in delinquency rates can be traced back to rising US consumer income inequality and aggressive easing in lending conditions, primarily from non-bank lenders. In short, central bank reflation efforts have been more successful at fuelling wealth creation for a subset of the consumer and less effective in stimulating broader income growth. Structurally, we have perhaps already saturated credit demand from higher quality borrowers, such as the baby boomer generation. The onus will shift more to younger generations, but this is where our prior UBS Evidence Lab survey highlights the default risk lies.

Inflation Retreats in March -- Robert Oak - The March Consumer Price Index dropped by -0.3%.   That's unusual and a decline in CPI has not happened since February 2016.  The reason was volatile gas prices but America finally is catching a break on cell phone service costs too.  The gasoline index by itself dropped -6.2% for the month.  The bigger surprise is Inflation without food and energy prices considered dropped by -0.1%.  That hasn't happened since 2010. Yearly overall inflation was 2.4%, much less than last month's 2.7% increase, and is shown in the below graph. Core inflation, or CPI with all food and energy items removed from the index, has increased 2.0% for the last year. and this is the smallest annual amount since November 2015. For the past decade the annualized inflation rate has been 1.9%. Core inflation is the figure the Federal Reserve considers for interest rate increase decisions. Core CPI's monthly -0.1% percentage change is graphed below. Within core inflation, shelter increased 0.1%, which is actually less of a jump than typical and the lowest increase since June 2014. Did people get a break on buying a home or rent? Of course not, rent increased 0.3%, whereas hotels and motels went down -2.8%. and home ownership equivalent rent increased 0.2%. Shelter overall is up 3.5% for the year with rent increasing 3.9% annually. Wireless service dropped a whooping -7.0% for the month and is down -11.4% for the year. New cars decreased by -0.3% and used cars and trucks decreased by -0.9%. Apparel decreased -0.7% for the month, but this was after a 0.6% February rise. Car insurance increased 8.1% for the year, the largest jump since June 2003. The energy index decreased -3.2% for the month and is now up 10.9% from a year ago. The BLS separates out all energy costs and puts them together into one index. For the year, gasoline has now increased 19.9%. Fuel oil is up 24.9% for the year, while dropped by -0.8% this month. Natural gas dropped by -0.8% but is up 10.3% for the year while electricity is down -0.1% for the month and has increased 1.6% for the year. Graphed below is the overall CPI energy index. Graphed below is the CPI gasoline index annual percentage change and for the month gas dropped by -6.2%. Graphed below is the rent price index which has been soaring for some time, now up 3.9% annually, and is shown in the below graph. Food prices increased by 0.3% for the month. Food and beverages have now changed 0.5% from a year ago. Groceries, (called food at home by the BLS), increased 0.5% for the month but are still down -0.9% for the year. Fresh fruit rose 2.4% for the month and four of the six major grocery store food group indexes increased. Dairy and related products decreased by -0.6% for the month after gaining for three months prior. Eating out, or food away from home increased 0.2% for the month and is up 2.4% for the year.

The effect: retailers say they’re not selling, but consumers report they are buying --One of the issues I keep reading about recently is the (alleged) divergence between “soft” and “hard” data.  For example, consumer sentiment as measured by the University of Michigan (and the Conference Board, and Gallup) has been making new highs since the Presidential election last November (according to Gallup, mainly fueled by a massive gain in optimism among Republicans). while “hard data,” chiefly industrial production but also including consumer spending, has failed to follow suit. One problem with this thesis has been that manufacturing as measured by the industrial production index, turned up for five months in a row.  It turned down in March, and one good measure of how intellectually honest the commentator is, is whether they have been using a consistent measure for industrial production: Production as a whole only fell in January and February because of utility production (warm winter in the eastern half of the US).  In March, production only rose because utility production rebounded sharply (March was actually colder than February in much of the East). So a Doomer who was all over the decline in industrial production for the last two months should be touting its advance in March.  If the Doomer backs out utilities this month, take a look to see if they did the same thing last month — almost certainly not.Another problem with the soft/nard data dichotomy is that online retail appears to have reached a tipping point where it is causing big damage to brick-and-mortar retailers, who are laying off thousands of employees and even shutting down completely. I am concerned that the official real retail sales numbers might not be adequately picking up online retail:

Real wages and spending: I don’t think consumers will roll over that easily  -This is the second part of a post about “hard data” and consumer spending. (First part here)  Yesterday I noted that self-reported consumer spending, as measured by Gallup, has been running 10% or better YoY since the beginning of February, consistent with’s earnings growth, but in contrast to a small slump in retail sales as reported for the last two months.In fairness, real personal consumption expenditures have turned down slightly in the last several months: Since this measures spending, there is clearly a divergence between this measure  and Gallup. Another contrary argument that the slump in consumer spending is real, is that the cause has been the decline in real wages since last July: But over the last 50 years, a downturn in real wages has frequently not meant recession.  Consumers can cope by refinancing debt at lower rates (not available now), by cashing in appreciating assets, if they have them (e.g., stocks or housing equity), or saving less, before they cut back saving.  While there was a slight downturn in the savings rate in 2016, it was less than half of that we saw in 1998 and 2004 (and similar downturns in earlier cycles not shown in the below graph): In the past, consumers have not caved in without saving less first.  It could always be different this time, but my suspicion is that we will see a much more substantial  decline in the savings rate before we see a real, sustained downturn in spending.

US Restaurant Industry Suffers Worst Collapse Since 2009 - What tentative hope had emerged for a rebound for the U.S. restaurant industry at the start of the year, was doused last month when in its February Restaurant Industry Snapshot, TDn2K found that "Restaurant Sales and Traffic Tumble in February" and reported that same-store sales fell -3.7% in February, with traffic declining -5.0% . It did however leave a possibility that things may turn around as a result of the prompt disbursement of withheld tax refunds in the month, which it suggested may have adversely affected sales and traffic.  Alas, that did not happen, and restaurant struggles continued in March as sales and traffic again declined year-over-year: same-store sales were down 1.1% while traffic dropped 3.4%. March results were disappointing for an industry desperately trying to reverse performance trends; with sales now negative in 11 out of the last 12 months, the longest stretch since the financial crisis. There was a modest improvement sequentially, however, and while still negative, sales improved by 2.5% points compared to February as traffic rose marginally by 1.6%.

Despite What They Say, GM's Inventory Build Is Anything But 'Normal' -- For months now we've been warning that the great auto 'plateau' is nothing more than a debt-fueled bubble, courtesy of the Fed, that is on the verge of collapse.  Of course, bubbles typically get exposed when customer sell-through starts to slow but OEM's go on believing that 10% volume growth is possible in perpetuity...that usually results in inventory growth that looks something like this: The second sign of a bubble usually comes when companies issue carefully crafted excuses for their inventory build.  And that's where Alan Batey, GM President of the America's, comes in to explain that his company's inventory glut isn't a sign of the auto industry's impending implosion but rather a modest build up ahead of planned shut downs and retooling efforts later this summer.  Per Automotive News:Automakers and dealers started April with near-record U.S. stocks of unsold new vehicles, but much of the surplus may stem from General Motors bulking up to prepare for factory shutdowns.The industry started the month with 4,191,700 light vehicles on hand, the highest unit count for April 1 since 2004 and 348,200 higher than a year earlier.GM, however, accounted for three quarters of the industry's 348,200 units of inventory growth in the past 12 months. GM added 260,800 units since April 1, 2016, to 924,800 this month. GM had the industry's highest April 1 stocks, with a 97-day supply, up six days from March 1. BMW, at 36 days, had the lowest.Alan Batey, GM president of the Americas, said the stockpiling is deliberate to keep dealers supplied while the automaker temporarily shuts multiple assembly plants later this year. GM must retool for a number of redesigned vehicles, including full-sized pickups and several large SUVs. Of course, factory shutdowns and retooling for model change overs are fairly common in the auto industry.  Therefore, if Batey is correct in his assertion that GM's inventory build is just a 'normal' preparation for retooling then we should see a similar pattern in inventory builds last year.But, per the chart below, and to our complete 'shock', that is simply not the case.

 Industrial Production increased 0.5% in March -- From the Fed: Industrial production and Capacity Utilization Industrial production increased 0.5 percent in March after moving up 0.1 percent in February. The increase in March was more than accounted for by a jump of 8.6 percent in the output of utilities—the largest in the history of the index—as the demand for heating returned to seasonal norms after being suppressed by unusually warm weather in February. Manufacturing output fell 0.4 percent in March, led by a large step-down in the production of motor vehicles and parts; factory output aside from motor vehicles and parts moved down 0.2 percent. The production at mines edged up 0.1 percent. For the first quarter as a whole, industrial production rose at an annual rate of 1.5 percent. At 104.1 percent of its 2012 average, total industrial production in March was 1.5 percent above its year-earlier level. Capacity utilization for the industrial sector increased 0.4 percentage point in March to 76.1 percent, a rate that is 3.8 percentage points below its long-run (1972–2016) average.  This graph shows Capacity Utilization. This series is up 9.4 percentage points from the record low set in June 2009 (the series starts in 1967). Capacity utilization at 76.1% is 3.8% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007. The second graph shows industrial production since 1967. Industrial production increased in March to 104.1. This is 19.6% above the recession low, and is close to the pre-recession peak. This was close to expectations.

Autos Drag Down Industrial Production, Housing Solid, by Tim Duy: The Federal Reserve released March industrial production data today. Overall production was up 0.5% supported by a big jump in utilities. Despite the headline gains, it was something of a mixed message. First, the dispersion of weakness was the lowest since 2014: It looks like with the rebound in energy prices and related production activity, the industrial side of the economy has turned a corner. On a softer note, manufacturing activity tumbled: This was fairly disappointing considering the long run of solid growth beginning in the second half of last year. Slowing motor vehicle production took a bite out of the numbers. Specifically, autos, not trucks: That chart makes it fairly clear that Americans prefer big vehicles to small ones. Overall motor vehicle sales are probably past their peak, and we can expect this source of weakness in industrial production to persist until sales settle into a new level. Note that motor vehicle output contributed 0.14 and 0.06 percentage points to overall growth in 2015 and 2016 respectively. That gives some sense of the magnitude of the opposite effect on growth this year - noticeable, but small. Housing starts were below expectations, but February was revised upwards. Overall, a solid start to the year: I don't see any reason to believe the uptrend in single family has broken, but multifamily is likely near cycle highs. For more on housing see Calculated Risk here and here..

NY Fed: Empire State Manufacturing Index indicates slower expansion in April - From the NY Fed: Empire State Manufacturing Survey: General Business Conditions Index Fell Eleven Points to 5.2 Responses from New York State manufacturers suggested that business activity expanded at a considerably slower pace than in the prior two months. Although the general business conditions index remained above the levels seen through most of 2016, it slipped eleven points to 5.2. ... Employment indexes continued to signal strength in the labor market. The index for number of employees climbed another five points to 13.9—its highest level in just over two years. ... Forward-looking indexes were mixed but generally at high levels, suggesting fairly widespread optimism about future conditions. The index for future business conditions rose three points to 39.9, while the future new orders and shipments indexes declined modestly. Employment and hours worked were expected to increase fairly briskly in the months ahead. This was well below the consensus forecast of 15.

 Empire State Manufacturing Survey: Index Falls in April, Worse Than Forecast -  This morning we got the latest Empire State Manufacturing Survey, which shows subdued growth. The diffusion index for General Business Conditions at 5.2 was a decrease of 11.2 from the previous month's 16.4. The forecast was for a reading of 15.0. The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state. Here is the opening paragraph from the report.Business activity grew at a more subdued pace in New York State, according to firms responding to the April 2017 Empire State Manufacturing Survey. The headline general business conditions index fell eleven points to 5.2. The new orders index, which had climbed to a multiyear high in March, retreated sharply to 7.0, suggesting more modest growth. The shipments index edged up to 13.7, while the unfilled orders index slipped to 12.4. However, delivery times lengthened further, with that index climbing to a record high of 16.1. Labor market indicators pointed to further sturdy increases in both employment and hours worked. Input prices and selling prices rose at a modest pace again this month. Indexes assessing the six-month outlook continued to convey a fairly high degree of optimism. [source] Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:

Philly Fed: Manufacturing "Continued to expand, but at a slower pace" in April - Earlier from the Philly Fed: Current Indicators Continue to Reflect Growth - Results from the April Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand, but at a slower pace than last month. The diffusion indexes for general activity, new orders, and shipments remained positive but fell from their readings in March. The current employment index, however, improved slightly and continues to suggest expanding employment in the manufacturing sector. The survey’s future indicators continued to reflect general optimism but retreated from their high readings in the first three months of the year....The index for current manufacturing activity in the region decreased from a reading of 32.8 in March to 22.0 this month. The index has been positive for nine consecutive months and remains at a relatively high reading but has moved down the past two months ......Firms reported an increase in manufacturing employment and work hours this month. The percentage of firms reporting an increase in employment (27 percent) exceeded the percentage reporting a decrease (8 percent). The current employment index improved 2 points, its fifth consecutive positive reading. Firms also reported an increase in work hours this month: The average workweek index was nearly unchanged at 18.9 and has registered a positive reading for six consecutive months. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

'Soft' Data Bloodbath - Manufacturing/Services PMI Plunge Below Trump Election Lows --Having now plunged for three straight months, Markit's PMI surveys for Manufacturing and Services plunged back below pre-election lows in April, crushing the dreams of 'soft' survey hopers as Markit notes the latest data "suggest the US economy lost further momentum at the start of the second quarter." The Composite flash PMI for April printed 52.7 - the lowest since September 2016.Commenting on the flash PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:“The PMI data suggest the US economy lost further momentum at the start of the second quarter. The surveys are signalling a GDP growth rate of 1.1% after 1.7% in the first quarter.“The vast services economy saw the weakest monthly expansion for seven months and the manufacturing sector showed signs of growth slowingfurther from the two-year high seen at the start of the year, despite export orders lifting higher.“The labour market also continued to soften. The surveys signalled a marked step-down in the pace of hiring in March which has continued into April. The latest survey data are consistent with only around 100,000 non-farm payroll growth. “The survey responses indicate that some froth has come off the economy since the post-election bounce seen at the end of last year. However, with inflows of new business picking up slightly in April and business optimism about the year ahead also brightening, there’s good reason to believe that growth could revive again in coming months.”

 Boeing to Dismiss Hundreds of Engineers Amid Sales Slowdown -  Boeing Co. plans to lay off hundreds of engineers in Washington state and other locations -- and may eliminate more jobs later this year as the planemaker contends with slowing aircraft sales.The manufacturer plans to hand out pink slips on Friday, the same day that 305 engineers and technical workers will leave voluntarily under an earlier buyout offer. Boeing has pared 1,332 of the jobs from its Seattle-area manufacturing center since the start of 2016, according to SPEEA, the union representing the workers.Boeing may make additional engineering cuts depending on “our business environment and the amount of voluntary attrition,” John Hamilton, vice president of engineering for the commercial airplanes unit, said in a letter to employees Monday. The dismissals are needed to “meet our operating plan and additional challenges in the marketplace.”The Chicago-based company, which emerged as the face of U.S. manufacturing under President Donald Trump, has been winnowing employment for more than a year as a record jetliner sales spree fades. Boeing trimmed the Washington workforce by 9 percent to 70,640 employees over the past year. The company’s total headcount has shrunk 7.6 percent to 146,962 since March 2016. Total revenue for 2016 dipped 1.6 percent to $94.6 billion as Boeing slowed output of the 747 jumbo jetliner amid declining sales and said it would reduce the production rate of the 777 twin-aisle plane for a second time. As demand for new planes has waned amid record order backlogs and a surplus older models, Boeing has trimmed its overhead and worked to ratchet down supplier costs.

Weekly Initial Unemployment Claims increase to 244,000 --The DOL reported:In the week ending April 15, the advance figure for seasonally adjusted initial claims was 244,000, an increase of 10,000 from the previous week's unrevised level of 234,000. The 4-week moving average was 243,000, a decrease of 4,250 from the previous week's unrevised average of 247,250. The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

Number of people collecting unemployment checks hits 17-year low, jobless claims show - — The number of out-of-work people collecting unemployment checks fell to a 17-year low in April, underscoring the strongest U.S. labor market in years. So-called continuing jobless claims fell by 49,000 to 1.98 million, marking just the second time they’ve fallen below 2 million during the current eight-year-old economic expansion. Continuing claims also dipped below the 2 million mark in March. The last time state unemployment offices sent out fewer checks to jobless Americans was in April 2000, the government reported Thursday.Initial jobless claims, meanwhile, rose by 10,000 to a still-low 244,000 in the seven days stretching from April 9 to April 15. . The number of new applicants for unemployment benefits has registered less than 300,000 for 111 straight weeks, the longest streak since the early 1970s.There is a “steady downtrend in place in the pace of layoffs,” noted Stephen Stanley, chief economist at Amherst Pierpont Securities.  The more stable monthly average of jobless claims was a touch lower at 243,000. They fell by 4,250 from the prior week.

BLS: March Unemployment Rates in Arkansas, Colorado, Maine and Oregon at New Series Lows --From the BLS: Regional and State Employment and Unemployment Summary Unemployment rates were lower in March in 17 states and stable in 33 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Eighteen states had jobless rate decreases from a year earlier, and 32 states and the District had little or no change. The national unemployment rate declined by 0.2 percentage point from February to 4.5 percent and was 0.5 point lower than in March 2016....  Colorado had the lowest unemployment rate in March, 2.6 percent, closely followed by Hawaii, 2.7 percent, and New Hampshire, North Dakota, and South Dakota, 2.8 percent each. The rates in Arkansas (3.6 percent), Colorado (2.6 percent), Maine (3.0 percent), and Oregon (3.8 percent) set new series lows. (All state series begin in 1976.) New Mexico had the highest jobless rate, 6.7 percent. This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession. The size of the blue bar indicates the amount of improvement. The yellow squares are the lowest unemployment rate per state since 1976. The states are ranked by the highest current unemployment rate. New Mexico, at 6.7%, had the highest state unemployment rate. The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red). Currently no state has an unemployment rate at or above 7% (light blue); Only two states are at or above 6% (dark blue). The states are New Mexico (6.7%), and Alaska (6.4%). Note: The series low for Alaska is 6.3% (almost a new low in Alaska too).

Philly Fed: State Coincident Indexes increased in 44 states in February -- From the Philly Fed: The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for February 2017. Over the past three months, the indexes increased in 47 states, decreased in two, and remained stable in one, for a three-month diffusion index of 90. In the past month, the indexes increased in 44 states, decreased in four, and remained stable in two, for a one-month diffusion index of 80. Note: These are coincident indexes constructed from state employment data.  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 February 46 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.  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.

Why don’t people care more about economic inequality? - Tyler Cowen -- That is the topic of my latest Bloomberg column, here is one bit:One possibility is that a lot of talk about inequality gives the audience the impression that it is inevitable, and thereby renders potential remedies less urgent. Another speculation is that human beings are constantly evaluating the status of others. To the extent analysts reiterate that some group of citizens doesn’t have as much, maybe they’re actually reminding us that those citizens hold a lower social status. Perhaps subconsciously, we then respond by thinking those citizens deserve less, or by downgrading the urgency of their needs.Another possibility is that talk about economic inequality increases political polarization, which lowers the chance of effective action. Or that criticizing American society may cause us to feel less virtuous, which in turn may cause us to act with less virtue. Perhaps if critics of inequality praised this nation more for what is has done to redress inequality, rather than criticizing it for the gaps, that might cement a self-image of Americans who are capable of tackling this problem, and thus spur interest in additional progress. That mechanism shouldn’t sound so strange to anyone who has tried to raise children.When I bring up such points in dialogue, I’ve found that a lot of my fellow academicians retreat to the moral platitude that the “good guys” simply need to fight harder against the special interest groups. Maybe so, or maybe that response is just another way of digging in deeper to what so far has been a losing battle. The reality is that income inequality has gone up a great deal since the early 1980s, and we haven’t done so much to reverse the basic trend. Do read the whole thing, the various biting comments about other academics are in other parts of the piece.

 Universal Basic Income: A Utopian Idea Whose Time May Finally Have Arrived -- Sometimes, all it really takes to change the course of history is a bit of dusting. That's happened recently as economists and policymakers began seriously re-examining the 500-year-old concept of a basic-income guarantee. The most debated version, known as universal basic income (UBI), is simple enough: the government would pay every adult citizen a salary, regardless of wealth, employment income or if they worked at all. Doing so, theory goes, might solve a host of endemic economic problems, from poverty to chronic joblessness, that are only likely to worsen in the coming century. The kernel of the idea can be found, perhaps fittingly, in Utopia, Thomas More's 1516 book. More articulated it through one of his main characters, Raphael Hythlodaeus. "No penalty on earth will stop people from stealing, if it is their only way of getting food," says Hythlodaeus. "It would be far more to the point to provide everyone with some means of livelihood." Over the centuries, some version or another of that conclusion found proponents in the likes of Thomas Paine, John Stuart Mill and Bertrand Russell. More recently, the concept has often made odd bedfellows: Martin Luther King Jr. endorsed the idea, as did conservative economists Milton Friedman and Friedrich Hayek. Starting in the late 1960s, the Nixon Administration studied the idea and tried unsuccessfully to get a basic-income benefit through Congress. (According to Rutgers historian James Livingston, the two men who oversaw a fact-finding pilot then known as the New Jersey Graduated Work Incentive Experiment were named Dick Cheney and Donald Rumsfeld.) Today, thinkers on the left see the UBI as a way to combat poverty and inequality as well as a potential palliative to the disruptions to workers caused by technology. To the right, the idea is an attractively simple alternative to bloated social-welfare regimes.

 Border Patrol struggles to recruit agents amid immigration crackdown  - Donald Trump’s immigration crackdown has a problem: not enough Americans are willing to carry it out. The Border Patrol is losing agents faster than it can replace them, putting a question mark over the president’s plan to ramp up the force. Air and Marine Operations, a separate agency, is also struggling to find pilots and other employees. “If you know people who are enthusiastic about border security please send them to Customs and Border Protection (CBP),” Ronald Vitiello, the Border Patrol chief, said in an appeal this week. “We’re already behind. We’re not hiring fast enough to keep up with the attrition.” He spoke at a border security expo in San Antonio, Texas, where other senior officials spoke out about recruitment woes. Benjamin Huffman, head of the Border Patrol’s strategic planning and analysis, half-joked to an audience that everyone would have to submit five names of potential recruits before leaving. Trump has ordered the agency to add 5,000 agents to beef up patrols and surveillance in advance of his proposed border wall. But its current 19,000-strong force is already 2,000 shy of a target set during the Obama administration. Officials said tough screening, especially a lie-detector test, rejected many qualified candidates, and that tough conditions such as living in remote, rugged areas prompted more than 1,000 agents to quit every year. “Some people just don’t want to live there,” said Randolph “Tex” Alles, acting deputy commissioner of CBP, a 60,000-strong agency that includes Border Patrol. “Hiring challenges are not new. Attracting and recruiting high quality individuals is a challenge for us.”

 Illegal Immigrant Arrests Soar In Trump's First 50 Days As Border Crossings Plunge -- Even as so-called 'sanctuary cities' around the country ramp up their efforts to thwart the Trump administration on enforcing immigration laws, despite the risk of losing their federal subsidies, arrests of illegal immigrants spiked 33% YoY in the first 52 days of Trump's presidency. Of course, for the Washington Post, such a spike in the enforcement of federal laws is highly disturbing and perhaps even a direct attack on the rights of sexual assault victims. U.S. Immigration and Customs Enforcement arrested 21,362 immigrants, mostly convicted criminals, from January through mid-March, compared to 16,104 during the same period last year, according to statistics requested by The Washington Post.Arrests of immigrants with no criminal records more than doubled to 5,441, the clearest sign yet that President Trump has ditched his predecessor’s protective stance toward most of the 11 million undocumented immigrants in the United States.Advocates for immigrants say the unbridled enforcement has led to a sharp drop in reports from Latinos of sexual assaults and other crimes in Houston and Los Angeles, and terrified immigrant communities across the United States. A prosecutor said the presence of immigration agents in state and local courthouses, which advocates say has increased under the Trump administration, makes it harder to prosecute crime.“My sense is that ICE is emboldened in a way that I have never seen,” Dan Satterberg, the top prosecutor in Washington state’s King County, which includes Seattle, said Thursday. “The federal government, in really just a couple of months, has undone decades of work that we have done to build this trust.”

Some Americans May Get Stranded On The 'Mexican Side' Of Trump's 'Beautiful' Border Wall - While happy campaign rhetoric made it sound like building a 2,000 foot wall along the U.S. southern border would be a walk in the park, in reality, much like repealing and replacing Obamacare and/or passing meaningful tax reform, various regulatory and other hurdles could tie up the project for years. One such issue that threatens the viability of Trump's 'beautiful' border wall stems from the fact that most of the southern border of Texas is owned by private individuals which means the U.S. government will have to take 100s landowners to court to exert its power of eminent domain.  Moreover, as NBC points out, some folks live so close to the Rio Grand River that they may end up on the 'Mexican side' of the wall.  Of course, these landowner fights could provide all the leverage needed for liberal lawyers to hold up the border wall construction forever, or at least until Trump gets voted out of office.When the U.S. government built the fence, it had to take hundreds of landowners to court to use its power of eminent domain. That's because unlike in other southern border states, most Texas border land is privately owned, and tough terrain and water use agreements with Mexico meant some fence was built a mile or more north of the river.With court fights also expected over Trump's wall, the Texas Civil Rights Project has begun signing up landowners and identifying people who might be affected.Under the U.S. Constitution, the government must prove it wants to seize land for public use and must offer a landowner "just compensation." While challenging the wall's "public use" would be difficult, those who believe they're not getting the full value of their land could take the case to court, setting up trials that could take years.Even if they don't win, lawyers hope to tie up the wall in court long enough that politics could effectively stop it, either in Congress or after another election."That's a fight that we've been ready to fight," said Efren Olivares, a lawyer with the Texas Civil Rights Project.

California Issues $1.25BN In Bonds For 'Bullet Train' Despite Trump Threat To Withhold Federal Funds For decades now the California bullet train has been the thorn in the sides of what few conservatives actually live in the liberal bastion of the West.  And with cost estimates starting at $65 billion, and ranging to well over $100 billion, or about $7,800 per California household, it's no wonder that fiscally responsible folks would be a bit reluctant to spend so much money on a service few will ever use and could threaten the solvency of their state as a whole. Be that as it may, seemingly no impediment, financial or otherwise, will stop Jerry Brown from wasting billions of California taxpayers' dollars in pursuit of his pet project.  Which is why it should come as little surprise that Brown has elected to proceed with a $1.25 billion general obligation bond sale today despite Trump's threats to withhold federal funding for the project, a move which casts substantial doubts over the financial feasibility of the project as a whole. Per Bloomberg:California isn’t letting litigation or Donald Trump stand in the way of one of the most expensive and controversial projects in the U.S.The state on Thursday plans to sell $1.25 billion in taxable bonds to finance a $64 billion high-speed rail system, the first debt issue for construction since voters approved it nearly a decade ago. The offering marks a show of faith from officials that the project will proceed despite a lawsuit from a county and farmer opposed to it and roadblocks from the Trump administration, which has delayed a grant that would have benefited the bullet train running from San Francisco to the Los Angeles area. The general-obligation debt, backed by California’s full faith and credit, isn’t dependent on the success of the project, the first publicly financed U.S. high-speed rail line. Lack of federal support would push more of the burden on California to finance the project, which Democratic Governor Jerry Brown says will transform the traffic-choked state by increasing access to affordable housing and boosting local economies.

How wrong is IBD on California? Let us count the ways -- Investor’s Business Daily has a hit piece out on California, as you can tell from the headline, “Taxifornia does it again.” Here’s the first paragraph of the editorial*, to give you a good flavor of it:  California’s far-left government has done it again. Not realizing its real problems are excessive spending on misplaced priorities, excessive taxes, too much debt and a far-too generous welfare state, its legislature working in cahoots with Gov. Jerry “tax-and-spend” Brown has pushed through the largest tax hike in state history. Amazingly, the editorial does not mention regulations once, though it did get around to the “job-killing $15-an-hour minimum wage” recently passed, along with the proposal for a single-payer health insurance system. I guess that counts as massive self-restraint on the editors’ part. The article calls California “the highest-tax state in the union.” If that’s so, it’s just another example of the false claim (popular also with Arthur Laffer and the conservative American Legislative Exchange Council) that high taxes always mean bad policy outcomes. (FWIW, according to Forbes, California only has the sixth-highest state and local tax burden.) So what have been the consequences of all of California’s tax increases? According to IBD, “Since 2004, California has lost more than 1 million people, representing a $26 billion net income loss.” Of course, no one has actually been lost. California’s population grew by almost exactly 4 million between 2004 and 2016, from 35.25 million to 39.25 million. What IBD’s editors are referring to is net interstate immigration and even there, the analysis is a little squirrely. From 2004 to 2008, the state had net interstate emigration of over 100,000 per year, with a low point of 288,000 net loss in 2006 (you know, during the housing disaster), but in every year since 2009, the number has been under 100,000 per year. Of course, interstate immigration is only one element of population change, and IBD conveniently omits the rest.  And the $26 billion alleged income loss due to interstate out-migration over that time period? A rounding error in an economy which grew from $1.8 trillion (2004) to $2.2 trillion (2015) annually in real 2009 dollars.  The article further claims that because of taxes, over 10,000 firms, including Toyota, “have either fled the state or reduced their investments.” Of course, Toyota has been replaced in its Fremont factory by Tesla, the most valuable auto company in the United States by market capitalization.

Trump’s Justice Department Could Potentially Put Funding For Some Local Law Enforcement At Risk - - The U.S. Justice Department is sending a message to state and local governments: Failure to comply with federal laws could have big consequences. This year, most of the conversation has focused on whether sanctuary cities that limit their cooperation with federal immigration authorities will be able to keep grant money for their police departments. But veterans of the Justice Department said that's only a piece of what could be at stake. A little-noticed portion of a memo Attorney General Jeff Sessions signed on March 31 directed his deputies to review local and state compliance with "all federal laws." "I think it's cause for concern," said Miriam Krinsky, a former federal prosecutor who now works with newly elected district attorneys and state attorneys. "With federal money moving forward, there could be the potential for federal strings to be attached." The Justice Department review could have implications for cities and states that extend far beyond immigration. That includes marijuana enforcement, since the drug is legal in many states but remains illegal under federal law. "This new directive really suggests that local and state prosecutors and law enforcement agencies should proceed with caution," Krinsky said. "They need to be careful at this point who they partner with or who they seek technical assistance or funding from." The Sessions memo drew national attention for its pledge to strengthen relationships with local police — and its skepticism toward federal probes of police departments that engage in a "pattern or practice" of unconstitutional policing. But the document also ordered Justice Department officials to consider a wide array of activity where local law enforcement relies on help from the federal government, including grants, technical assistance and training, and participation in task forces. Those task forces bring local and federal authorities together to crack down on violent crime, human trafficking and terrorism. The partnerships facilitate sharing of information about crime trends and policing strategies. Krinsky worries that those bonds could "start to crumble," hurting local communities.

Can the police retaliate against a citizen for refusing to answer police questions? -- In a new case, Alexander v. City of Round Rock, the U.S. Court of Appeals for the 5th Circuit considers the following question: If the police pull over a driver and the driver indicates he will refuse to answer any police questions, does it violate the Constitution for the police to retaliate against the driver to punish him for refusing to answer their questions?As I read the 5th Circuit’s decision, the court rules that (a) retaliation against the driver for refusing to answer police questions may involve acts that violate the Fourth Amendment, (b) retaliation for refusal to answer police questions doesn’t clearly violate the First Amendment, and (c) such retaliation doesn’t violate the Fifth Amendment. The court’s Fifth Amendment ruling strikes me as missing some complications, and I thought I would blog about why I think it’s a tricky issue.

The Booming Business Of Private Prisons - In the past forty years, our prison population has increased by 500 percent. And a private prison industry has grown along with it. When the war on drugs started swelling our prisons back in the 1980s, a couple of entrepreneurs saw an opportunity. Since then, local and federal governments have incorporated private prisons into their criminal justice systems. States house about 7 percent of their inmates in private facilities. The federal system houses about eighteen percent.Lauren-Brooke Eisen - senior counsel at NYU Law’s Brennan Center for Justice - and Marc Mauer - Executive Director of The Sentencing Project and author of Race to Incarcerate - say that we should view this trend more skeptically. Three Takeaways

  • Two of the largest private prison companies - CoreCivic and the GEO Group - are publicly traded. Last year, they raked in about 4 billion dollars in revenue. “That’s more than Airbnb, Snapchat, Pandora, and the Dallas Cowboys combined,” says Eisen. 
  • Are private prisons cheaper than government-run prisons? Well, the numbers aren’t promising. “There’s no significant difference [in price],” says Mauer. “Sometimes they’re a little cheaper, sometimes they’re a little more expensive. It’s more or less the same.” 
  • Over fifty percent of civil detention centers are run by private prisons, and the number is growing. “A lot of people are concerned that the footprint of private contractors will grow in terms of operating and building more of these facilities,” Eisen explains.

The Most Controversial DNA Test You've Never Heard Of --A vote on whether to approve a proposal that would allow familial DNA searching in certain criminal cases has been delayed by New York state’s Forensic Science Committee. The controversial proposal has been sent back to a special subcommittee to “tighten up the language.”If approved, the new policy would allow police to investigate family members of New Yorkers whose DNA closely matches DNA found at crime scenes.Because familial searching has gotten little to no coverage in mainstream media, many people have no idea what it is - or that it’s already being used in California, Colorado, Florida, Michigan, Texas, Utah, Virginia, Wisconsin, Wyoming, and Ohio. The FBI describes the investigatory process as follows:“Familial searching is an additional search of a law enforcement DNA database conducted after a routine search has been completed and no profile matches are identified during the process. Unlike a routine database search which may spontaneously yield partial match profiles, familial searching is a deliberate search of a DNA database conducted for the intended purpose of potentially identifying close biological relatives to the unknown forensic profile obtained from crime scene evidence. Familial searching is based on the concept that first-order relatives, such as siblings or parent/child relationships, will have more genetic data in common than unrelated individuals. Practically speaking, familial searching would only be performed if the comparison of the forensic DNA profile with the known offender/arrestee DNA profiles has not identified any matches to any of the offenders/arrestees.”Though familial searching is already being used in ten states and has led to the arrests of numerous violent criminals, it is not always accurate.“Anyone who knows the science understands that there’s a high rate of false positives,” Erin Murphy, a New York University law professor and the author of Inside the Cell: The Dark Side of Forensic DNA told Wired magazine.

Who Is Behind the Assault on Public Schools? - Over the past three decades, public schools have been the target of a systematic assault and takeover by corporations and private foundations. The endeavor is called “school reform” by its advocates, while critics call it corporate school reform. Finnish educator Pasi Sahlberg has given it the vivid acronym GERM—the global education reform movement. Its basic features are familiar: high-stakes testing; standardized curricula; privatization; and deskilled, high-turnover faculty. In the United States, public schools have become increasingly segregated, destabilized, and defunded, with the hardest hit in low-income communities of color.  Nevertheless, while the political conflicts and social ramifications of the school reform phenomenon are well known, basic questions about the movement remain underexamined. Who really leads it? What are their aims and motives? After briefly taking up the statements of the reformers themselves, I will turn to the views of their progressive opponents, and offer a critique of three influential interpretations of the school reform movement. Finally, I will present my own theory about this movement, its drivers, and its underlying aims. The school reform movement presents itself as a collaboration among grassroots groups, business leaders, and private donors, united in an effort to improve education, foster a better economy, and help poor children escape poverty. Their goal is to “prepare America’s children for success in college and careers” (Barack Obama), “give low-income and minority students a world-class education” (Bill Gates), and help Americans “maintain our standard of living” (Eli Broad).1 For these reformers, high-stakes testing and teacher “accountability” are the defining metrics of success. George Shultz and Eric Hanushek of the conservative Hoover Institution at Stanford claim that if U.S. students raised their scores on the major international mathematics test by forty points over the next twenty years, the country could expect $70 trillion rise in GDP over the next eighty years. “That’s equivalent to an average 20% boost in income for every U.S. worker each year over his or her entire career.”2 A large body of research, however, challenges the merits of high-stakes testing and other elements of the corporate school reform package.3 It is also at least questionable whether the reformers really believe their own statements.

13 Questions That Expose Charter School Falsehoods -- The Network for Public Education is challenging the Trump/DeVos anti-public school agenda. According to NPE, “DeVos and her allies have worked for decades pushing charters, vouchers and neo-vouchers such as education tax credits. DeVos even supports virtual charter schools that have a horrific track record when it comes to student success.”This campaign picks up urgency as Arizona just passed legislation providing its entire student population with vouchers to attend private, for-profit, and religious schools. The law is modeled on Trump/DeVos proposals.  The public is often confused by the Trump/DeVos assault on public schools because they frame it as promoting “choice.” In response, The Network for Public Education prepared a thirteen-point question/answer toolkit to expose the lies and distortions of charter school, voucher, and tax credit advocates. The full toolkit is available online. This report excerpts key items from the toolkit.

States are moving to cut college costs by introducing open-source textbooks -- Every cost associated with higher learning has steadily increased over the past decade, but none more so than college textbooks. While tuition increased by 63% between 2006 and 2016, and housing costs increased by 50%, the cost of textbooks went up by 88%, according to data from the US Bureau of Labor Statistics.  Initiatives in Maryland and New York are attempting to curb those costs by adopting open-source, copyright-free textbooks. The University System of Maryland recently announced that it would be giving out 21 “mini-grants” to seven community colleges and five public four-year schools. The grants will go to “faculty who are adopting, adapting or scaling the use of OER [open educational resources] in Fall 2017 through high-enrollment courses where quality OER exists,” according to the announcement. Open educational resources are materials like electronic textbooks that typically use licenses that are far less restrictive than traditional, copyrighted textbooks. That means they can be limitlessly duplicated and distributed to students, and even revised to suit the needs of a given class. The Massachusetts Institute of Technology was a pioneer of this approach when it began making its course materials open to the public in 2001, using Creative Commons licenses and borrowing the ethos of open source programming.Although the mini-grants are only $500 to $2,500 each, the effort in Maryland is expected to save 8,000 students up to $1.3 million in the Fall 2017 semester alone. That’s a significant amount, but just a drop in the bucket of what students in the state spend on textbooks each year.“Since 1978, the cost of textbooks has risen 812%, outpacing even the cost of medical services and new housing,” the announcement says. “Nationally, students spend an average of $1,200 a year on textbooks. Within Maryland alone, 2-year and 4-year students spend over $223 million in textbooks.” Another big investment in open educational resources came in the budget passed in New York state last week. The news was somewhat buried by the fact that the budget includes free tuition for New York students whose families make up to $125,000 a year, but the state will also be putting $8 million into open source materials over the next fiscal year.

 Pomona College Students Say There’s No Such Thing as Truth, ‘Truth’ Is a Tool of White Supremacy -  Reason - A coalition of marginalized students at Pomona College are demanding that the president of Pomona (one of the Claremont Colleges) take disciplinary action against student-journalists who write for The Claremont Independent, a conservative paper. That's not all. The students' letter to the president also stridently rejects the very mission of a liberal arts college. The search for truth is little more than an attempt to silence marginalized people, in the view of these students. Accordingly, the campus administration must revise its commitment to free speech such that no one who espouses hateful views—as defined, in incredibly broad terms, by the offended parties themselves—is allowed to speak at Claremont."Free speech, a right many freedom movements have fought for, has recently become a tool appropriated by hegemonic institutions," the students wrote in their letter. "It has not just empowered students from marginalized backgrounds to voice their qualms and criticize aspects of the institution, but it has given those who seek to perpetuate systems of domination a platform to project their bigotry."The students refer specifically to Manhattan Institute scholar Heather MacDonald's recent visit to campus. MacDonald, a conservative critic of the Black Lives Matter movement, was prevented from speaking by student protesters. The students surrounded the doors of the building and denied entry to other students who wanted to hear from her. Multiple news outlets, including Reason and The Claremont Independent, wrote critically about the students involved in the incident, and Claremont President Chiram Hodash expressed dismay about the censorship. The students' letter demands that MacDonald—falsely labelled a "white supremacist"—never be allowed back on campus. In fact, all hate speech should be proactively banned from Claremont.

Two more Illinois universities at risk of junk ratings from Moody's (Reuters) - Illinois' record-breaking stretch without a complete budget could push the credit ratings of two more state universities into the junk level. Moody's Investors Service on Monday said it placed seven state universities under review for potential downgrades affecting $2.2 billion of debt because Illinois has failed to provide them with full operating funding. Four universities, Northeastern Illinois, Northern Illinois, Governors State, and Eastern Illinois, already have some or all of their debt rated junk. Multi-notch downgrades would push ratings for Illinois State and Southern Illinois universities into junk. "We will review contingency plans and other expense actions initiated to cope with the shortfall in state operating appropriations. Also included in the reviews are budgeted (fiscal) 2018 operations and assumptions," the credit rating agency said in a statement. Illinois is limping toward the June 30 end of a second-straight fiscal year without a complete budget due to a stalemate between its Republican governor and Democrats who control the legislature. Moody's said the potential exists for multi-notch downgrades depending on a university's liquidity and ongoing ability to adjust to the lack of state funding. The state's biggest system, the University of Illinois, has so far escaped a downgrade of its Aa3 Moody's rating since the budget impasse began in 2015. Moody's last review resulted in downgrades for six of the universities in June 2016. Only about four public universities in three other states and Puerto Rico are currently rated junk by Moody's.

Appeals Court Rebukes CFPB, Rejects Probe Into For-Profit College Accrediting Group - A federal appeals court rejected the Consumer Financial Protection Bureau’s investigative fishing trip into the records of a leading accrediting agency for for-profit colleges, saying the bureau failed to explain what sort of illegal conduct it was looking into.The decision by the D.C. Circuit Court of Appeals in Washington is a rebuke to the CFPB and its director Richard Cordray, who demanded the Accrediting Council for Independent Colleges and Schools turn over documents and make an executive available to testify about the group’s possible involvement in “unlawful acts and practices in connection with accrediting for-profit colleges.” The Obama administration mounted fierce legal attacks on for-profit colleges, accusing them of peddling shoddy degrees financed by federal student loans and forcing Corinthian Colleges and ITT Technical Institute to close their doors.This appears to be the first time in decades that a federal appeals court rejected an agency's civil investigative demand or administrative subpoena, said Allyson Baker, a partner in Venable's Washington office who represented ACICS.  “They didn’t think the CFPB met the requirements of the statute, which requires notice,” said Baker, herself a former CFPB enforcement attorney.ACICS refused to comply with the civil investigative demand in 2015, sending the question to a federal district court. That court last year said the CFPB, which is charged with enforcing consumer financial laws, didn’t have authority to question a school accrediting agency. The CFPB “plowed  head long into fields not clearly ceded to it by Congress,” the district court said.The D.C. Circuit affirmed today, in an opinion by Judge David Sentelle, on narrower grounds. The agency “wholly fails” to state what sort of unlawful conduct it is investigating, the appeals court said. The CFPB never explained what “unlawful acts and practices” it suspected and merely repeated the same language in court filings. Without specifics, the court said it can’t determine whether the demands in the CID are relevant to the investigation. If the court were to approve the CFPB’s request, the judge wrote, “we would effectively write out of the statute all of the notice requirements that Congress put in.”

In Which States Do Most Millennials Live With Their Parents? -- Just a few short decades ago America's youth was highly encouraged by eager parents to become self-sufficient by the ripe old age of 18.  Today, the mere suggestion of such a thing could land unsuspecting parents in prison for 'triggering' their offspring with malicious 'hate speech.' And, as a new study from the Census Bureau points out today, the changing dynamics are readily apparent in the latest household survey data which shows that more millennials are living at home with mom today than any other living arrangement.  Here are some of the key takeaways:

  • More young people today live in their parents’ home than in any other arrangement: 1 in 3 young people, or about 24 million 18- to 34-year-olds, lived in their parents’ home in 2015.
  • In 2005, the majority of young adults lived independently in their own household, which was the predominant living arrangement in 35 states. A decade later, by 2015, the number of states where the majority of young people lived independently fell to just six.
  • Most of today’s Americans believe that educational and economic accomplishments are extremely important milestones of adulthood. In contrast, marriage and parenthood rank low: over half of Americans believe that marrying and having children are not very important in order to become an adult.
  • Young people are delaying marriage, but most still eventually tie the knot. In the 1970s, 8 in 10 people married by the time they turned 30. Today, not until the age of 45 have 8 in 10 people married.
  • More young men are falling to the bottom of the income ladder. In 1975, only 25 percent of men, aged 25 to 34, had incomes of less than $30,000 per year. By 2016, that share rose to 41 percent of young men. (Incomes for both years are in 2015 dollars.)
  • Between 1975 and 2016, the share of young women who were homemakers fell from 43 percent to 14 percent of all women aged 25 to 34.
  • Of young people living in their parents’ home, 1 in 4 are idle, that is they neither go to school nor work. This figure represents about 2.2 million 25- to 34-year-olds.

To our complete 'shock', parents living in liberal states like NJ, CT, NY and CA were most likely to provide 'safe spaces' for their unemployed millennials to play video games.  In fact, 7 out of the top 10 states where the most millennials live at home were liberal...and 11 out of the top 15. And while the number of millennials living at home with mom continues to surge, 1 out of 4 of them are neither enrolled in school or working.

 Criticism of Private Equity Fees Going Mainstream: Pew and CalPERS Versus Yale and Industry Stalwarts -- Yves Smith - For the last few years, we’ve been writing about the many ways in which private equity does not live up to its billing. One beef has been that fees are excessive given that private equity has not outperformed over the last decade when you factor in its risks. Nosebleed prices for deals and even more money pouring into the strategy as desperate underfunded pensions hope private equity will salvage them means this inadequate performance isn’t likely to change anytime soon, if ever. Oxford professor Ludovic Phallipou has estimated total private equity fees and costs at 7% per year. No one in the industry has roused himself to object to his estimate, which suggests if anything it might be low. Second is even with private equity managers charging fees that would be considered extortionate in any other type of asset management, many, including some of the very biggest fund managers, have been caught out regularly levying unauthorized fees and costs. That is called embezzlement yet oddly no one has seen fit to call in the cops. Last week, Pew released a study, State Public Pension Funds Increase Use of Complex Investments, and findings weren’t at all positive about private equity. The reason Pew’s take matters is that Pew has the image of being independent, but if anything, it has a small c conservative orientation. So for an organization which no one would depict as anti-business or liberal to voice doubts about private equity is a significant development. 1The Pew study covers some private equity topics we’ve covered regularly, such as: high fees relative to the risks, lack of transparency (which is an unduly polite way of saying investors don’t even know how much in total fees they are paying) and lack of consistent accounting (note that some pension funds report only returns gross of fees while others report net or both).2 The report also has some important findings about overall public pension fund results and behavior: ….only two of the funds examined exceeding investment return targets over the past 10 years….

The Detroit Of Tomorrow? -- Say the words “big city pension problem,” and what are the first images that come to mind?More than likely, it’s the icons of postindustrial America: boarded-up homes and empty factory buildings.They make convenient mental shortcuts when figuring out where the money disappeared in places such as Detroit, which sought bankruptcy protection a handful of years ago as it tried to rejigger its pension obligations.“Well, of course!” we tell ourselves. “It makes sense when companies flee and a city’s tax base gets hollowed out.”But when even the richest of American cities start to struggle with this sort of thing … it shows you we’re approaching a crisis point.After all, you’d likely never guess that a city such as San Francisco, the very heart of America’s 21st-century technology boom, would have such a problem.But according to the city’s most recent estimate, it needs more than twice as much money as it thought — $5.5 billion — in order to fill the gap between its pension assets and the retirement benefits promised to its municipal workers.The problem is the same as in the rustiest of any Rust Belt city — lackluster investment returns and retirees living longer lives. As a result, the city is on the hook for a lot more in “contributions” — direct payments to the fund. Add it all up, and, as Bloomberg noted, it means San Francisco will need to raise its annual contributions to the pension fund by more than 30% in the next five years.

 Don't count on that government pension - Millions of Americans are expecting to receive a pension from the city or state that employs them. Many will be in for a terrible surprise, according to the nonprofit organization Truth in Accounting.It surveyed 237 municipal pension plans across the country, using newly required reporting data about pension underfunding. Although it has taken decades for many of these pension funds to get into such bad shape, only now are the details being revealed, says Sheila Weinberg, president of Truth in Accounting and a CPA who has dedicated her life to requiring full and useful disclosure of federal, state and local debt obligations. (I am a board member of Truth in Accounting.) This newly collected data should be frightening to those counting on a state or municipal pension. The latest numbers are available at There you can search by state to find both state and local pension statistics. The report for each city and state includes the amount of pension plan assets, the amount of plan promises, and the dollar amount and percentage of pension underfunding. Every plan also receives a letter grade, from A to F. Of the 237 cities studied, 29 received an "F" grade, reflecting a funding ratio of less than 35 percent. Those plans cover many thousands of workers who cannot possibly be paid their full promised pensions, absent a huge tax increase (which would also come out of their pockets as workers).

Pence’s Medicaid experiment confounds expectations on the left and right -  When former Indiana Gov. Mike Pence embraced Obamacare’s Medicaid expansion with conservative twists — such as requiring enrollees to contribute to their care — critics lamented poor people would be locked out while backers cheered the program’s focus on personal responsibility.Neither side’s expectations were quite borne out. Two years later, as the program emerges as a national model thanks to Pence’s role in the Trump administration, the reality on the ground shows what happens when political philosophy collides with the practical challenges of providing health care to tens of thousands of people, many of them in crisis.Advocates for the poor in Indiana argue that liberal fears of depressed enrollment were overblown. More than 400,000 Hoosiers are enrolled, despite state requirements that low-income residents make nominal monthly contributions to their care or face stiff penalties.Likewise, Republicans’ contention that the system would promote personal responsibility and prod beneficiaries to ration their care and make better decisions about what treatments to seek also turned out to be overly optimistic.By all accounts, the expansion — known as the Healthy Indiana Plan 2.0 — has made a difference. Health officials in Scott County, Ind., a poverty-stricken community about 30 miles from Louisville, Ky., paint a picture of a program that’s bolstered a patchy social safety net — especially during a major HIV outbreak triggered by the opioid epidemic — without bankrupting the Hoosier State or punishing enrollees.To be sure, the program isn’t perfect, they say. But they overwhelmingly give more positive reviews than not.

 Retired miners lament Trump’s silence on imperiled health plan — Donald J. Trump made coal miners a central metaphor of his presidential campaign, promising to “put our miners back to work” and look after their interests in a way that the Obama administration did not. Now, three months into his presidency, comes a test of that promise. Unless Congress intervenes by late April, government-funded health benefits will abruptly lapse for more than 20,000 retired miners, concentrated in Trump states that include Pennsylvania, Ohio and West Virginia. Many of the miners have serious health problems arising from their years in the mines. In mining areas like Uniontown, Pa., and surrounding Fayette and Greene Counties, which Mr. Trump carried 2 to 1, it is an upsetting and potentially costly prospect. “It’s just a terrible, terrible feeling,” said one of the retirees, David VanSickle, who spent four decades at work in the mines. “I think about that 25 times a day.” The president has offered no public comment on the issue, even as he has rolled back regulations on mine operators, an omission that has not escaped the notice of Mr. VanSickle and other retired miners. “To me, that was kind of a promise he did make to us,” Mr. VanSickle said about Mr. Trump, whom he supported last fall. “He promised to help miners, not just mining companies.” Responsibility for the retirees’ health plans has increasingly shifted to the federal government in recent years, as struggling coal companies have shed their liabilities in bankruptcy court. Congress voted last fall to finance benefits for a large group of retirees for several months, but House and Senate Republican leaders have yet to agree on a longer-term solution.

Study: Second Opinion from Doctor Results in Different Diagnosis 88% of Time -- Via: Mayo Clinic: Many patients come to Mayo Clinic for a second opinion or diagnosis confirmation before treatment for a complex condition. In a new study, Mayo Clinic reports that as many as 88 percent of those patients go home with a new or refined diagnosis — changing their care plan and potentially their lives. Conversely, only 12 percent receive confirmation that the original diagnosis was complete and correct.  These findings were published online in the Journal of Evaluation in Clinical Practice. The research team was led by James Naessens, Sc.D., a health care policy researcher at Mayo Clinic.

Children as young as 13 attending 'smartphone rehab' as concerns grow over screen time | The Independent: Children refusing to put down their phones is a common flashpoint in many homes, with a third of British children aged 12 to 15 admitting they do not have a good balance between screen time and other activities. But in the US, the problem has become so severe for some families that children as young as 13 are being treated for digital technology addiction. One ‘smartphone rehab’ centre near Seattle has started offering residential “intensive recovery programs” for teenagers who have trouble controlling their use of electronic devices. The Restart Life Centre says parents have been asking it to offer courses of treatment to their children for more than eight years.  It is important for families to “talk about tech and how much is good, how much is ok and when does it start to interfere with family relationships, with responsibilities, with sleep, and many other things,“  A recent survey of 1,500 parents found that, on average, UK children own their first mobile phone by the age of seven, followed by a tablet aged eight and a smartphone aged 10. And a report published last year by Ofcom found that 64 per cent of children aged 12 to 15 and 65 per cent of parents of children in that age group said the teenagers’ “screen time” was under control. 'Toilet paper for smartphones' installed in airport lavatories Richard Graham is a consultant psychiatrist at the private London mental health hospital the Nightingale Hospital, where he runs a specialist technology addiction clinic. He told Metro what parents should look out for to know if their child is at risk of smartphone addiction: "Is their device use disturbing activities?" he said. “Is it stopping them from going to school, or engaging in other activities such as having dinner with the family? When someone seems absolutely not able to stop, they're losing control”.

Oglala Lakota County, SD -- Here is a map of male life expectancy at birth by US county. Your eye is drawn to the striking red patch on the border of South Dakota and Nebraska. It has a history. That’s Oglala Lakota County, which falls entirely within the Pine Ridge Reservation of the Oglala Lakota nation. This is the poorest county in America, with $8,768 per capita income. Male infants there have a life expectancy of 65.2 years, compared to 76.5 for the US as a whole. This is less than the (male and female) life expectancy in Laos and Yemen. Oglala Lakota County experienced 1945 deaths per 100,000 population in 2013 (compared to 927 / 100,000 for the US as a whole). The people of Oglala Lakota County are, clearly, exposed to severely adverse social determinants of health. But this epidemiological language is too impersonal: the social determinants include a history of oppression and murder. The Wounded Knee Massacre of Lakotas by the US 7th Cavalry occurred here in 1890. Many communities have terrible histories. Oglala Lakota County is only the second worst country in the US for male life expectancy. The worst (3142 out of 3142) is McDowell County, West Virginia, where male infants are expected to live only 63.9 years. This is slightly worse than the life expectancy at birth in the Sudan. McDowell County was once a leading coal-producing county, but the industry has since collapsed. In 2015, the county had the highest rate of opioid deaths in the US (141 deaths per 100,000 people, roughly 10 times the rate for the US as a whole).

Podcast: Anne Case on mortality and morbidity in the 21st Century -- This week’s episode is a long, absorbing conversation with economist Anne Case, author of a blockbuster trilogy of papers on mortality and morbidity in the US. (The papers were co-authored by Angus Deaton, a previous Alphachat guest.)The first paper in the series was published in the summer of 2015, the second paper a few months after that, and the third paper was released just last month by Brookings.This research is best known for the startling discovery that middle-age mortality for American non-Hispanic whites had started climbing at the end of the 1990s after decades of progress, among other pessimistic trends. But the work goes much deeper than that, with Case and Deaton offering a tentative theory of “cumulative disadvantage” to explain their disturbing findings. The authors also investigate why these trends are affecting America but not European countries with similar socioeconomic characteristics.And finally, the work did lead to methodological disputes with other researchers and commentators, some more substantive than others. Case and I discuss all this and much more, including her background in health economics, the benefits and disadvantages of arguing with bloggers, and her papers about the lasting effects of child circumstances, the usefulness of height as a variable in her work, and the South African economy.

Nonprofit Linked To Pharma Lobby Works To Block Drug Imports - A nonprofit organization that has orchestrated a wide-reaching campaign against foreign drug imports has deep ties to the Pharmaceutical Research and Manufacturers of America, or PhRMA, the powerful lobbying group that includes Eli Lilly, Pfizer and Bayer.The nonprofit, called the Partnership for Safe Medicines, has recently emerged as a leading voice against Senate bills that would allow drugs to be imported from Canada.Both the lobbying group and the nonprofit partnership have gone to great lengths to show that drugmakers are not driving what they describe as a grass-roots effort to fight imports, including an expensive advertising blitz and an event last week that featured high-profile former FBI officials and a former Food and Drug Administration commissioner.However, a Kaiser Health News analysis of groups involved in the partnership shows more than one-third have received PhRMA funding or are local chapters of groups that have received PhRMA funding, according to PhRMA tax disclosures from 2013 to 2015.Forty-seven of the organizations listed in the ads appear to be advocacy organizations that received no money from PhRMA in those years. A PhRMA senior vice president, Scott LaGanga, previously led the Partnership for Safe Medicines for 10 years. At PhRMA, LaGanga was responsible for the lobbying group's alliances with patient advocacy groups, and he was simultaneously listed as the executive director of the Partnership for Safe Medicines on each of that group's annual tax filings since 2007, the earliest year for which they are available.

Why Cancer Drug Prices Keep Rising in the U.S. -- Cancer drugs cost more in the U.S. than anywhere in the world. But little research has been done comparing drug prices internationally beyond their initial cost, Savage said, so his team took on this task, examining how prices inflate after being introduced here and in the U.K.  The prices for the top 10 cancer drugs are 42 percent higher in the U.S. than they are in the United Kingdom, according to an analysis published by Savage and others in February in the Journal of Oncology Practice. One drug, Pegfilgrastim (Neulasta), a medication that helps the body make white blood cells, which defend against infection and disease after cancer treatments, costs more than four times as much in the United States. And prices for all the drugs described in the study continue to rise in the U.S., at an average of 8.8 percent each year, while in the U.K. it was 0.24 percent—“six drugs had unchanged prices, two had decreased prices, and two had modest price increases.”  No one benefits from this upward spiral except drug companies.This means the expensive drugs may be out of reach for American patients who have mediocre insurance, or who don’t have it at all. I have interviewed people who’ve chosen to stop their cancer treatment rather than pay for drugs that will end up leaving their families destitute. In the U.K., though, once the price for a drug has been set, it usually remains static, Savage said. Prices usually go down after introduction, and can only be increased with government consent, or in light of new evidence that the drug is somehow more effective than originally thought, or that the drug has a new application, say, for treating a different disease, or a different stage of disease, or for helping more patients than originally envisioned.   “Each one of these drugs is expensive. Many are used in combination with another expensive drug, or after another expensive drug,” Savage said, “though none of them cure anybody. Advances in care are coming more rapidly than the ability of the countries and the patients to pay for them.”

Pharmaceutical giant ‘plotted to destroy cancer drugs to drive prices up 4,000%’ -- Leaked internal emails appear to show employees at one of the world’s leading pharmaceutical companies calling for “celebration” over price hikes of cancer drugs, an investigation has revealed.Staff at Aspen Pharmacare reportedly plotted to destroy stocks of life-saving medicines during a price dispute with the Spanish health service in 2014.After purchasing five different cancer drugs from British firm GlaxoSmithKline (GSK), the company tried to sell the medicines in Europe for up to 40 times their previous price, reported The Times.In 2013, the price of one pack of a generic chemotherapy drug called busulfan, used to treat leukaemia, rose from £5.20 to £65.22 in England and Wales, according to the newspaper.The other four drugs, including Leukeran, also used by leukaemia patients, and melphalan (trade name Alkeran), for skin and ovarian cancers, also became up to four times more expensive.Price rises for generic cancer drugs, such as those acquired by Aspen, cost the NHS in England around £380m a year for prescriptions dispensed outside hospitals, the European Cancer Congress has estimated.In a confidential email published by The Times, an Aspen employee appeared to write: “We’ve signed new reimbursement and price agreement successfully: price increases are basically on line with European target prices (Leukeran, a bit higher!)... Let’s celebrate!”When bargaining over drug prices in Spain, the pharmaceutical giant is said to have threatened to stop selling the cancer treatments unless the health minister agreed to price rises of up to 4,000 per cent, reported Spanish online newspaper El Confidencial Digital at the time.Now another leaked email appears to reveal that staff at Aspen discussed destroying their supplies of the drug in the row.

Penicillin changes the behaviour of young mice  -- The Economist -- THE symbiosis between human beings and the bacteria dwelling in their guts is a delicate thing. When it works well, both sides benefit. The bugs get a comfy home. The hosts get help with their digestion, making more food available than otherwise would be. If relations are upset, though, bad consequences may flow. Both obesity and malnutrition can be exacerbated by the wrong gut bacteria. Illnesses such as asthma and eczema are linked to a lack of certain bugs from an infant’s intestines. And there is evidence, from experiments on mice, that an absence of gut flora affects the development of the brain. Such absence weakens the blood-brain barrier, which normally helps to keep foreign material out of that organ. It also seems to make animals less sociable than would otherwise be expected. When Dr Leclercq and her colleagues killed and examined their animals shortly after the behavioural tests, they expected to see permeable blood-brain barriers in the mice exposed to penicillin. But they did not. They actually saw the reverse: the blood-brain barriers of mice exposed solely to penicillin were far less permeable than those of the other two groups. What is going on—and, in particular, what relationship (if any) exists between the effects of gut flora on the blood-brain barrier and on behaviour—remains to be seen. But Dr Leclercq and her colleagues have demonstrated that medically relevant doses of penicillin, even when administered via the mother rather than directly, can have palpable effects on young mice. Whether the same applies to young people, just before or after birth, is surely a matter worth investigating.

The Economics of Horseshoe Crab Blood - When global demand for a natural product that reproduces only slowly skyrockets, it can be an extinction or near-extinction event.  Caren Chesler reports an in-progress story about "The Blood of the Horseshoe Crab" . The subtitle of the story reads: "Horseshoe crab blood is an irreplaceable medical marvel—and so biomedical companies are bleeding 500,000 every year. Can this creature that's been around since the dinosaurs be saved?" .   Here's a sampling of Chesler's argument, but the article itself is very much worth reading: The cost of crab blood has been quoted as high as $14,000 per quart. Their distinctive blue blood is used to detect dangerous Gram-negative bacteria such as E. coli in injectable drugs such as insulin, implantable medical devices such as knee replacements, and hospital instruments such as scalpels and IVs. Components of this crab blood have a unique and invaluable talent for finding infection, and that has driven up an insatiable demand. ... There are currently no quotas on how many crabs one can bleed because biomedical laboratories drain only a third of the crab's blood, then put them back into the water, alive. But no one really knows what happens to the crabs once they're slipped back into the sea. Do they survive? Are they ever the same? ...  While industry experts say the $14,000-a-quart estimate is high—the figure is more likely the price tag for the coveted amoebocytes that are extracted from the blood—it is testament to how precious LAL [Limulus Amoebocyte Lysatehas] become. To make enough of it for LAL testing, the biomedical industry now bleeds about 500,000 crabs a year. Global pharmaceutical markets are expected to grow as much as 8 percent over the next year. ...  The International Union for Conservation of Nature decided last year that the American horseshoe crab is "vulnerable" to extinction ... "Vulnerable" is just one notch below "endangered,"   The number of crabs harvested by the U.S. biomedical industry jumped from an estimated 200,000 to 250,000 in the 1990s to more than 610,000 crabs in 2012, according to the ASMFC's latest stock assessment report. ...  The same story plays out across the Pacific Ocean. The horseshoe crab native to Asia, called Tachypleus, produces a different but equally useful version of LAL called Tachypleus Amoebocyte Lysate, or TAL. But horseshoe crabs are already disappearing from beaches in China, Japan, Singapore, Taiwan, and Hong Kong, places where they once thrived. ...  If the species were to dwindle, it wouldn't just be an issue for conservationists but for everyone, as LAL is currently the only substance able to detect gamma-negative bacteria in the health field. As one conservationist put it, "Every man, woman, and child and domestic animal on this planet that uses medical services is connected to the horseshoe crab."

Poverty, open sewers and parasites: ‘America’s dirty shame’ - - Lowndes County in Alabama is one of the poorest places in the US. Some residents cannot afford waste water sanitation facilities, and so must allow the sewage from their mobile homes to flow freely into their backyards. Human waste lies uncovered in soil. Children play nearby. This is “America’s dirty shame”, according to Catherine Flowers, a local community activist and director of the Alabama Center for Rural Enterprise.  Concerned by the health implications, Flowers asked scientists at the National School of Tropical Medicine in Houston, Texas, to conduct experiments in the area. The research will soon be submitted to the American Journal of Tropical Medicine and Hygiene. “They tested the soil and water, and took blood and faecal samples. They found at least five tropical parasites,” she says. The poor living conditions are exacerbated by a climate that combines increasingly high temperatures with heavy rainfall, creating a good environment for parasites to breed. “It is the perfect intersection of poverty and climate change,” she adds. Flowers worries that the problems will only become worse if President Donald Trump cuts the budget of the US Environmental Protection Agency as planned by 31 per cent. He has already ordered a review of clean water rules introduced under Barack Obama and plans to abolish entirely the Fogarty International Center, the global research arm of the National Institutes of Health.  Alabama is one of the five Gulf coast states that shoulder the burden of neglected tropical diseases in the US. Some scientists say these are an under-appreciated problem in the world’s largest economy. Among the parasites found in Lowndes County were helminths — intestinal worms that infect humans and are transmitted through contaminated soil, such as hookworm, whipworm and ascaris.  Dr Peter Hotez, dean of the National School of Tropical Medicine, warns against complacency and estimates as many as 12m Americans are living with a poverty-related neglected tropical disease. “Most of the world’s neglected diseases are in the world’s G20 countries,” he says. “The concept of global health needs to give way to a new paradigm: on the new map, Texas and the Gulf coast would be lit up as a hotspot.”

A Brain-Invading Parasite Is Believed To Be Spreading Because Of Climate Change -- Health officials in Hawaii have been warning residents not to touch snails or slugs with their bare hands because of an increase in cases of people coming into contact with a rare parasitic infection known as a rat lungworm. Experts are blaming its sudden spread across the United States on climate change and globalisation. In the last two decades, there have only been two documented cases of rat lungworm infections in Hawaii. But in the past three months, six more cases have occurred in rapid succession. Other states where it has recently popped up include California, Alabama, Louisiana and Florida. Pretty much everything about this disease is nasty. Rat lungworm is a parasitic nematode (Angiostrongylus cantonensis) that begins its life as an infection in rat's lungs, blood, and brains. From there, the rats defecate worm larvae that are spread to other creatures like snails, slugs and freshwater shrimp. Humans might eat one of these infected hosts or they might eat produce that has had the worm transferred to it by a host.  Next thing you know, your brain is being invaded and it doesn't sound good at all. Once rat lungworm disease moves into the brain it can cause meningitis and its symptoms include tremors, pain, and inflammation. It is often fatal.

Malicious disease spreads to Europe -  This story may start with a bug bite somewhere in rural Bolivia. In a ramshackle home with cracked walls that offer shelter to a bug called the 'kissing bug.' "Kissing bug," because it likes to bite its victim's face at night. The bite itself wouldn't be so bad, if it wasn't for the fact that the bug defecates or urinates after biting. Caught unaware, the sleeping victim will itch and scratch, rubbing a parasite into its body that transmits Chagas disease. In most cases, the infection will go unnoticed. "Some 90 percent of those infected with Chagas disease show no symptoms, " says Doctor Jaime Altcheh, a pediatrician who heads up the department of parasitology and Chagas disease at a major children's hospital in the Argentinian capital of Buenos Aires. It may be 20 or 30 years after that initial bug bite that a person may start having serious heart problems, or digestive problems. By then, the disease has become very difficult to cure. What's more, a woman is very likely to have passed the infection on to her children during pregnancy or birth, or a blood donor may have unknowingly passed on the infection. With some 1.5 million people infected - according to data compiled by the World Health Organization (WHO)- Argentina has the most cases of Chagas disease. But it is Bolivia that has the highest number of cases relative to the size of its population.Chagas is endemic in 21 countries on the Latin American continent. The overwhelming majority of people living with Chagas disease live in Latin America. At least six million people are infected with Chagas disease according to WHO. But the disease has long spread to countries where the "kissing bug" doesn't exist. The WHO estimates that around 100,000 people in Europe are infected with Chagas disease.

2 Billion People Drink Contaminated Water, Says WHO --  The World Health Organization urges cleaner sanitation practices after new data reveals that at least two billion people do not have access to clean water . The drinking water that is causing nearly 500,000 deaths a year is contaminated with feces, causing cholera, dysentery, intestinal worms, schistosomiasis and trachoma, typhoid and polio. The most serious threats are in impoverished and developing areas. Although there has been a push for safe drinking water by the UN General Assembly, which led to a 4.9 percent increase in budgets worldwide, most countries say it is not enough. The report found that 80 percent of countries are not adequately meeting the UN standards. In a statement WHO said when people can't provide the most basic necessities, like repairing infrastructure, water safety and reliability is sacrificed first. "This is a challenge we have the ability to solve," Guy Ryder, chair of UN-Water and director-general of the International Labour Organization, said. "Increased investments in water and sanitation can yield substantial benefits for human health and development, generate employment and make sure that we leave no one behind."  This is a heavy burden on local communities, but as Ryder said, it is possible. To really meet UN standards, the world budget for drinking water would have to triple, that's $114 billion annually, to provide underserved areas. Governments can also step up their game by increasing and sustaining WASH (water, sanitation and hygiene) access for vulnerable groups, especially in rural areas.

8 Million Californians Have Been Drinking Polluted Water For Years – California is expected to set a strict state-level maximum contaminant level for a probable human carcinogen called 1,2,3-trichloropropane (TCP) next week ― 28 years after the state’s Water Resources Control Board first detected the chemical in its drinking water system. If the board passes this provision, utilities would be required to test for TCP and treat it out of the water if levels exceed 5 parts per trillion.TCP was initially used as an industrial solvent, paint remover and degreasing agent, according to the Environmental Protection Agency. It’s also a byproduct of two pesticides that were widely used in agriculture in the 1980s.Both of those pesticides, Dow’s Telone and Shell’s D-D, have long since been discontinued or reformulated to remove the TCP, but environmental advocacy groups like the Environmental Working Group say the damage has already been done.TCP has been detected in the water supplies of 94 different water systems serving 8 million Californians, according to an EWG report released this week citing EPA monitoring results. “This is a contaminant that, because it does not adhere to soil, very readily contaminates and migrates into groundwater,” Bill Walker, managing editor at the EWG and co-author of the report, told The Huffington Post. “It’s remarkably persistent. Once it’s in the water, it stays there for centuries.”

Researchers find glyphosate in pregnant women, worry about impact on infants -- A team of scientists this week released early results of an ongoing study spotlighting concerns about the rising use of pesticides and reproductive risks to women and children. The researchers tested and tracked, over a period of two years, the presence of the common herbicide glyphosate in the urine of 69 expectant mothers in Indiana. The team – led by Paul Winchester, medical director of the neonatal intensive care unit at the Franciscan St. Francis Health System and professor of clinical pediatrics at Riley Hospital for Children in Indianapolis, Ind. – found glyphosate residues in 90 percent of the women, and high levels of those residues appeared to correlate with shortened pregnancies and below-average birth weights adjusted for age. The findings alarmed the researchers because such babies are at increased risk of diabetes, heart disease, high blood pressure, and lower cognitive abilities. “Gestational age maximizes the size of your brain at birth, and any shortening is essentially a reduction of IQ points,” Winchester said in an interview with FERN’s Ag Insider. “It has not just health, but lifetime achievement implications.” This is the first time that anyone has demonstrated glyphosate is present in pregnant women in the U.S., according to Winchester. However, the results were limited by a small sample size. He and his colleagues plan to submit their research to a peer-reviewed journal within the month and they hope to expand the study later this year. “The fact that we were able to find adverse effects on the small number of people we measured would imply a larger study is needed immediately to find out if this is prevalent everywhere,” Winchester says. “This is a critical piece of information that I think people should be concerned about.”

GMOs, Corporate Science, and the Culture of the Lie (The Cornell/Monsanto Alliance) -- The so-called Cornell Alliance for Science has nothing to do with science but rather is a political front funded by Bill Gates and designed to muster pro-GM activism and package it with a fraudulent pseudo-scientific sheen. Its existence is exemplary of the complete fraudulence and lack of the most basic integrity on the part of today’s universities and scientific establishment. These have long since jettisoned any scientific integrity they ever had and have transformed themselves into nothing but corporate PR fronts. The Cornell/Monsanto project is among the most prominent and formally instituted of these front groups. Today the Alliance has a new scam going. This is a survey of selected industry tests which purports to analyze whether or not the American Association for the Advancement of Science (AAAS) is correct in asserting a “consensus” on GMO safety. Self-evidently there is no such consensus, so on its face the AAAS is simply propagating a political lie in claiming there is. See here for another typical AAAS systematic fraud on the public, this one in collaboration with the Pew Center. As we see, the AAAS itself is a corporate marketing division, not a science organization. So when Cornell’s Alliance analyzes the AAAS’s claim it’s pure theater, one propagandist trying to launder another. I suppose the AAAS then can review the Alliance’s proclamations and find them correct. But just as regulators like the EPA and EFSA do nothing but launder propaganda which is conveyed to them by Monsanto, so these sham pseudo-scientific outfits do nothing but the same. See here for similar lies on the part of the National Academy of Science. Today’s STEM establishment comprises nothing more or less than a corporate research and propaganda bureau. It considers this corporate science paradigm to constitute science as such, and when they say “science” they mean, in all sincerity, “whatever the corporate marketing department decrees.” History will look back in astonishment and disgust at how the science community threw away its entire legitimacy, laboriously built over centuries, for nothing but to serve as PR flacks for a handful of agrochemical, tobacco, and similar poison-peddling corporations.

Monsanto Tribunal: Our Report from The Hague - On Tuesday, April 18, representatives of the Organic Consumers Association and our Regeneration International project gathered in The Hague, Netherlands, along with members of other civil society groups, scientists and journalists. We assembled to hear the opinions of the five judges who presided over the International Monsanto Tribunal. After taking six months to review the testimony of 28 witnesses who testified during the two-day citizens’ tribunal held in The Hague last October, the judges were ready to report on their 53-page Advisory Opinion.  The upshot of the judges’ opinion? Monsanto has engaged in practices that have violated the basic human right to a healthy environment, the right to food, the right to health, and the right of scientists to freely conduct indispensable research.The judges also called on international lawmakers to hold corporations like Monsanto accountable, to place human rights above the rights of corporations, and to “clearly assert the protection of the environment and establish the crime of ecocide.” The completion of the Tribunal judges’ work coincides with heightened scrutiny of Monsanto, during a period when the company seeks to complete a merger with Germany-based Bayer. In addition to our organization’s recently filed lawsuit against Monsanto, the St. Louis-based chemical maker is facing more than 800 lawsuits by people who developed non-Hodgkin lymphoma after being exposed to Monsanto’s Roundup herbicide. As a result of recently-made-public court documents related to those lawsuits, pressure is mounting for Congress to investigate alleged collusion between former EPA officials and Monsanto to bury the truth about the health risks of Roundup.

The Legacy of Monsanto’s PCBs: Oozing Pus, Birth Defects and Immune Problems  --After textiles moved away, from the 1940s onward New Bedford supplied the world with electric gear. But when those factories began to close in the 1960s, they left behind some awful secrets -- 572 chemically poisoned plots of land within the city's 24 square miles, including land where unsuspecting townspeople built two public schools. In the early 1980s, local people learned that their prized harbor -- all 18,000 acres of it, including its bounty of fish and lobsters -- had been rendered dangerously toxic by factory wastes. In 1983, New Bedford Harbor, the mouth of the Acushnet River, was declared a Superfund site, heavily contaminated with PCBs (polychlorinated biphenyls). This small city reeled. To many, the combination of unemployment and toxic waste seemed insurmountable.PCBs are a family of 209 industrial poisons known to harm humans at extremely low levels of exposure. PCBs cause cancer, diabetes, birth defects, liver disease and high blood pressure -- and they disrupt the nervous, hormonal and immune systems, giving rise to a broad array of other problems. A few of the 209 PCBs are thought to pose a toxic threat even more potent than dioxin.  About 60,000 of New Bedford's 95,000 residents live in "environmental justice neighborhoods as defined in Massachusetts law, based on percent of people who have low income or identify as minority or lack proficiency in English.. To face down the menace of PCBs, grassroots groups sprang up, determined to force a complete cleanup of their poisoned city, 55 miles below Boston on the South Coast. Now President Trump has once again shown local people the government can't be trusted to keep its word. Less than a month into his presidency, Trump proposed severely cutting the national budget for toxic cleanups -- doing so at the very moment when a new study has revealed that PCBs wafting off New Bedford Harbor have penetrated homes and offices in nearby towns.

Dow Chemical Pushes Trump Administration to Scrap Pesticide Study -- Dow Chemical, whose CEO Andrew Liveris is a close adviser to President Donald Trump, is pressuring the administration to throw out a government risk study on several popular pesticides, the Associated Press reported. The 10,000-page study found that the three pesticides under review— chlorpyrifos , diazinon and malathion—pose a risk to roughly 1,800 animals and plants protected under the Endangered Species Act. The evaluations were compiled by federal scientists over the last four years and were expected to result in new limits on how and where the highly toxic pesticides can be used. But lawyers representing Dow and two other makers of the organophosphates sent letters to the heads of three cabinet agencies last week, asking that the study be "set aside" and saying that the results are flawed. Last month, U.S. Environmental Protection Agency (EPA) chief Scott Pruitt scrapped his own agency's proposal to ban chlorpyrifos —an insecticide that at small doses can harm children's brains and nervous systems—from use on food crops. The AP noted that chlorpyrifos originates from a nerve gas developed by Nazi Germany, and Dow sells about 5 million pounds of the chemical in the U.S. each year. "Public health experts, pediatricians and EPA scientists all agree that chlorpyrifos is unsafe for children at any level," Environmental Working Group Senior VP for government affairs Scott Faber said after Pruitt announcement. "That overwhelming and uniform agreement among experts should have been all the information Administrator Pruitt needed to protect kids from this notorious neurotoxin. Yet, he decided instead to side with Croplife, Dow and the rest of chemical agriculture and allow chlorpyrifos to remain in use."  The government scientists found that chlorpyrifos is "likely to adversely affect" 1,778 of the 1,835 animals and plants in its study. Diazinon and malathion, which the World Health Organization announced as probable carcinogens in 2015, were similarly found to threaten vulnerable species.

Green group sues Trump admin over repeal of wildlife protections | TheHill: An environmental group is suing the Trump administration for repealing protections for wolves, bears and other predatory animals that live on Alaska’s national preserves. The Center for Biological Diversity is challenging the constitutionality of the Congressional Review Act (CRA), which Congress used to pass legislation that Trump signed repealing the Department of Interior's Refuges Rule. The rule prohibited practices in hunting predatory animals such as wolves, bears and other wildlife in Alaska’s national wildlife refuges. Hunters were banned from killing wolves and their pups in dens and gunning down grizzly bears at bait stations, trapping and killing black bears with steel-jaw leg-hold traps or wire snares, and killing brown and black bears from an aircraft. In the lawsuit filed in the federal district court in Anchorage, Alaska, the Center for Biological Diversity claims that the CRA is unconstitutional because it infringes on the powers of the executive branch in banning agencies from issuing rules in the future that are “in substantially the same form” as rules that have been repealed. The center is asking the court to declare CRA’s prohibition on future rulemaking unconstitutional and reinstate the rule. “Wolf cubs shouldn’t be slaughtered in their dens on the very wildlife refuges that are meant to protect biological diversity,” Collette Adkins, an attorney and biologist at the center said in a statement.

Farmers Have a Beef With Trump and Big Meat   -- Last week the U.S. Department of Agriculture said it was delaying implementation of an Obama administration rule designed to give America’s farmers more leverage in their dealings with mammoth agriculture companies that control almost every aspect of their livelihoods, so-called Big Meat.  The move, though not out of the ordinary for an incoming administration, is seen by farmer advocacy groups as a sign Trump is bending to the will of the industry, which strongly opposes the rule. The decision comes as Sonny Perdue III, the president’s pick for Secretary of Agriculture, is likely to be confirmed next week. Perdue is the former governor of Georgia, the country’s top chicken producing state, and has received hundreds of thousands of dollars in campaign contributions from agribusiness, according to the National Institute on Money in State Politics. And finally, Trump has proposed a 21 percent budget cut to the USDA, provoking an outcry from agricultural groups that worry rural communities will be hurt most.

Our Current Food System Is Broken and Unjust—We Need a Paradigm Shift That Values Nutrition as a Human Right --There is a sense that the world food system has reached an impasse. Hunger afflicts at least an eighth of the world population, mostly in the global South, but also in the North where austerity policies—which respond to crisis by prioritizing the interests of the wealthy—leave working people hungry. What is even more serious is that even this damaged ‘food security’ cannot be guaranteed into the future. International institutions now recognize that something fundamental must change, a realization embodied in the notion of paradigm shift and further concretized in the form of sustainable intensification. Such recognition is all the more significant since, for most of its history, the UN Food and Agriculture Organization (FAO) tended to be somewhat unwilling to offend corporate interests. Within the UN system it was mostly the two successive Special Rapporteurs on the Right to Food, Jean Ziegler and Olivier de Schutter, who pushed for a more radical and systemic critique. The latter notably placed his authority behind agroecology, a term that implies bringing farming back to an understanding of natural systems, and that forms an important point of reference for this book. A landmark in official critiques of the ruling food paradigm was the publication of Save and Grow, A New Paradigm of Agriculture—A policymaker’s guide to the sustainable intensification of smallholder crop production, which argued specifically for a revitalization of small farms and a recognition of their dignity and essential contribution. Expanding on this, the UN Conference on Trade and Development (UNCTAD) further stated: “The world needs a paradigm shift in agricultural development: from a ‘green revolution’ to an ecological intensification’ approach. This implies a rapid and significant shift from conventional, monoculture-based and high-external-input-dependent industrial production towards mosaics of sustainable regenerative production systems that also considerably improve the productivity of small-scale farmers. We need to see a move from a linear to a holistic approach in agricultural management, which recognizes that a farmer is not only a producer of agricultural goods, but also a manager of an agroecological system…”This and similar statements embody a welcome reflection on what the shift may entail: terms like ‘mosaics’ and ‘regenerative’ imply a change in how we think, moving away from linear and reductionist approaches and towards a systems perspective.

Do African Famines Presage Global Climate-Change Catastrophe? -- Michael Klare - Not since World War II have more human beings been at risk from disease and starvation than at this very moment. On March 10th, Stephen O’Brien, under secretary-general of the United Nations for humanitarian affairs, informed the Security Council that 20 million people in three African countries -- Nigeria, Somalia, and South Sudan -- as well as in Yemen were likely to die if not provided with emergency food and medical aid. “We are at a critical point in history,” he declared. “Already at the beginning of the year we are facing the largest humanitarian crisis since the creation of the U.N.”  Without coordinated international action, he added, “people will simply starve to death [or] suffer and die from disease.”  According to O’Brien, 7.3 million people are at risk in Yemen, 5.1 million in the Lake Chad area of northeastern Nigeria, 5 million in South Sudan, and 2.9 million in Somalia. In each of these countries, some lethal combination of war, persistent drought, and political instability is causing drastic cuts in essential food and water supplies. Of those 20 million people at risk of death, an estimated 1.4 million are young children. Despite the potential severity of the crisis, U.N. officials remain confident that many of those at risk can be saved if sufficient food and medical assistance is provided in time and the warring parties allow humanitarian aid workers to reach those in the greatest need. All in all, the cost of such an intervention is not great: an estimated $4.4 billion to implement that U.N. action plan and save most of those 20 million lives.  The international response? Essentially, a giant shrug of indifference. To have time to deliver sufficient supplies, U.N. officials indicated that the money would need to be in pocket by the end of March. It’s now April and international donors have given only a paltry $423 million -- less than a tenth of what’s needed. While, for instance, President Donald Trump sought Congressional approval for a $54 billion increase in U.S. military spending (bringing total defense expenditures in the coming year to $603 billion) and launched $89 million worth of Tomahawk missiles against a single Syrian air base, the U.S. has offered precious little to allay the coming disaster in three countries in which it has taken military actions in recent years. As if to add insult to injury, on February 15th Trump told Nigerian President Muhammadu Buhari that he was inclined to sell his country 12 Super-Tucano light-strike aircraft, potentially depleting Nigeria of $600 million it desperately needs for famine relief.     Moreover, just as those U.N. officials were pleading fruitlessly for increased humanitarian funding and an end to the fierce and complex set of conflicts in South Sudan and Yemen (so that they could facilitate the safe delivery of emergency food supplies to those countries), the Trump administration was announcing plans to reduce American contributions to the United Nations by 40%.   This goes beyond indifference.  This is complicity in mass extermination.

Brazilian MPs bid to cut protections for one million hectares of forest - A committee of Brazil’s Congress has approved proposals to roll back protections on 1.1 million hectares of forest and national park. Lawmakers with links to mining and agriculture interests amended two government bills to open up even more land for exploitation, in a move that environmentalists say jeopardises the country’s climate change goals. It amounts to “a licence to clear-cut”, warned Roberto Cabral, head of the government’s environmental protection agency’s elite deforestation-fighting unit. “When you have a protected area, people may invade it to hunt and steal from it, but they will never clear-cut it because they know they won’t get property rights. When you trim down one of those areas, you are signalling to people on the ground that none of them is untouchable anymore.” Two pieces of legislation target sections of Jamanxim National Forest, the Serra do Cachimbo Ecological Station, São Joaquim National Park, Jamanxim National Park, neighbouring the National Forest and Trairão II National Forest. They need to pass a plenary vote in Congress before being adopted. Environment minister José Sarney Filho put forward the plan to trim Jamanxim National Forest as an amnesty on squatters already occupying the space. The government could not afford to pay the compensation that would be needed to evict them, he argued.

China plans world’s biggest national park on Tibetan plateau --China is considering turning the entire Tibetan plateau and surrounding mountains into a huge national park to protect “the last piece of pure land”, according to scientists briefed on the project.  Dubbed the Third Pole National Park because the plateau and mountains, including the Himalayas, have a natural environment that in many ways resembles polar regions, it would be the world’s biggest national park. The plateau covers an area of more than 2.5 million sq km, mainly in Tibet and Qinghai, dwarfing the biggest national park at present, Greenland’s 972,000 sq km Northeast Greenland National Park.This summer, the Chinese government will launch the biggest scientific survey of the Tibetan plateau, with a large number of scientists from China taking part, accompanied for the first time by others from neighbouring countries such as Nepal and Pakistan. The researchers will be assisted by advanced research equipment including drones and new earth-observation satellites. One important mission of the survey will be to help draw the boundary of the new national park, according to some researchers preparing for expeditions.  But the project’s feasibility has been questioned. Professor Liu Jingshi, researcher with the Chinese Academy of Sciences’ (CAS) Institute of Tibetan Plateau Research, said the Third Pole National Park, if established as proposed, would be difficult to manage due to its unprecedented size.He said it took the United States government decades to figure out how to manage Yellowstone, the world’s first national park, which was established in 1872. The Third Pole would be more than 250 times larger, with a much more sophisticated natural landscape.

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.

Report: Can't blame El Nino as global temps spike in March - — In what scientists call a clear sign of a warming world, Earth's temperatures in March were the most above normal on record without an El Nino spiking temperatures.The National Oceanic and Atmospheric Administration calculated that the average global temperature in March was 56.8 degrees Fahrenheit (13.8 Celsius), only behind last year's El Nino-goosed record.France, Germany and other parts of Europe saw record heat while most of the Arctic — except Alaska and Canada — was unusually warm, NOAA climate scientist Ahira Sanchez-Lugo said Wednesday.It's the first time the Earth was more than 1 degree Celsius (1.8 degrees Fahrenheit) warmer than normal without an El Nino. Sanchez-Lugo said it looks like the planet is getting to the point where it'll likely be that much warmer than the 20th century average.El Nino is a natural warming of the Pacific that alters weather worldwide. Both 2015 and 2016 set repeated warmth records during an El Nino. Earth is in a neutral condition in the Pacific."It's quite impressive; it's just climate change" not natural variability like El Nino, Sanchez-Lugo said. "We typically expect the next year after El Nino to be slightly cooler."   The first three months of 2017 are almost a full degree Celsius (1.8 Fahrenheit) warmer than normal, making it the second hottest start of a year.

The nation is immersed in its warmest period in recorded history - The U.S. is enduring a stretch of abnormally warm weather unsurpassed in the record books, and it shows no immediate sign of ending. The latest one-, two-, three-, four- and five year periods — ending in March — rank as the warmest in 122 years of record-keeping for the Lower 48 states, according to data from the National Oceanic and Atmospheric Administration. Freakish bouts of warm weather have accompanied this long period of historic warmth, unlike anything previously experienced. In February of this year, Chicago witnessed multiple 70-degree days for the first time and a record snowless streak. Denver hit 80 degrees as early as it ever has (in a calendar year). Meanwhile, spring arrived as much as three weeks early in the South.  In November, the nation was nearly snow-free in the middle of the month for the first time on record. Denver hit 80 degrees as late as it ever has. In December 2015, 70-degree weather surged into Vermont on Christmas Eve, and 29 states experienced their warmest December on record.If the climate in recent years was stable, the frequency and intensity of cold weather would balance the warm weather across the nation. But reality presents a much more lopsided situation, and cold extremes have been more scarce. Deke Arndt, a climatologist at NOAA’s National Centers for Environmental Information, has constructed a list of monthly, seasonal and annual temperature records set in states and regions since 2010. Red, signifying record warmth, is clearly dominant, while there is hardly any blue:

Ruins, Not Reefs: How Climate Change Is Fast-Forwarding Coral Science --Cobb is a climate scientist at the Georgia Institute of Technology. On November 8, she was on her most recent of many research trips to Kiritimati Island reef, the largest coral atoll in the world. (Kirimati is pronounced like Christmas.) She first began studying the reef in 1997, during the last big El Niño warming event; she has returned nearly every year since. Last year, she went three times.“We had been waiting for the big one. And boy… did it happen,” she told me earlier this year. “It really rolled out at an unprecedented magnitude. This particular El Niño event had its maximum temperature loading almost in a bulls-eye almost around Kirimati Island.”By any measure, its caused a cataclysm. Eighty-five percent of the corals in the reef died: They will never recover, disintegrating into sand over the next several years. Two-thirds of the surviving corals bleached in some way, meaning they did not reproduce and may have sustained long-term damage.“Almost none of this reef has made it through 2015 and 2016,” Cobb said, calling the event “the wholesale destruction of the reef.” By any measure, 2016 was not a good year for coral reefs. El Niño raised ocean temperatures worldwide, devastating corals the world over. The Great Barrier Reef—the sprawling system off the coast of Australia, and among the world’s  most biodiverse reef systems—suffered a particularly debilitating year. Miles and miles of the coral reef bleached so severely, and for so long, that they died. On Monday, news broke that it happened again. For the second year in a row, warm ocean temperatures are bleaching the Great Barrier Reef. The white splotches of ocean floor indicative of the phenomenon run even farther south—some 500 kilometers—than they did last year. The bleaching occurred even though there is no worldwide El Niño this year: The reef is ailed not by a rare climatic phenomenon but by the baseline warming of the oceans. Until this decade, back-to-back bleaching events like that simply didn’t happen.“We knew that this day would come—we’ve been seeing the thermal-tolerance threshold for corals get closer and closer, and we knew it was pushing over the limit for coral survival.”

As coral reefs die, huge swaths of the seafloor are deteriorating along with them -  U.S. government scientists have found a dramatic impact from the continuing decline of coral reefs: The seafloor around them is eroding and sinking, deepening coastal waters and exposing nearby communities to damaging waves that reefs used to weaken. The new study, conducted by researchers with the U.S. Geological Survey, examined reefs in Hawaii, the Florida Keys and the U.S. Virgin Islands, finding seafloor drops in all three locations. Near Maui, where the largest changes were observed, the researchers found that the sea floor had lost so much sand that, by volume, it would be the equivalent of 81 Empire State Buildings. “We knew that coral reefs were degrading, but we didn’t really know how much until we did this study,” “We didn’t really realize until now that they’re degrading enough that it’s actually affecting the rest of the seafloor as well.” The work was published Thursday in the journal Biogeosciences. Coral reefs naturally generate sand as hard coral skeletons die, and their calcium carbonate bodies become the next layer of the seafloor. Meanwhile, the living tops of coral columns grow taller and taller, which allows them to keep pace in eras of rising seas. But as corals are subjected to more and more assaults from a combination of global climate change, local pollution and direct human-caused damage, this natural dynamic appears to have been undermined, and seafloor accretion has swung to erosion. “When corals stop growing fast enough, and when they stop making those big skeletons, you also lose that supply of sand to the rest of the seafloor, and you lose that supply of sand to the beaches,” said Yates.

Our Plastic Habit Now Pollutes the Arctic Ocean -  Ocean plastic has reached the northernmost ends of the earth. The remote and icy waters of the Arctic Ocean are also being inundated by this form of non-biodegradable pollution. According to a paper published Wednesday in the journal Science Advances , currents carrying trash, originating mostly from the North Atlantic, are flowing north into the Greenland and Barents Seas. An estimated 300 billion bits of plastic debris has accumulated in those waters, in sea ice or even the seafloor. Researchers from the University of Cádiz in Spain and several other institutions found that in some parts of the Greenland and Barents Seas, concentrations of plastic were in the hundreds of thousands of pieces per square kilometer. The researchers dubbed the region a "dead end for this plastic conveyor belt." "It's only been about 60 years since we started using plastic industrially, and the usage and the production has been increasing ever since. So most of the plastic that we have disposed of in the ocean is still now in transit to the Arctic," said Carlos Duarte, one of the study's co-authors and director of the Red Sea Research Center at the King Abdullah University of Science and Technology in Saudi Arabia.  The scientists warned that climate change could make the problem worse as rising temperatures melt sea ice. "The growing level of human activity in an increasingly warm and ice-free Arctic, with wider open areas available for the spread of microplastics, suggests that high loads of marine plastic pollution may become prevalent in the Arctic in the future," the paper stated.

The pristine Arctic has become a garbage trap for 300 billion pieces of plastic -  Drifts of floating plastic that humans have dumped into the world’s oceans are flowing into the pristine waters of the Arctic as a result of a powerful system of currents that deposits waste in the icy seas east of Greenland and north of Scandinavia. In 2013, as part of a seven-month circumnavigation of the Arctic Ocean, scientists aboard the research vessel Tara documented a profusion of tiny pieces of plastic in the Greenland and Barents seas, where the final limb of the Gulf Stream system delivers Atlantic waters northward. The researchers dub this region the “dead end for floating plastics” after their long surf of the world’s oceans. The researchers say this is just the beginning of the plastic migration to Arctic waters. [A young man tries to save the oceans from plastic with floating noodle look-alikes] “It’s only been about 60 years since we started using plastic industrially, and the usage and the production has been increasing ever since,” said Carlos Duarte, one of the study’s co-authors and director of the Red Sea Research Center at the King Abdullah University of Science and Technology in Saudi Arabia. “So, most of the plastic that we have disposed in the ocean is still now in transit to the Arctic.” The results were published Wednesday in the journal Science Advances. The study was led by Andrés Cózar of the University of Cádiz in Spain along with 11 other researchers from universities in eight nations: Denmark, France, Japan, the Netherlands, Saudi Arabia, Spain, the United Kingdom and the United States. The researchers estimated that about 300 billion pieces of tiny plastic are suspended in these Arctic waters right now, although they said the amount could be higher. And they think there is even more plastic on the seafloor.

 Threatened Himalayas: What do we know? -- The Himalayas are as vulnerable to climate change as they are critical to people all over Asia. Still, before this decade, relatively little was known about this extensive region due to lack of data. To some extent, this was remedied when scientists working on the fifth assessment report (AR5) of the Intergovernmental Panel on Climate Change (IPCC) focused on the threats to the Himalayan region. AR5, released in batches between 2013 and 2014, was critical to the understanding of decision makers before the UN climate summit which led to the Paris Agreement. Partially this was because AR5 brought the assessment of climate change impacts down to the country level, allowing policymakers to understand the specific threats that their communities faced. Secondly, AR5 very clearly stated that climate change was increasing “the likelihood of severe, pervasive and irreversible impacts for people and ecosystems.”Now, as scientists prepare for IPCC’s sixth assessment report (AR6), they want more systematic information on the Himalayas and the basins of rivers that flow down from this, the world’s tallest mountain range.  One of the ways that the needs of communities in the Himalayas will find their way into AR6 is the Himalayan Monitoring and Assessment Programme (HIMAP), being pioneered by the Kathmandu-based International Centre for Integrated Mountain Development (ICIMOD). It is the irreversible part of that statement that cries out for clarifications. Speaking to, Panmao Zhai, Co-Chair of the Working Group I of AR6, said that changes such as the loss of the glaciers is something that we just would not be able to recover from. “This cannot be changed back, because of the large time scales over which the glaciers formed. And if they are lost, the impact on the hydrological cycle will also be irreversible.” The melting of the glaciers is also linked to sea level rise and the warming of the oceans. This would mean that areas along the coast would be permanently lost. It would also impact the monsoons in Asia, although Zhai emphasised that there are multiple factors in play in that last, with heat contrast, pollution and cloud cover all modulating how the monsoons work, and many of these are impacted by factors other than climate change.

Climate Climax, Editorial, Nepali Times - Global measurements of a warming of the earth are more and more frightening. In recent weeks we have learnt that February 2017 was the second-warmest in NASA’s global temperature records that go back 137 years. The only warmer Februrary was last year. The hotspot has been the Arctic, which saw the hottest year on record with temperatures 40 above average in February. Arctic sea ice is seeing a record low winter maximum for three consecutive years.If all this sounds bad, hear this. The Himalaya is warming much faster than the rest of the planet’s surface. Even if countries meet or exceed their commitments for emission cutbacks, the average global temperature will still rise by 1.4o by 2100, but in the Himalaya, Pamir and Tibetan Plateau, temperatures will go up by 1.8.o The effects will be apocalyptic, and we are already seeing signs of it in Nepal’s glaciers thinning, retreating and losing mass at an alarming rate. Some of these trends were reviewed at an international conference on Understanding Climate Change and Climate Action this week in Kathmandu organised by the Nepal government with Kathmandu-based ICIMOD and the Intergovernmental Panel on Climate Change (IPCC).The IPCC has been cautious ever since its alarmist prediction ten years ago that Himalayan glaciers would all melt off by 2035 was proven to be unfounded. Even so, the new figures look serious enough. We are now looking at Nepal’s glaciers shrinking by half by 2050, and losing up to 80% of their ice by the end of the century. More than 1,000 glacial lakes have formed in the Nepal Himalaya alone as the ice melts, some of them are in danger of bursting. The trend is worse as we go west to east along the Himalayan arc. The mountains store an estimated 6,000 cubic km of water in the form of ice, and when it melts it will directly affect 1 billion farmers living downstream in South Asia, China and South-east Asia who grow food for nearly half of humanity.

Rising Waters Threaten China’s Rising Cities -- Flooding has been a plague for centuries in southern China’s Pearl River Delta. So even the rains that May, the worst in the area in years, soon drifted from the headlines. People complained and made jokes on social media about wading through streets that had become canals and riding on half-submerged buses through lakes that used to be streets. But there was no official hand-wringing about what caused the floods or how climate change might bring more extreme storms and make the problems worse.  A generation ago, this was mostly farmland. Three vital rivers leading to the South China Sea, along with a spider’s web of crisscrossing tributaries, made the low-lying delta a fertile plain, famous for rice. Guangzhou, formerly Canton, had more than a million people, but by the 1980s, China set out to transform the whole region, capitalizing on its proximity to water, the energy of its people, and the money and port infrastructure of neighboring Hong Kong.Rushing to catch up after decades of stagnation, China built a gargantuan collection of cities the size of nations with barely a pause to consider their toll on the environment, much less the future impact of global warming. Today, the region is a goliath of industry with a population exceeding 42 million.But while prosperity reshaped the social and cultural geography of the delta, it didn’t fundamentally alter the topography. Here, as elsewhere, breakneck development comes up against the growing threat of climate change. Economically, Guangzhou now has more to lose from climate change than any other city on the planet, according to a World Bank report. Nearby Shenzhen, another booming metropolis, ranked 10th on that World Bank list, which measured risk as a percentage of gross domestic product.While it is difficult to attribute any single storm or heat wave to climate change, researchers say there is abundant evidence that the effects of climate change can already be seen — in higher water levels, increasing temperatures and ever-more severe storms.

Receding glacier causes immense Canadian river to vanish in four days - An immense river that flowed from one of Canada’s largest glaciers vanished over the course of four days last year, scientists have reported, in an unsettling illustration of how global warming dramatically changes the world’s geography.The abrupt and unexpected disappearance of the Slims river, which spanned up to 150 metres at its widest points, is the first observed case of “river piracy”, in which the flow of one river is suddenly diverted into another. For hundreds of years, the Slims carried meltwater northwards from the vast Kaskawulsh glacier in Canada’s Yukon territory into the Kluane river, then into the Yukon river towards the Bering Sea. But in spring 2016, a period of intense melting of the glacier meant the drainage gradient was tipped in favour of a second river, redirecting the meltwater to the Gulf of Alaska, thousands of miles from its original destination.The continental-scale rearrangement was documented by a team of scientists who had been monitoring the incremental retreat of the glacier for years. But on a 2016 fieldwork expedition they were confronted with a landscape that had been radically transformed.  “We went to the area intending to continue our measurements in the Slims river, but found the riverbed more or less dry,” said James Best, a geologist at the University of Illinois. “The delta top that we’d been sailing over in a small boat was now a dust storm. In terms of landscape change it was incredibly dramatic.” The team flew a helicopter over the glacier and used drones to investigate what was happening in the other valley, which is less accessible.  “We found that all of the water that was coming out from the front of the glacier, rather than it being split between two rivers, it was going into just one,” said Best.

Above Canada and Greenland With NASA's Operation IceBridge  (28 captioned photos) Getty Images photographer Mario Tama just returned from the Arctic, after accompanying researchers with NASA's Operation IceBridge as they flew sets of eight-hour research flights above parts of Canada, Greenland, and the Arctic Ocean on their Arctic spring campaign. Scientists are monitoring Arctic ice loss and studying how polar ice has evolved over the past nine years. The flights were conducted aboard a retrofitted 1966 Lockheed P-3 aircraft, flying out of Thule Air Base in northwestern Greenland.  Tama reports that “according to NASA scientists and the National Snow and Ice Data Center, sea ice in the Arctic appears to have reached the lowest maximum wintertime extent ever recorded on March 7.” And, if you enjoy these images, please see Tama’s shots from Antarctica last year.

NASA photos capture a strange new crack in a massive Greenland glacier and we might be doomed: A mysterious crack has been spreading across a giant Greenland glacier, and it's raising concerns that part of the floating ice shelf could splinter off into the ocean. That could be bad. Scientists with the NASA field campaign Operation IceBridge recently captured the first photographs of the growing rift while flying over Petermann Glacier, a structure that connects the Greenland ice sheet to the Arctic Ocean.The new chasm appears in the center of the glacier's floating ice shelf — the tongue of ice that extends into the water from the grounded glacier on land. In the photos, the crack appears relatively close to a larger rift spreading toward the shelf's center. Should the two intersect, part of the ice shelf in northwest Greenland could potentially break off. There may be a savior for the shelf. A "medial flowline" in the ice could have a "stagnating effect" on the newer rift, helping to slow or halt its advance toward the older chasm, scientists with Operation IceBridge said on Facebook.   Stef Lhermitte, a professor at Delft University of Technology in the Netherlands, first alerted the NASA team to the crack's coordinates after spotting it in satellite images, Washington Post reported. Polar-orbiting satellites showed the chasm for the first time in July 2016, and "it has been growing since then," Lhermitte said on Twitter.   While scientists still aren't sure what caused the crack to form, Lhermitte said a possible culprit might be "ocean forcing," a phenomenon that happens when warm ocean waters melt the ice from underneath.

 Scientists have discovered vast systems of flowing water in Antarctica. And that worries them. -- The surface of the remote Antarctic ice sheet may be a far more dynamic place than scientists imagined, new research suggests. Decades of satellite imagery and aerial photography have revealed an extensive network of lakes and rivers transporting liquid meltwater across the continent’s ice shelves — nearly 700 systems of connected pools and streams in total.“A handful of previous studies have documented surface lakes and streams on individual ice shelves over a span of a few years,” glaciologist Alison Banwell of the University of Cambridge wrote in a comment on the new research, published Wednesday in the journal Nature. “But the authors’ work is the first to extensively map meltwater features and drainage systems on all of Antarctica’s ice shelves, over multiple decades.”  The findings, presented Wednesday in a pair of papers in Nature, could upend our understanding of the way meltwater interacts with the frozen ice sheet. We now know that, rather than simply pooling where it melts in every case, liquid water may run for miles across the continent first — and that discovery comes with some worrying implications. The major problem is that these drainage systems can carry meltwater from other parts of the ice sheet onto the continent’s vulnerable ice shelves. These are large, floating blocks of ice that jut out into the ocean from the edges of glaciers, helping to block and stabilize the flow of ice behind them. If these ice shelves weaken and break off, they can release a flood of ice into the ocean, raising sea levels in the process. Now, the authors of the new research suggest that the transport of moving water onto and across Antarctica’s ice shelves could make them increasingly vulnerable to collapse as melt rates accelerate under future climate change.

Global Warming Could Thaw Far More Permafrost Than Expected, Study Says --- More than 40 percent of the world's permafrost—landscape covered in frozen soil—is at risk of thawing even if the world succeeds in limiting global warming to the international goal of 2 degrees Celsius, according to a new study.  Currently, permafrost covers about nearly 5.8 million square miles, and scientists found as much as 2.5 million square miles of that could thaw—about twice the area of Alaska, California and Texas combined—in a 2 degree Celsius scenario. Thawing would be more limited if warming can be held to 1.5 degrees Celsius, but could still affect 1.8 million square miles.  The new research was published Monday in the journal Nature Climate Change. Permafrost contains vast amounts of carbon in the form of plants that died since the last ice age and have remained frozen rather than decomposing. When permafrost thaws, this long-trapped carbon is released into the atmosphere, further propelling future warming. A 2015 study estimated that the thawing permafrost could release up to 92 gigatons of carbon into the atmosphere by the century's end. This new study did not estimate the greenhouse gas emissions that would be released from the thawing, or how those emissions could then spur greater rates of permafrost loss in a vicious cycle.Instead, the international team of scientists focused on how warming air temperatures would affect the extent of permafrost. They said their calculations suggest a much more extensive loss than previously thought."These results alarm me because they predict even greater permafrost loss than shown in the global models for the 2°C warming target," Kevin Schaefer, a researcher at the National Snow and Ice Data Center, wrote in an email to InsideClimate News. "Even hitting the global 2°C warming target implies major impacts to people and infrastructure in the Arctic."

Atmospheric CO2 levels accelerate upwards, smashing records – The primary driver of global warming, disruptive climate changes and ocean acidification is the ever-increasing amount of carbon dioxide in our atmosphere. Despite decades of global efforts towards climate policies, clean energy and efficiency, CO2 levels continue to rise and are actually accelerating upwards. For those of us hoping for signs of climate progress, this most critical and basic climate data is bitter news indeed. It shows humanity racing ever more rapidly into a full-blown crisis for both our climate and our oceans.  That's the story told by the newest CO2 data released by the United States National Oceanic and Atmospheric Administration (NOAA). Let's take a look....  My first chart, on the far right, shows NOAA's CO2 data thru 2016. Each vertical bar shows how much the level of CO2 in the atmosphere increased that year. You can see at a glance how the annual changes keep getting larger. Indeed, the last two years (dark orange) saw CO2 rise by three parts-per-million (3 ppm) for the first time ever recorded. And the relentless upwards march of CO2 is even more clear in the ten-year averages.  My second chart shows these ten-year average increases as yellow columns. Up, up, up. NOAA's press release highlighted the "unprecedented" CO2 rise in last two years.  The scientists also pointed out that 2016 "was a record fifth consecutive year that carbon dioxide (CO2) rose by 2 ppm or greater." Those last five years also broke a new record by exceeding +2.5 ppm per year for the first time.  I've included both the new five-year record and the new two-year record as black bars on the chart. All told, we've managed to pull off the triple crown of climate failure. The last ten years, five years and two years have all smashed records for CO2 increases. If humanity is making climate progress, someone forgot to tell the atmosphere about it.

We just breached 410 ppm CO2 -- The world just passed another round-numbered climate milestone. Scientists predicted it would happen this year and lo and behold, it has. On Tuesday, the Mauna Loa Observatory recorded its first-ever carbon dioxide reading in excess of 410 parts per million (it was 410.28 ppm in case you want the full deal). Carbon dioxide hasn’t reached that height in millions of years. It’s a new atmosphere that humanity will have to contend with, one that’s trapping more heat and causing the climate to change at a quickening rate.  In what’s become a spring tradition like Passover and Easter, carbon dioxide has set a record high each year since measurements began. It stood at 280 ppm when record keeping began at Mauna Loa in 1958. In 2013, it passed 400 ppm. Just four years later, the 400 ppm mark is no longer a novelty. It’s the norm.“Its pretty depressing that it’s only a couple of years since the 400 ppm milestone was toppled,” Gavin Foster, a paleoclimate researcher at the University of Southampton told Climate Central last month. “These milestones are just numbers, but they give us an opportunity to pause and take stock and act as useful yard sticks for comparisons to the geological record.” Earlier this year, U.K. Met Office scientists issued their first-ever carbon dioxide forecast. They projected carbon dioxide could reach 410 ppm in March and almost certainly would by April. Their forecast has been borne out with Tuesday’s daily record. They project that the monthly average will peak near 407 ppm in May, setting a monthly record. Carbon dioxide concentrations have skyrocketed over the past two years due to in part to natural factors like El Niño causing more of it to end up in the atmosphere. But it’s mostly driven by the record amounts of carbon dioxide humans are creating by burning fossil fuels.

We’re Hurtling Toward the Worst CO2 Levels the Earth Has Seen in Over 200 Million Years - A new study published in Nature Communications suggests that carbon dioxide levels are rapidly headed toward highs not seen since the Triassic period. Given the natural progression of the sun, there is no geological precedent for what could happen.  There’s no question that the world is getting warmer. Sure, the history of the Earth’s billions of years of existence have been marked by global temperature fluctuations, but we’re heading toward some unprecedented conditions in the relative near future. New research is showing that the planet is on track to return to carbon dioxide levels not seen in 200 million years.  A new study published in Nature Communications doesn’t solely focus on the levels themselves but also the rate at which they are increasing. Since the industrial revolution about 150 years ago, atmospheric concentrations of greenhouse gases have skyrocketed from 280 ppm to almost 405 ppm when measured last year.  Should this trend continue, we could see CO2 levels at 2000 ppm by the year 2250. There haven’t been levels that high since the Triassic era. And, even though levels may have been that high in the past, that does not mean that we know what to expect if they return to those levels. This is, in part, because 200 million years ago, those levels existed naturally and were not caused by the actions of humans, as is the case today. It’s important to know that CO2 is not the only factor that contributes to a warmer planet. The amount of sunlight hitting the planet also has a major impact. And it just so happens that our sun is significantly brighter than it was 200 million years ago.According to Gavin Foster, lead author, and Professor of Isotope Geochemistry at the University of Southampton, “…because the Sun was dimmer back then, the net climate forcing 200 million years ago was lower than we would experience in such a high CO2 future. So not only will the resultant climate change be faster than anything the Earth has seen for millions of years, the climate that will exist is likely to have no natural counterpart, as far as we can tell, in at least the last 420 million years.”

The Nightmare Scenario for Florida’s Coastal Homeowners -- When Coral Gables Mayor Jim Cason first started worrying about sea-level rise, he asked his staff to count not just how much coastline the city had (47 miles) or value of the property along that coast ($3.5 billion). He also told them to find out how many boats dock inland from the bridges that span the city’s canals (302). What matters, he guessed, will be the first time a mast fails to clear the bottom of one of those bridges because the water level had risen too far. “These boats are going to be the canary in the mine,” said Cason, who became mayor in 2011 after retiring from the U.S. foreign service. “When the boats can’t go out, the property values go down.” If property values start to fall, Cason said, banks could stop writing 30-year mortgages for coastal homes, shrinking the pool of able buyers and sending prices lower still. Those properties make up a quarter of the city’s tax base; if that revenue fell, the city would struggle to provide the services that make it such a desirable place to live, causing more sales and another drop in revenue. And all of that could happen before the rising sea consumes a single home.   Relative sea levels in South Florida are roughly four inches higher now than in 1992. The National Oceanic and Atmospheric Administration predicts sea levels will rise as much as three feet in Miami by 2060. By the end of the century, according to projections by Zillow, some 934,000 existing Florida properties, worth more than $400 billion, are at risk of being submerged. The impact is already being felt in South Florida. Tidal flooding now predictably drenches inland streets, even when the sun is out, thanks to the region’s porous limestone bedrock. Saltwater is creeping into the drinking water supply. The area’s drainage canals rely on gravity; as oceans rise, the water utility has had to install giant pumps to push water out to the ocean.  The effects of climate-driven price drops could ripple across the economy, and eventually force the federal government to decide what is owed to people whose home values are ruined by climate change. Sean Becketti, the chief economist at Freddie Mac, warned in a report last year of a housing crisis for coastal areas more severe than the Great Recession, one that could spread through banks, insurers and other industries. And, unlike the recession, there’s no hope of a bounce back in property values.

Governor Declares State of Emergency to Save Louisiana Coast -- Louisiana Gov. John Bel Edwards declared a state of emergency Wednesday for coastal Louisiana to highlight the state's need for more federal funding to address extreme weather events.   "We are in a race against time to save our coast, and it is time we make bold decisions," Edwards said. "The Louisiana coast is in a state of crisis that demands immediate and urgent action to avert further damage to one of our most vital resources."   More than half of Louisiana's 4.65 million residents live on the coast. "Parts of our state remain unprotected from or vulnerable to future hurricane and flood events," Edwards emphasized, and estimated that 2,250 square miles of coastal Louisiana will be lost in the next 50 years unless immediate action is taken.  Edwards attributed the problem to factors including climate change, sea level rise , subsidence, hurricanes, storm surges, flooding , disconnecting the Mississippi River from coastal marshes and the Deepwater Horizon oil spill.  Louisiana is still reeling from last August's historic flooding , which killed 13 people and caused more than $8 billion in damage. The Shreveport Times reported in January that Edwards was vigorously seeking more federal flood recovery funding beyond the $1.6 billion, which was finally made available last week.  According to The Advocate , Edwards "is seeking $2.2 billion in additional federal flood aid, nearly half of which would go toward homeowner assistance programs."  Also on Wednesday, Louisiana's Coastal Protection and Restoration Authority approved the 2017 Coastal Master Plan and the 2018 Annual Plan , in which spending priorities for restoration and protection were identified.

Rising seas could push some U.S. migration to areas far from coast: study | Reuters: Rising sea levels caused by climate change may drive U.S. coastal residents to areas far from the seaboard, not just to adjacent inland regions, according to a study published online in the journal Nature Climate Change. Even landlocked states such as Arizona and Wyoming could see significant increases in population because of coastal migration by 2100, and may be unprepared to handle the surge, said the analysis from a University of Georgia researcher. "We typically think about sea-level rise as being a coastal challenge or a coastal issue," Mathew Hauer, author of the study and head of the Applied Demography program at the University of Georgia, said in an interview on Tuesday. "But if people have to move, they go somewhere." The U.S. National Oceanic and Atmospheric Administration predicted in January a 1-to-8-foot (0.3-2.5 meter) increase in sea levels by the year 2100. Previous research by Hauer and others has put the number of Americans displaced by rising seas over the same period as high as 13.1 million. While a movement of residents from low-lying coastal regions to adjacent inland communities will likely occur, Hauer said that according to his model, even landlocked states such as Nevada, Arizona and Wyoming will see an influx. Nevada's Clark County, home to Las Vegas, is projected to see an influx of up to 117,000 climate migrants by the end of the century, and nearly every county in Wyoming is predicted to see some increase, as are many counties in western Montana, central Colorado and northern Utah, the study found. Hauer said previous studies had shown that people permanently leaving their homes often choose destinations where they have family connections or better job prospects, even if those locations are far away.

Is it OK to engineer the environment to fight climate change? -  For the past few years, the Harvard professor David Keith has been sketching this vision: Ten Gulfstream jets, outfitted with special engines that allow them to fly safely around the stratosphere at an altitude of 70,000 feet, take off from a runway near the Equator. Their cargo includes thousands of pounds of a chemical compound — liquid sulfur, let’s suppose — that can be sprayed as a gas from the aircraft. It is not a one-time event; the flights take place throughout the year, dispersing a load that amounts to 25,000 tons. If things go right, the gas converts to an aerosol of particles that remain aloft and scatter sunlight for two years. The payoff? A slowing of the earth’s warming — for as long as the Gulfstream flights continue.Keith argues that such a project, usually known as solar geoengineering, is technologically feasible and — with a back-of-the-envelope cost of under $1 billion annually — ought to be fairly cheap from a cost-benefit perspective, considering the economic damages potentially forestalled: It might do good for a world unable to cut carbon-dioxide emissions enough to prevent further temperature increases later this century. What surprised me, then, as Keith paced around his Harvard office one morning in early March, was his listing all the reasons humans might not want to hack the environment. “Actually, I’m writing a paper on this right now,” he said. Most of his thoughts were related to the possible dangers of trying to engineer our way out of a climate problem of nearly unimaginable scientific, political and moral complexity. Solar geoengineering might lead to what some economists call “lock-in,” referring to the momentum that a new technology, even one with serious flaws, can assume after it gains a foothold in the market. The qwerty keyboard is one commonly cited example; the internal combustion engine is another. Once we start putting sulfate particles in the atmosphere, he mused, would we really be able to stop?  Another concern, he said, is “just the ethics about messing with nature.”

Educators Decry Conservative Group's Climate 'Propaganda' Sent to Schoolteachers -- Science teachers and legislators are fighting back after a conservative advocacy organization mailed false information on climate science to thousands of school science teachers nationwide.After the Heartland Institute began a mass mailing of teaching materials denying the scientific consensus on climate change, lawmakers and teachers' organizations have raised the alarm over what they characterize as propaganda disguised as information.  "I am writing to ask you to consider the possibility that the science in fact is not 'settled,'" Heartland Institute's Lennie Jarratt, manager for the institute's Center for Transforming Education, wrote in a cover letter sent to the teachers accompanying the book, Why Scientists Disagree About Global Warming. "If that's the case, then students would be better served by letting them know a vibrant debate is taking place among scientists on how big the human impact on climate is, and whether or not we should be worried about it." These statements are false, as is the book's contention that the overwhelming majority of scientists do not agree on the manmade cause of global warming. The National Science Teachers Association (NSTA), a professional organization representing 55,000 teachers nationwide, sent a letter to its members calling on them to resist what they characterized as an "unprecedented attack." "First, scientists don't disagree about climate change or its causes," David Evans, the executive director of NSTA, wrote in a letter to members earlier this week. "Second, labeling propaganda as science does not make it so. Third, science teachers are the critical bastion in the war against reason. And the special interests know it." Some  The National Center for Science Education, a nonprofit that defends the integrity of science education against ideological interference, launched a fundraiser to counter the misinformation and "help teachers present climate change accurately, honestly and completely." The organization, which fought successfully for accurate teaching of evolution, helped to develop the national science standards released in 2013 that made the teaching of global warming part of the public school curriculum. The non-mandatory standards are now used by approximately 20 states, NCSE spokesperson Robert Luhn said.

 What do Environmental and Resource Economists Think? -This article presents results from an opinion survey of members of the Association of Environmental and Resource Economists (AERE) concerning issues ranging from basic market failure propositions to current policy questions to environmental attitudes. The topical issues considered span the discipline and include pollution, growth and sustainability, fisheries, forestry, and energy economics. We assess the degree to which there is a consensus among AERE members on specific issues and use a multivariate analysis to determine whether differences can be predicted by observable characteristics. We find that AERE members have reached consensus on many issues, but there are a few key areas where this is not the case. The multivariate analysis of survey responses indicates that the level of concern about the environment and natural resources, political ideology, and individual characteristics help explain the opinions of AERE members.

White House Officials To Meet On Fate Of Paris Climate Deal - President Donald Trump’s senior officials will gather next week to finally hash out internal disagreements about whether the U.S. should stay in the Paris climate deal, White House officials told Politico Friday. Secretary of State Rex Tillerson, EPA administrator Scott Pruitt, Energy Secretary Rick Perry, senior adviser Jared Kushner, and Trump’s chief strategist Steve Bannon are among those expected to participate in the meeting, which is tentatively scheduled for next Tuesday. Sources told Politico the the names of the participants and time of the meeting are still in flux.The much-talked about climate deal requires the U.S. to dramatically reduce greenhouse gasses. Former President Barack Obama signed the deal last year without the Senate’s consent. The agreement has become a contentious point within the Trump administration. Bannon and Pruitt represent the side most opposed to the agreement, while Tillerson and Kushner have staked out more conciliatory positions. The secretary of state believes the deal could be an effective diplomatic tool.Pruitt, a Republican who sued the EPA more than a dozen times as Oklahoma’s attorney general, has made no bones about his antipathy for the deal, telling reporters last week the Obama-era deal is a “bad deal for this country.”  Pruitt is primarily worried the deal could toss a wrench in his push to repeal Obama’s climate change regulations for power plants, reported Politico.Other White House officials, meanwhile, argue the agreement is not legally binding and will not hurt Pruitt’s effort to undo Obama’s so-called Clean Power Plan, which requires the U.S. to reduce its greenhouse gas emissions by more than 28 percent over the next 10 years. The CPP predates the Paris deal and was not legally based on any international commitment.

Scott Pruitt calls for an ‘exit’ from the Paris accord, sharpening the Trump White House’s climate rift -- President Trump’s top environment official called for an “exit” from the historic Paris agreement Thursday, the first time such a high-ranking administration official has so explicitly disavowed the agreement endorsed by nearly 200 countries to fight climate change.  Speaking with “Fox & Friends,” Pruitt commented, “Paris is something that we need to really look at closely. It’s something we need to exit in my opinion.” “It’s a bad deal for America,” Pruitt continued. “It was an America second, third, or fourth kind of approach. China and India had no obligations under the agreement until 2030. We front-loaded all of our costs.” Pruitt’s claim about China and India having “no obligations” until 2030 is incorrect — while these countries do indeed have 2030 targets, they are already acting now to reduce their emissions by investing in renewable energy and other initiatives.  Pruitt had called the Paris accord a “bad deal” in the past but does not appear to have previously gone so far as to call for the United States to withdraw. The Trump administration has previously said it is currently reviewing its position on climate change and energy policy and remains noncommittal, for now, on whether it will follow through on the president’s campaign pledge to “cancel” the 2015 Paris climate agreement. Trump’s recent executive order on energy policy, which set in motion the rollback of Obama’s domestic Clean Power Plan, was silent on the matter of Paris. 

Exxon, Shell join Ivanka Trump to defend Paris climate pact   As President Donald Trump contemplates whether to make good on his campaign promise to yank the United States out of the Paris climate accord, an unlikely lobbying force is hoping to talk him out of it: oil and coal producers. A pro-Paris bloc within the administration has recruited energy companies to lend their support to the global pact to cut greenhouse gas emissions, according to two people familiar with the effort who asked not to be identified.Cheniere Energy Inc., which exports liquefied natural gas, became the latest company to weigh in for the pact to cut greenhouse gas emissions in a letter Monday to White House energy adviser G. David Banks. "Domestic energy companies are better positioned to compete globally if the United States remains a party to the Paris agreement," Cheniere wrote. The accord "is a useful instrument for fostering demand for America’s energy resources and supporting the continued growth of American industry."  Exxon Mobil Corp., previously led by Secretary of State Rex Tillerson, Royal Dutch Shell Plc and BP Plc also have endorsed the pact. The industry campaign to stick with the Paris accord comes amid deep divisions in the Trump administration over the carbon-cutting agreement. Both the president’s daughter, Ivanka Trump, and her husband, Jared Kushner, a White House special adviser, have urged the president to stay in the deal, along with Tillerson.

Trump may be about to break another big promise. That’s very good news -- President Trump has reversed himself on a lot of campaign promises lately, and some have rushed to credit him with learning on the job. While one hopes he is capable of this, his reversals also reflect the less admirable factor that his original campaign agenda was mostly fraudulent — and is now colliding violently with reality.One excellent illustration of this is Trump’s vow to pull the United States out of the Paris climate deal. And that’s why it’s good news that Trump is now seriously considering remaining in the accord, now that some of his most senior advisers are apprising him of the folly of withdrawing from it.The Associated Press and the New York Times report that Trump’s top advisers will huddle Tuesday to decide what to recommend to the president about the United States’ path forward. The Times notes that there is a divide among them that breaks down this way:  On the campaign trail, Mr. Trump vowed to “cancel” the climate deal, and his most politically conservative advisers, including his senior strategist Stephen K. Bannon, have pushed him to follow through. But Mr. Bannon’s influence has waned in recent weeks, while authority has risen for Mr. Trump’s daughter Ivanka and son-in-law, Jared Kushner, who advocate staying in the accord.Secretary of State Rex W. Tillerson, the former chief executive of Exxon Mobil, has also spoken in favor of “keeping a seat at the table” in the climate pact, and in recent days, major corporations have stepped forward to embrace that position.With Kushner and Ivanka Trump on the ascendant, even as the Bannon wing loses clout, the Times notes that “the side pressing the president to remain in the deal enters the pivotal meeting with the upper hand.” If they prevail, it could have important long-term consequences for the battle against climate change. It is true that Trump is already making it a lot harder for us to meet our commitments as part of the deal, by moving to reverse former president Barack Obama’s Clean Power Plan, which sets goals for states to reduce carbon emissions and is key to whether we hit our reduction targets.But for various reasons, unwinding that plan could prove hard to do and could take a long time.

White House scuttles Paris climate meeting - Axios -- The White House postponed a meeting Tuesday on the administration's approach to the Paris climate accord, blaming the schedules of staffers — Reince Priebus, Steve Bannon, Kellyanne Conway and Stephen Miller — traveling with President Trump. It did not provide a rain date. Slated to attend the meeting, per various news outlets: Bannon and EPA Administrator Scott Pruitt, who both favor abandoning the pact, as well as Jared Kushner, who supports remaining in the accord, and Secretary of State Rex Tillerson, who has said the U.S. should maintain a "seat at the table" in global climate talks. Why it matters: The eventual decision on whether to remain in the 2015 international pact is one of the biggest unresolved climate policy questions at the White House.

EPA considers repealing two Obama air pollution rules | TheHill: The Trump administration is considering whether to repeal or revise two major Obama administration regulations limiting air pollution from large sources. Justice Department attorneys asked the Court of Appeals for the District of Columbia Circuit late Tuesday to delay scheduled oral arguments in two separate cases involving the Environmental Protection Agency (EPA) rules. The most major action concerns the landmark 2012 Mercury and Air Toxics Standards rule, one of the most costly Obama administration rules that has been responsible for shutting down hundreds of coal-fired power plants. The EPA is reviewing whether it supports a 2016 regulation that the Obama administration wrote to fix a problem that the Supreme Court found when it ruled in 2015 that the EPA did not follow the law in writing the mercury rule. “In light of the recent change in Administration, EPA requests continuance of the oral argument to give the appropriate officials adequate time to fully review the supplemental finding,” the attorneys wrote, adding that the prior positions taken by the agency with respect to the supplemental finding may not necessarily reflect its ultimate conclusions after that review is complete.” The administration did not indicate whether it is reviewing the underlying 2012 rule. But Earthjustice, which is representing numerous organizations in the litigation to defend the rule, slammed action, saying it is an attack on the mercury standards. 

EPA plans buyouts to reduce workforce under Trump | TheHill: Top officials at the Environmental Protection Agency (EPA) will maintain a freeze on external hiring and offer employees buyouts this year as part of a Trump administration workforce restructuring plan. In a memo sent to agency officials and regional administrators, EPA acting deputy administrator Michael Flynn said the agency will continue a hiring freeze put in place at the beginning of the Trump administration. The memo, provided to The Hill, said the EPA would also “begin the necessary steps to initiate an early out/buyout program” this year following a workforce restructuring directive from the Office of Management and Budget (OMB) last week. The buyout program is due to be completed by the end of September, Flynn wrote. OMB last week lifted a government-wide hiring freeze that critics said was hurting federal operations. But it also ordered departments and agencies to write restructuring plans for their workforces. “What we’re doing ... 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,” OMB Director Mick Mulvaney said last week. The directive instructed agencies to take “immediate actions” to reduce the size of workforces and develop plans to “maximize employee performance.” In his memo, Flynn said the EPA would begin the workforce reduction effort and continue the hiring freeze Trump ordered in January.

Pruitt allies explore hiring private lawyers to rewrite EPA rule - POLITICO: Industry groups with close ties to EPA Administrator Scott Pruitt are considering a highly unusual approach to undoing the Obama administration’s most controversial water regulation — pushing Pruitt to hand the job to private lawyers. Such an approach would help Pruitt bypass the Environmental Protection Agency employees who spent five years writing the Waters of the U.S. regulation — the kinds of career federal bureaucrats whom supporters of President Donald Trump often deride as the "deep state." Trump has ordered the agency to replace the water rule, a sweeping regulation that has stirred up opposition from groups including the agriculture, oil and gas, and development industries. But legal experts say privatizing the rule-making process in this manner would be almost unheard of. Although it’s likely legally doable, they say, it would raise a host of ethical questions, while probably limiting the public’s view into decisions about which streams, lakes and wetlands get federal protection. Environmentalists call it alarming that anyone would even seriously discuss the possibility. “To then say it’s OK for a cabal of industry groups to put some gun for hire in charge of writing the rule, that just seems absolutely, wildly unethical,” said John Rumpler, who directs the clean water program for Environment America. His group supports the 2015 rule, which increased the number of creeks and wetlands that receive automatic protection under the Clean Water Act after two muddled Supreme Court decisions.

Why scientists are marching on Washington and more than 400 other cities -- Saturday's March for Science is political, but not partisan. So say the organizers, who insist that they can walk that fine line even in an era of ideological rancor and extreme polarization.“We’ve been asked not to make personal attacks or partisan attacks,” said honorary national co-chair Lydia Villa-Komaroff, in a teleconference with reporters. But Villa-Komaroff, a cell biologist who will be among those with two-minute speaking slots, quickly added: “This is a group of people who don’t take well being told what to do.”The Science March, held on Earth Day, is expected to draw tens of thousands of people to the Mall, and satellite marches have been planned in more than 600 cities on six continents. The crowd will gather on Saturday near the Washington Monument for five hours of speeches and teach-ins, culminating in the march at 2 p.m. The march will follow Constitution Avenue along the north edge of the Mall to the foot of Capitol Hill. The weather forecast is a tricky one — it's not an exact science, apparently — but attendees should be prepared for rain, particularly in the afternoon.Protest marches may be common in Washington these days, but one centered on the value of science is unprecedented. The march is part of a wave of activism in the research community. Scientists are jumping into the political fray by running for public office — such as in southern California, where geologist Jess Phoenix, a Democrat, has announced her candidacy for a congressional seat held by a Republican. The idea for the event was spawned during a Jan. 21 conversation on Reddit, as millions of people gathered in Washington and cities around the world for the record-breaking Women's Marches. Valorie Aquino, who is working on her PhD in anthropology at the University of New Mexico, signed on as one of the march's national co-chairs shortly after. She thought she'd be able to continue her research while coordinating the event, not anticipating how quickly it would snowball. Most mainstream science organizations — such as the American Association for the Advancement of Science, the American Geophysical Union, and the American Chemical Society — have signed on as partners of the march, despite their lack of experience in going to the barricades. Rush Holt, head of AAAS, said there was initial hesitation about whether this was the kind of event a scientist ought to be joining but that members of his association overwhelmingly support the decision to participate.

 Gauging the Trump effect on energy, the environment and land in the West - President Donald Trump promises to take a hard turn away from Obama’s environmental policies, from the management of public lands to the direction of the energy industry. But what the Trump administration means for the 11 contiguous Western states, in practical terms, is unclear. Asked in March if Trump had a coherent energy policy, Robert Stavins, director of the Harvard Environmental Economics Program, took a second and replied, “No.” Stavins, whose expertise has been tapped by Democratic and Republican presidents, said Trump’s team has continued to govern with ideologically driven campaign promises that were “inconsistent at the time but were wonderful applause lines.”Economists have found Trump’s energy and environmental pledges often are at odds with economic and political realities. The reality, for instance, that as more utilities move away from coal, even some coal executives say it’s unwise to believe mining jobs will come back. Or the fact that dozens of Fortune 500 companies and nearly 30 states have pledges encouraging clean energy, which can make fossil fuels less desirable, regardless of the federal government’s actions. Or that the new Environmental Protection Agency administrator’s denial of climate change and rejection of current emissions standards run counter to the views of most Americans, EPA scientists and international leaders. All of it begs that same question: Where doesthe federal government’s power begin and end?At the end of his tenure, Obama called the government an aircraft carrier, not a speedboat. He told The New Yorker the metaphor to explain the difficulty of passing his agenda, even when Democrats controlled both chambers of Congress. Trump is now in a similar position.The Trump administration faces the constraints of federalism, a career bureaucracy, a body of legal precedent, changing energy markets and companies that — like the insurance business — have big capital requirements and use long-term assessments to make decisions. As one environmental advocate put it, “the facts are uniting people in very interesting ways.”

Democrats are being pressured to support a "bipartisan" carbon tax bargain no Republicans support - Vox: --The dream of a bipartisan deal on carbon taxes is evergreen in US political circles. Lately, it has taken on a somewhat more specific form. The Climate Leadership Council (led by emeritus Republicans George Shultz and James Baker III) and the libertarian Niskanen Center have both proposed various forms of a deal in which Republicans would agree to a carbon tax in exchange for Democrats agreeing to repeal regulations on carbon emissions and fuel economy (among others). Reporter Amy Harder (who recently moved from the Wall Street Journal to Axios) points out that no Republicans support the deal. But she also says that environmental groups and Democrats will not accept it — and their refusal is “the logjam preventing any climate compromise.”Niskanen’s David Bookbinder (formerly of Sierra Club) told Harder that green groups actually would accept the trade if the price was right, they just won’t say so. "Like most entities that have no experience in actual negotiations,” he said, “[environmental groups] believe that they can't say publicly that they will make the trade until the R's put the tax on the table.”Harder adds: Our thought bubble: At least one side is going to have to be the first to show a willingness to compromise privately and eventually publicly to break the logjam that is this perennial carbon tax debate. So far, that's not happening. A spokesman for the Sierra Club declined to comment on the record about their official position, which is that they wouldn't support a trade of EPA regulation for a carbon tax.This is shaping up to be a classic Washington dynamic: Democrats being pressured to compromise in advance, with phantoms. Gets Altered, Removes Climate Benefits of Renewables --  By now it shouldn't be a surprise that the Trump administration is wiping Obama-era climate initiatives off the Internet.  This time, the Department of Energy (DOE) has significantly altered its websites on renewable energy , removing references on how clean energy technologies can reduce the nation's reliance on fossil fuels and help lower climate-changing emissions.  The DOE's Office of Energy Efficiency and Renewable Energy —which could face deep funding cuts under Trump's budget proposal —has made "extensive changes and reorganizations" on websites for the Bioenergy Technologies Office, the Wind Energy Technologies Office and the Vehicle Technologies Office, according to the Environmental Data and Governance Initiative (EDGI), a coalition of academics and nonprofits that has tracked changes to federal websites ever since Donald Trump took office.  As The Washington Post explained:  "Under the Obama administration, these offices' websites emphasized the importance of cutting down on U.S. carbon emissions and reducing the nation's dependence on fossil fuels—a message in keeping with President Barack Obama's push to address climate change.  "But with the Trump administration de-emphasizing climate change and looking to promote climate-friendly and carbon-intensive energy sources—an agenda that coincides with a broad attempt to eliminate regulations on fossil fuels and particularly on coal—the priorities outlined on these offices' Web pages have been shifting since the inauguration."

China's Xi Outshines Trump as the World's Future Energy Leader -- Much of Pres. Donald Trump’s Mar-a-Lago country club in Palm Beach, Fla., sits less than two meters above the Atlantic Ocean, meaning big parts of the resort could rest beneath the waves by the end of this century as seas rise in response to global warming. Already nearby communities like Miami Beach are flooded even when the sun shines, as higher seas push water up and out of the porous limestone underneath the ground in southern Florida.  China is no better off, with cities from Hong Kong to Shanghai at increasing risk of inundation. Other threats such as extreme weather, farms turned to desert and choking smog are all exacerbated by climate change that results from rising concentrations of carbon dioxide in the air. Even China’s efforts to combat those rising concentrations—in part by switching from burning coal to capturing the power latent in rivers like the Yangtze—falter in the face of global warming, as a result of less water in those rivers due to drought and the dwindling glaciers of the Tibetan Plateau. But all that seems to exist in an alternate universe where facts matter, because Trump and China’s Pres. Xi Jinping apparently ignored climate change at their inaugural meeting last week. Although the two leaders apparently found time to discuss everything from North Korea’s nuclear capability to a potential reset of trade relations, climate change was never mentioned, even though Trump might have wanted to take the opportunity to directly fact check his Tweet from last year that China invented climate change to cripple U.S. manufacturing.

The little-known federal agency with the power to buck Trump’s anti-climate agenda  - The nation’s primary energy regulatory agency has become a frequent target of environmentalists in recent years. They charge that the Federal Energy Regulatory Commission (FERC) is a rubber-stamp machine, approving every natural gas infrastructure project application it receives without consideration of the long-term climate impacts.But not every environmental and public advocacy group views the agency with such animosity. Some think FERC could in fact play an important role in combating climate change in an era when the Trump administration is gutting climate initiatives at the Environmental Protection Agency and other federal agencies, according to one regulatory expert. “The activists who are calling for FERC to be shut down and are against the nomination of three new commissioners are ignoring potential opportunities for some positive progress on climate initiatives,” Tyson Slocum, director of Public Citizen’s Energy Program, told ThinkProgress. The five-member commission has three openings that President Donald Trump will likely fill with Republicans or similarly-minded individuals.  Headquartered in Washington, D.C., FERC regulates the interstate transmission of natural gas, oil, and electricity and oversees the wholesale sale of electricity. The commission’s policies have played a major role in determining the extent to which renewable energy, energy storage, and energy efficiency are integrated into power markets.“Even when these Republicans eventually join FERC, there is a chance FERC could chug along as an agency that could explore or even embrace regional  climate change initiatives under the umbrella of wholesale power market reform,” Slocum explained.The commission’s rules for ensuring grid reliability, especially in the eastern U.S. where utilities have banded together to form regional grid entities, increase costs for customers and often lead to the running of otherwise uneconomic coal-fired power plants, Slocum contended.The Sierra Club and other environmental groups are challenging FERC’s approval of structures proposed by regional grid operators that are “unduly preferential for outdated, inefficient technologies like coal and nuclear,”

Oklahoma ends wind power subsidy | TheHill: Oklahoma Gov. Mary Fallin (R) signed legislation Monday to end the state’s tax credit for wind power this year. Wind farms that start producing energy after July 1 this year will not be able to claim the credit under the new law. The credit was originally set to expire in 2021. In a statement, Fallin welcomed the growth in wind power that the credit brought on, but said the state’s tight budget necessitated rescinding it early. “The zero emissions tax credit was key to the growth of wind energy in Oklahoma, and I’m grateful to the industry for their ambitious successes, as well as their willingness to work with the state to address our challenging budgetary circumstances,” she said. “It is time to ensure that Oklahoma has a bright future, and continues its position as a prominent energy state.” Oklahoma ranks No. 3 in the country in installed wind capacity, with almost 7,000 megawatts. It provide more than a quarter of the state’s electricity. The tax credit cost $3.7 million in 2010, but the industry growth increased its use to $113 million in 2014, the Tulsa World reported.

Natural gas generators make up the largest share of overall U.S. generation capacity – EIA -- In 2016, natural gas-fired generators accounted for 42% of the operating electricity generating capacity in the United States. Natural gas provided 34% of total electricity generation in 2016, surpassing coal to become the leading generation source. The increase in natural gas generation since 2005 is primarily a result of the continued cost-competitiveness of natural gas relative to coal.  Natural gas-fired combined-cycle units accounted for 53% of the 449 gigawatts (GW) of total U.S. natural gas-powered generator capacity in 2016. Combined-cycle generators have been a popular technology choice since the 1990s and made up a large share of the capacity added between 2000 and 2005. Under current natural gas and coal market conditions in many regions of the country, combined-cycle generating units are often used as baseload generation, which operate throughout the day.  Other types of natural gas-fired technology, such as combustion turbines (about 28% of total natural gas-powered generator capacity) and steam turbines (17%), generally only run during hours when electricity demand is high. The capacity-weighted average age of U.S. natural gas power plants is 22 years, which is less than hydro (64 years), coal (39), and nuclear (36).   Every state except Vermont has at least one natural gas plant. About 38% of U.S. natural gas-fired generation capacity is located in four states: Texas, California, Florida, and New York. Natural gas power plants account for more than half of the total electricity generating capacity in each of these four states and in seven other states. Texas has the most natural gas-fired capacity of any state, with 69 GW, or 15% of the national total. California and Florida each have about 40 GW of natural gas-fired capacity.  

Shell lobbies Dutch government to quadruple offshore wind target by 2030 - Anglo-Dutch oil major Royal Dutch Shell said it has urged the Dutch government to come up with bolder offshore wind targets and quadruple the goal for installed capacity to 20 gigawatts (GW) by 2030. Europe’s biggest oil company, which has traditionally invested little in green energy sources, is ramping up renewable energy investments to $1 billion a year by the end of the decade after pressure from shareholders to do so and as it sees governments turning to less carbon intensive and more flexible fuels. The Netherlands is lagging other European countries in renewable energy investments and was ordered by a district court in The Hague in 2015 to cut carbon emissions by 25 percent within five years after losing a court case brought by environmental campaigners. The government has since launched a programme to speed up renewable energy projects, including tenders to build 4.5 GW of offshore wind farm capacity and more beyond that.

The High Cost of Renewable Subsidies -- I have for some time wanted to get to the bottom of renewable subsidies and their impact upon electricity prices. But the complexity and opacity of the system has always defeated me. And then last week a report titled “Status Review of Renewable Support Schemes in Europe” landed in my inbox and it seemed to contain much of the information I was seeking. The headline numbers: the weighted average subsidy paid to renewable generators in EU 26 in 2015 was €110 / MWh. The maximum was €184 / MWh in the Czech Republic and the minimum €16.2 / MWh in Norway and the UK came in at €75 / MWh. Considering that the wholesale price of electricity in Europe is typically €40 to €60 / MWh we can see that renewables are costing on average about 3 times as much as conventional power (wholesale~50, subsidy~110, total~160). And politicians, who have mandated the use of renewable electricity, are wondering why electricity prices are rising. The report was published by the Council of European Energy Regulators (CEER)  on 11th April 2017. But since it summarises a vast amount of complex data that has taken considerable time to compile, the reference years reported are 2014 and 2015. The report can be downloaded here.

Onshore Wind Projects Could Proceed Without Subsidies In The UK - A new study has found that the UK Government could deliver 1 GW of new onshore wind energy through an expected national renewable energy Contracts for Difference auction at no additional cost to consumers — in other words, subsidy free. The new report was published by industry experts Baringa Partners for industry body Scottish Renewables, which asked Baringa to assess the costs of developing an additional 1 GW of ‘Pot 1’ renewable capacity through an auction for Contracts for Difference (CfD) in Great Britain. The auction is expected to take place in 2018 or 2019, with the capacity involved in the auction set to come online between 2021 and 2023.The premise behind Scottish Renewables’ request for this report is the fact that the UK Government has not provided any funding or allowance for pot 1 technologies — more mature technologies such as onshore wind and large-scale solar. Rather, funding is available for pot 2 technologies — less established technologies such as offshore wind, wave, tidal stream, and geothermal.The UK Government has made it clear it no longer wants to subsidize onshore wind, but the new Baringa report shows that subsidies are not necessary, highlighting that the UK Government — if it opened the upcoming auction to onshore wind — could provide 1 GW of new onshore capacity at no expense to the taxpayer. “The UK Government has already published research showing that onshore wind is on track to be the cheapest form of electricity generation in the UK, and this report shows that the industry is continuing to drive down costs,” said Niall Stuart, Chief Executive of industry body Scottish Renewables.

Britain preparing to scrap EU green energy targets after Brexit --The UK is currently committed to getting 15 per cent of all energy from renewable sources such as wind and solar by 2020. The UK is currently on course to miss the target and incur millions of pounds in fines from the European Union. Government sources told The Daily Telegraph that the target, under the EU Renewable Energy Directive, is likely to be scrapped after Brexit. It comes after civil service documents, photographed on a train, revealed that Britain plans to scale down its concern over climate change after Brexit. Details of the policy change were contained in the papers of a senior civil servant at the Department for International Trade (DIT) photographed by a passenger earlier this month. The notes say: “Trade and growth are now priorities for all posts — you will all need to prioritise developing capability in this area. Some economic security-related work like climate change and illegal wildlife trade will be scaled down.” The target has led to billions of pounds Government subsidies for renewable power sources such as wind, solar and biomass power plants, which are ultimately paid for by customers through their energy bills. The National Audit Office estimated that green energy subsidies will cost every household £110 a year by 2020.

World's Biggest Oil Exporter Sets Ambitious Renewable Energy Goal --Saudi Arabia, the world's biggest crude oil exporter, is launching an ambitious renewable energy program to transform its power sector.The kingdom is pledging between $30-$50 billion to develop 30 solar and wind projects over the next 10 years to boost electricity generation and curb oil consumption.Saudi Arabia wants 10 percent of its electricity to come from renewables in the next six years, energy minister Khalid Al-Falih said Monday at a conference in Riyadh.He said that the new projects will help the country reach a goal of about 10 gigawatts of renewable energy by 2023. The plan also includes an unspecified amount of electricity generated from nuclear plants.Here's what Saudi Arabia's renewable energy program entails, according to Bloomberg :"The country is currently seeking bids to build 700 megawatts of wind and solar power capacity in a first round of tenders. It plans a second tender round for rights to build 400 megawatts more of wind power and an additional 620 megawatts of solar plants, Turki Al Shehri, head of the ministry's renewable energy project development office, told reporters. Saudi Arabia will tender for the wind project in the fourth quarter at a project planned for the northern area of Domat al-Jandal, Al-Falih said." The " Saudi Vision 2030 " plan seeks to reduce the kingdom's reliance on oil. Renewable energy projects are a major component of this plan.

Saudi Arabia pushes ahead with renewable drive to diversify energy mix  -- Saudi Arabia aims to produce 10 percent of its power from renewable sources in the next six years as it pushes ahead with a multi-billion-dollar plan to diversify its energy mix and free up more crude oil for export. The drive by the world's top oil exporter will see the kingdom developing 30 solar and wind projects by 2023 to boost its electricity generation and reduce crude oil burning. Saudi Arabia is targeting 9.5 gigawatt (GW) of renewable energy by 2023. The renewables initiative involves investment estimated between $30 billion and $50 billion. Saudi Energy Minister Khalid al-Falih kicked off the massive renewable programme in Riyadh on Monday by announcing the beginning of the bidding process for a 300 megawatt (MW) solar power project, which is expected to come online by 2018-2019. "The energy mix to produce electricity will change, today the kingdom uses large quantities of oil liquids, including crude, fuel oil and diesel," Falih said. "So the percentage of renewable energy by 2023 (will be) 10 percent of total installed capacity in the kingdom." Under an economic reform programme launched last year, known as Vision 2030, Saudi Arabia is seeking to use non-oil means to generate much of its additional future energy needs to avoid running down oil resources and diversify its economy.

Climate change, pollution forces India to move away from fossil fuels towards renewable energy - The mammoth coal-fired Cheyyur electrical station was first imagined by bankers at India’s Power Finance Corporation and senior engineers across town at the Central Electric Authority. That was in 2005, when the country was rich in fossil fuel resources and desperate for electric power. Though India mined more coal than almost any other country, endemic blackouts and brownouts enfeebled its economic prospects. In the central government’s view, the coastal beaches, mud flats and palm groves here along the Bay of Bengal seemed a reasonable site for a $2 billion power station. There was plenty of room for mountainous coal piles, towering smokestacks, six giant turbines, water pumps, effluent pipes, coal ash storage ponds, and a new port. The 589-hectare (1,455-acre) plant site included portions of this community and five other isolated farm and fishing villages. Twelve years later, as waves lap against Bay of Bengal beaches and inland farmers cultivate stone fruits and vegetables in Edenic, palm-shaded groves, it is plain that neither Tamil Nadu plant gained traction. Work on 12 other power stations has been suspended. The Ultra Mega Power Projects idea, as originally conceived, is dead in India.   Some 3,000 to 4,000 people live here near the wide Bay of Bengal beach and beneath cooling canopies of coconut and palmetto.   That pastoral lifestyle is no longer imperiled by a giant power plant.  In an outdoor interview graced by fresh coconut milk and raw cashews, Harikrishna explained through an interpreter that he and his neighbors had plenty to defend. Krishna’s family has spent at least 12 generations on the same sandy ground where he and his wife live with two of their three sons, their wives, and two grandchildren. Milk cows wander the yard strewn with dried palm fronds. Fruits and vegetables ripen in the dark furrows of a bountiful garden. Fresh coconuts lie in a green pile awaiting the swipe of a sharp knife that makes the sweet milk inside available. In Tamil Nadu, the Cheyyur mega plant’s opponents were helped by economic and ecological trends that are beginning to close out the age of black fuels, starting with coal. Global coal production peaked in 2013 at 8 billion metric tons and has been falling one to two percent annually in the years since. Coal exports worldwide are declining. Prices are erratic. Public concern about water supply and water and air pollution from big coal-fired power plants has escalated along with construction delays and expenses.

 S. Korea coal, nuclear power targeted for cuts by presidential candidates -- No matter who is elected as South Korea’s new leader next month it is clear that coal and nuclear power generation will likely be scaled back. The two leading candidates, liberal front-runner Moon Jae-In and centrist Ahn Cheol-soo, both plan to lower South Korea’s reliance on coal and nuclear power, pointing to a need to shift to renewable energy, according to their policy advisors. South Korea, Asia’s fourth-largest economy, gets 40 percent of its electricity from coal, 30 percent from nuclear, 20 percent from natural gas, and the rest from oil and renewables. But policy changes are expected amid growing concerns over pollution and the safety of nuclear energy, and Moon and Ahn appear determined to help drive them. “We should move away from coal and nuclear power, and shift to clean or renewable energy-based platforms,” said Kim Jwa-kwan, head of Moon’s energy policy team.

Battle to Save Dying Arizona Coal Plant Goes to Washington - For more than four decades, the Navajo generating station in the dusty Four Corners area of Arizona has been the region’s economic engine, generating jobs and vital government revenue along with 2,250 megawatts of power. Now its utility owners want to start the process of closing the plant as early as July. Their argument: Coal can’t compete with cheap natural gas. To save the plant and about 800 jobs linked to it, the Navajo and Hopi are taking their case to a higher power: A U.S. president who’s vowed to revive the slumping coal industry. Tribal leaders met Wednesday with the Trump administration, the owners and other stakeholders in a final push to keep the generator running. The Hopi’s 15,000 members derive 80 percent of their government revenue from coal mining royalties. For the Navajo, with 170,000 members, it’s 40 percent. “It’s a linchpin of the Navajo and Hopi economy,” said Dan Dubray, a spokesman for the U.S. Interior Department, which owns 24 percent of the plant and has a legal obligation to protect tribal assets and resources. The battle to keep coal alive in an era of cheap natural gas is being fought across the nation, from West Virginia to Montana. It’s a debate in which the tribes have a significant stake. The Hopi’s 15,000 members derive 80 percent of their government revenue from coal mining royalties. For the Navajo, with 170,000 members, it’s 40 percent. The generating station and the nearby Kayenta coal mine that feeds it each employs about 400 workers, and together they generate millions in economic activity. The mine, on both of the tribes’ lands, supplies coal to the plant -- its only customer -- via electric rail.

EPA seeks to scuttle cleanup of coal power plant pollution   (AP) -- The Trump administration is once again seeking to scuttle cuts to pollution from coal-fired power plants. The Environmental Protection Agency on Tuesday asked a federal appeals court in Washington to postpone consideration of 2012 rules requiring energy companies to cut emissions of toxic chemicals. The agency said in a court filing it wants to review the restrictions, which are already in effect. Nationally, most utilities are already on pace to comply with the new standards. It is the latest in a string of moves by President Donald Trump’s appointees to help companies that profit from burning of fossil fuels. Last week EPA administrator Scott Pruitt announced he would seek to rewrite Obama-era rules limiting water pollution from coal-fired power plants. The agency also sought to roll back tighter restrictions on pollution from coal mines. Trump has pledged to reverse decades of decline in a U.S. coal industry under threat from such cleaner sources of energy as natural gas, wind turbines and solar farms. The president has also said he doesn’t agree with the consensus of climate scientists that carbon emissions from fossil fuels is the primary cause of global warming. Coal burned to generate electricity is also the nation’s largest source of mercury pollution, which when inhaled or ingested by pregnant women can harm the development of infant brains.

 2 Tennessee Cases Bring Coal’s Hidden Hazard to Light - — The hulking Gallatin Fossil Plant sits on a scenic bend of the Cumberland River about 30 miles upstream from Nashville. In addition to generating electricity, the plant, built in the early 1950s by the Tennessee Valley Authority, produces more than 200,000 tons of coal residue a year. That coal ash, mixed with water and sluiced into pits and ponds on the plant property, has been making its way into groundwater and the river, potentially threatening drinking water supplies, according to two current lawsuits.Coal ash, the hazardous byproduct of burning coal to produce power, is a particularly insidious legacy of the nation’s dependence on coal. Unlike the visible and heavily regulated airborne emissions from power plant smokestacks, coal ash is largely unseen unless there is a major spill and, until recently, far less effectively regulated.More than 100 million tons of coal ash is produced every year, one of the nation’s largest and most vexing streams of toxic waste. The hazardous dust and sludge — containing arsenic, mercury, lead and other heavy metals — fill more than a thousand landfills and bodies of water in nearly every state, threatening air, land, water and human health.The Gallatin power plant is facing citizens’ complaints and two major lawsuits over its handling of coal ash. One suit, filed in 2015 by an environmental advocacy group in federal court, says the utility violated the Clean Water Act by allowing toxic leaks from its coal ash disposal ponds. A second, also filed in 2015, by the state’s attorney general and its environmental enforcement agency, asserts that the Tennessee Valley Authority broke state pollution laws and endangered public health. The state case is scheduled to go to trial this year; in the federal case, which went to trial at the end of January, the parties were scheduled to file proposed findings of fact on Friday.

 Exxon probe is unconstitutional, Republican prosecutors say | Reuters: A group of 11 Republican state attorneys general are protesting an investigation into whether Exxon Mobil Corp. violated consumer protection laws when selling fossil fuel products, according to a court filing. Top prosecutors for Alabama, Arizona, Arkansas, Louisiana, Michigan, Nebraska, Oklahoma, South Carolina, Texas, Utah and Wisconsin, all of whom are Republicans, filed a brief in U.S. District Court in Manhattan supporting a lawsuit by Exxon to halt a probe by New York Attorney General Eric Schneiderman and Massachusetts Attorney General Maura Healey. Schneiderman and Healey, both Democrats, are looking at whether the company violated consumer protection laws by selling fossil fuels while failing to reveal information about the effects of burning them on the global climate. In their brief, the attorneys general said Healey and Schneiderman were abusing their power and violating Exxon's rights to free speech by "using law enforcement authority to resolve a public policy debate" over whether carbon emissions cause climate change, a debate they claim is not settled. The brief cites a May 17, 2016, article in the conservative magazine the National Review by Scott Pruitt, who at the time was attorney general for Oklahoma and earlier this year was appointed by President Donald Trump to lead the Environmental Protection Agency, claiming "scientists continue to disagree about the degree and extent of global warming and its connection to the actions of mankind."

France enshrines decision to close oldest nuclear power generation plant - The French government on Sunday published a decree for closing the country’s oldest nuclear plant, fulfilling a campaign-trail pledge made by President Francois Hollande who is now in the final weeks of office. The decree sets down the conditions for closing a nuclear plant at Fessenheim, near the border with Germany. Fessenheim will cease operations when a new reactor, currently being built at Flamanville on the Normandy coast, “enters service,” the decree said. France’s nuclear plant operator EDF last month said the Flamanville reactor — a project that has run into deep problems — will begin operations in 2019. The closure of the twin-reactor plant at Fessenheim is part of a plan to slash France’s dependence on atomic energy.

Nuclear power subsidies on tap in a growing number of states, including New York and Connecticut | While "no nukes" was once a top rallying cry within the environmental movement, at least five states now hope to subsidize older nuclear plants in order to meet clean energy goals. Nuclear subsidies have passed in New York and Illinois, legislation has been introduced in Connecticut, a bill will soon be introduced in Ohio, and a program is being considered in New Jersey, according to the trade publication Utility Dive. Several states are pursuing "zero-emission credits" where the plants would receive payments for each unit of carbon-free power they produce. Connecticut's proposal is different, and would secure power purchase agreements for Millstone Station, the state's sole nuclear plant. The costs of the subsidies would be borne by ratepayers. Nuclear plant owners say they can't compete in wholesale electricity markets where natural gas generators enjoy a strong advantage, and where renewables benefit from various incentives. Many nuclear generators are facing the risk of early closure. At the same time, nuclear advocates say the plants provide major round-the-clock generation without producing carbon dioxide, a greenhouse gas that contributes to climate change. Each of the states considering nuclear subsidies have adopted strong renewable portfolio standards with the goal of reducing emissions. The standards require that an increasing portion of electricity come from low-carbon sources.

Shipments Of Waste To WIPP Resume -- After a three year hiatus due to a radiation leak that triggered a multi-billion dollar clean up and policy changes, the Waste Isolation Pilot Plant underground repository in southeastern New Mexico is taking shipments of nuclear waste again. The February 2014 leak was blamed on an improperly packed drum of waste. It took until December 2016 for normal operations to resume at the repository – the county’s only underground facility for radioactive waste – but shipments did not resume until this week. Shipments will arrive from the national laboratory in Idaho, Savannah River in South Carolina and from Waste Control Specialists in Texas. Despite the cleanup, procedures are more strident and work slower than prior to the leak. Workers must now use protective clothing, respirators and radiation detection devices they did not use before the leak, AP reported.

How Western civilisation could collapse - Safa Motesharrei, a systems scientist at the University of Maryland, uses computer models to gain a deeper understanding of the mechanisms that can lead to local or global sustainability or collapse. According to findings that Motesharrei and his colleagues published in 2014, there are two factors that matter: ecological strain and economic stratification. The ecological category is the more widely understood and recognised path to potential doom, especially in terms of depletion of natural resources such as groundwater, soil, fisheries and forests – all of which could be worsened by climate change. That economic stratification may lead to collapse on its own, on the other hand, came as more of a surprise to Motesharrei and his colleagues. Under this scenario, elites push society toward instability and eventual collapse by hoarding huge quantities of wealth and resources, and leaving little or none for commoners who vastly outnumber them yet support them with labour. Eventually, the working population crashes because the portion of wealth allocated to them is not enough, followed by collapse of the elites due to the absence of labour. The inequalities we see today both within and between countries already point to such disparities. For example, the top 10% of global income earners are responsible for almost as much total greenhouse gas emissions as the bottom 90% combined. Similarly, about half the world’s population lives on less than $3 per day.   For both scenarios, the models define a carrying capacity – a total population level that a given environment’s resources can sustain over the long term. If the carrying capacity is overshot by too much, collapse becomes inevitable. That fate is avoidable, however. “If we make rational choices to reduce factors such as inequality, explosive population growth, the rate at which we deplete natural resources and the rate of pollution – all perfectly doable things – then we can avoid collapse and stabilise onto a sustainable trajectory,” Motesharrei said. “But we cannot wait forever to make those decisions.”

Rover Pipeline dumps up to 2 million gallons of 'drilling fluid' south of Navarre - Crews working on the Rover Pipeline dumped drilling fluid on wetlands in Stark and Richland counties, according to papers filed with the Ohio Environmental Protection Agency. The larger spill — estimated between 1.5 million and 2 million gallons — occurred in a wetland adjacent to the Tuscarawas River south of Navarre. The pipeline passes through Bethlehem and Pike townships in Stark County and intersects with the river, according to maps. The second spill is estimated at 50,000 gallons and occurred in Mifflin Township east of Mansfield. Both spills involved drilling fluids — a mud containing bentonite — from horizontal directional drilling tied to construction of a buried pipeline, according to Ohio EPA paperwork. In Bethlehem Township, crews were drilling under the Tuscarawas River to create a path for the pipeline. Drilling has stopped while the company cleans up the spills, Ohio EPA spokesman James Lee said. Vacuum trucks and pumping systems are being used to clear away the mud. The state agency is monitoring the clean up process, he said. The company reported both spills to the Ohio EPA last week, when the incidents occurred. Energy Transfer Partners, based in Houston, is building the $4.2 billion Rover Pipeline to move natural gas produced by wells in the Utica and Marcellus shale formations from southeastern Ohio to distribution points in western Ohio, Michigan and Canada. The company hopes to have the project finished and the pipeline operating late this year. According to the Ohio EPA report, the drilling fluids dumped in Bethlehem Township contained bentonite and cuttings from the dirt and rock formation being drilled. The material covered roughly 500,000 square feet or wetlands with a layer of mud that impacted water quality.

Rover Pipeline work dumps 50,000 gallons of drilling fluid in Mifflin Twp. wetlands | Ashland Source | An estimated 50,000 gallons of drilling fluids were dumped into wetlands in Mifflin Township in eastern Richland County by crews working on the Rover Pipeline, according to documents filed last week with the Ohio Environmental Protection Agency. The spill involved drilling fluids from horizontal directional drilling related to construction of the buried pipeline being built by Houston-based Energy Transfer Partners. James Lee, spokesman for the Ohio EPA, said the spill took place on Friday, April 14, in the area of Amoy-Pavonia Road and was reported to the EPA by Energy Transfer Partners. According to Ohio EPA paperwork, the drilling fluids accumulated within an estimated 30,000 square foot area of wetlands. The drilling fluids, which included bentonite and cuttings from the natural formation, coated the area with a layer of mud and impacted water quality. Bentonite is a natural clay mud used as a lubricant for drilling. After being informed of the spill, the Ohio EPA issued a notice of violation for the unauthorized discharge to waters of the state, in this case a wetland, Lee said. Lee emphasized that no private wells or public water systems were impacted by the spill. Vacuum trucks and pumping systems are being used by the company to clean up the spill and the Ohio EPA is monitoring the situation. According to Lee, discharges of bentonite mud and other material into waters of the state (including wetlands) can affect water chemistry, and potentially suffocate wildlife, fish and macroinvertebrates. Any affected public water systems would need to apply extensive and costly treatment in order to remove the material from the source water. It’s unknown if the company will receive any fines or further sanctions at this time.

Fracking Pipeline Spilled Millions Of Gallons Of Mud Into Ohio Wetlands – WOSU -- A Texas company building a high-pressure natural gas pipeline has been issued violations notices by the state of Ohio for spilling drilling mud in separate wetlands. An Ohio Environmental Protection Agency notice says Rover Pipeline spilled around 2 million gallons of the mud used as a lubricant into wetlands while drilling beneath the Tuscarawas River in Stark County, about 60 miles south of Cleveland. An EPA spokesman says no mud got into the river. The company spilled 50,000 gallons of the naturally-occurring mud call bentonite the next day in Richland County about 70 miles northeast of Columbus. The $4.3 billion, twin 42-inch pipeline project will transport gas from Appalachian fracking operations.  The company says cleanup is finished in Richland County and continuing in Stark County.

 Widely-Opposed Pipeline 'Confirms Worst Fears' After Two Spills Into Ohio Wetlands -- Energy Transfer Partners ' new Rover Pipeline has spilled millions of gallons of drilling fluids into Ohio's wetlands. Construction of the $4.2 billion project only began last month. According to regulatory filings obtained by Sierra Club Ohio , on April 13, 2 million gallons of drilling fluids spilled into a wetland adjacent to the Tuscarawas River in Stark County. The next day, another 50,000 gallons of drilling fluids released into a wetland in Richland County in the Mifflin Township. The spills occurred as part of an operation associated with the pipeline's installation.   Dallas-based Energy Transfer Partners is the same operator behind the controversial Dakota Access Pipeline . The U.S. Federal Energy Regulatory Commission approved the Rover Pipeline's construction in February. The 713-mile pipeline will carry fracked gas across Pennsylvania, West Virginia, Ohio and Michigan and Canada, and crosses three major rivers, the Maumee, Sandusky and Portage, all of which feed into Lake Erie. The pipeline is designed to transport 3.25 billion cubic feet of domestically produced natural gas per day.  Completion of the Rover Pipeline is planned for November 2017. Energy Transfer spokeswoman Alexis Daniel told Bloomberg that the spills will not change the project's in-service date.

Pipeline firm cited for 2M-gallon spill in Ohio wetlands -  (AP) — A Texas company building a high-pressure pipeline to carry natural gas from Appalachia has been issued violation notices for spilling a total of about 2 million gallons of drilling fluid into two separate wetlands last week, the Ohio Environmental Protection Agency said. About 2 million gallons of the non-toxic, clay-based lubricant spilled April 13 as Rover Pipeline employees drilled horizontally beneath the Tuscarawas River near Navarre in Stark County, about 60 miles south of Cleveland. EPA spokesman James Lee said Thursday that none of the clay mud, called bentonite, reached the river. The spill, covering 500,000 square feet, was caused by pressure during drilling that allowed mud to rise to the surface, Lee said. The next day, about 50,000 gallons of bentonite spilled in Richland County, about 70 miles northeast of Columbus, after a pump failed. No bentonite has been found in private water wells or public water systems from either spill, Lee said.

Sabal Trail, Marcellus / Utica natural gas supply and Florida's growing power market.  - The Florida natural gas market will soon have access to another supply source. In June 2017, the Sabal Trail Transmission natural gas pipeline project is expected to begin service, bringing the market one step closer to connecting Marcellus/Utica natural gas to demand markets on the increasingly gas-thirsty Florida peninsula. The project will increase gas supply options for growing power generation demand in the Sunshine State while effectively also increasing gas-on-gas competition between producers in the Northeast, Gulf Coast and Midcontinent. Today we provide an update on Sabal Trail and its related projects. The Florida peninsula has long been isolated from natural gas supply areas, with minimal in-state production, no gas storage capacity to speak of and just two pipeline options for shipping gas into the state from other supply regions. All that may have been acceptable—or at least manageable—at one point in time, but the state in recent years has added significant amounts of gas-fired power generation capacity. Florida—already one of the biggest consumers of natural gas to generate electricity, second only to Texas—is hugely dependent on natural gas and becoming more so. To meet growing demand for electricity in Florida, NextEra Energy’s Florida Power and Light Company (FPL), the state’s largest electric utility and the largest consumer of natural gas, has undertaken a significant revamp of its generation fleet to replace legacy plants that burn coal and less-efficient natural gas peaker units (see Lady Well Power for more on peaker units). FPL completed its first major plant upgrade at Cape Canaveral in April 2013 – a 1,277-MW combined cycle gas turbine unit consuming about 175 MMcf/d of natural gas. Additional gas-fired generation plant capacity has been added since then.  This includes the addition of the 1,250-MW Riviera Beach plant in spring 2014 and the 1,277-MW Port Everglades plant in Fort Lauderdale in April 2016; a 460-MW expansion of Tampa Electric’s Polk County Power Station in January 2017; and a planned new 1,640-MW Duke Energy combined-cycle power plant in Citrus County, FL, and the Okeechobee Clean Energy Center, a 1,600-MW combined-cycle gas-fired power plant in Okeechobee County scheduled to open in 2019.

US shale investment back on the upswing - Charleston Gazette-Mail -  Global upstream oil and gas merger and acquisitions reached $136 billion in 2016, according to Evaluate Energy’s global M&A 2016 review. And one area seeing a jump in activity was the U.S. Marcellus shale, where close to eight times more was invested in asset and corporate acquisitions in 2016 than in 2015. The Marcellus formation, which runs through northern Appalachia, primarily in Pennsylvania, West Virginia, New York and Ohio, is considered the second-largest natural gas field in the world, after Northfield in Qatar and Iran. Marcellus spans approximately 60.8 million net acres with an estimated 500 trillion cubic feet of natural gas, about 50 trillion cubic feet of which is recoverable using current technology. In 2015, the U.S. shale industry was one of the main casualties of the oil price downturn, suffering a 75 percent drop in year-on-year merger and acquisition spending to $13 billion. This amount was the lowest annual M&A U.S. shale spend since 2009. A reshuffling of asset portfolios in 2016 redirected investments away from the Permian basin, and toward the Marcellus Shale, which led to resurgence in deals as well as natural gas output. The M&A spend in the shale industry bounced back to $48 billion during 2016, representing a 269 percent increase year on year.Many of the players were eager to take advantage of other companies realizing that their respective Marcellus positions were noncore assets. Mega international players such as Anadarko Petroleum Corp., Statoil ASA and Mitsui & Co. sold significant portions of Marcellus land for sums of more than $100 million. Southwestern Energy Company, in efforts to reduce debt, agreed a large deal to sell Marcellus acreage that had no drilling plans until 2023. The acquirers of these assets included far more Marcellus or Appalachian basin-centric companies.Overall, the Marcellus 2016 deals totaled $7.25 billion. This kind of year-on-year increase usually reflects one or two mega deals but not in 2016, when the total included 13 large deals (over $100 million). Both figures are a significant increase on 2015 activity, when only $920 million was spent and only three large deals took place. In fact, 2016 saw more large deals in the Marcellus than in every year since 2010, the first real M&A boom, when 15 such deals were announced.

Cabot Oil & Gas : New suit alleges fracking polluted Dimock Twp well water --Two weeks after a judge reversed a $4.24 million well contamination verdict against Cabot Oil & Gas Corp., another Dimock Twp. resident filed a federal lawsuit alleging the company's Marcellus shale drilling operations contaminated his well water. Ray Kemble claims Cabot's negligence in drilling natural gas well pads contaminated the well water at his home on Route 3023 with several toxic chemicals and high levels of methane. Kevin Cunningham, a spokesman for Cabot, said Kemble's lawsuit appears to include claims that were resolved by a settlement he reached with Cabot years ago. "Mr. Kemble has been active for years in the media voicing his opposition to development of natural gas in Pennsylvania and this suit appears to be a continuation of that monologue," Cunningham said in a statement. "Cabot intends to vigorously defend the lawsuit." The lawsuit, filed Thursday by attorneys Edward Ciarimboli and Clancy Boylan of Kingston, says Kemble initially noticed problems with his well water in 2008, shortly after Cabot began drilling natural gas wells near his Susquehanna County home. Tests run by state and federal environmental agencies later determined his home and others had high levels of methane. Over the next few years, the water quality problems worsened. By November 2012, his water was "black, like mud, and had a strong chemical odor," the suit says. "Plaintiffs water continues to this day to turn different colors, emit different foul and toxic chemical odors, making it unfit to use for any purpose," the suit says. The suit also alleges a compressor station that transports natural gas to a pipeline disrupts the peace, emitting high decibel screeching and pressure venting noises that can be heard at Kemble's property. It was not clear why Kemble waited nearly a decade to file the lawsuit. Attempts to reach Ciarimboli and Boylan for comment Friday were unsuccessful.

Ship & Shore Environmental Introduces Hydroflare Produced Water Evaporator - Ship & Shore Environmental Inc. today announced the introduction of Hydroflare, a first-to-market technology developed in partnership with Hydrozonix a leading water quality management company. The companies have joined forces in response to recent demand for a viable, efficient and long-term solution for managing water sourcing and wastewater treatment in hydraulic fracturing. This new technology evaporates and treats the “produced water” that oil and gas companies generate in the fracking process. “The number of hydraulic fracturing (fracking) shale oil and gas wells in the US, and worldwide, continues to increase. Discharge of water from the fracking process to the ground creates many environmental problems. In addition, demands on fresh water supplies are mounting, as is the need to process the large volumes of produced wastewater. Companies in the oil and gas industry are under increasing pressure to control the produced water and field gas, so we partnered with Hydrozonix to develop a technology that finally provides a solution. And no solution like Hydroflare exists on the market today,” said Anoosheh Oskouian, President & CEO of Ship & Shore Environmental, Inc. The US has vast reserves of oil and natural gas which now are commercially reachable as a result of advances in horizontal drilling and hydraulic fracturing technologies. But as more hydraulic fracturing wells come into operation, the stress on surface water and groundwater supplies grow more demanding. Withdrawing large volumes of water used in the process requires up to one million gallons (3,780 m3) of fresh water per wellhead to complete the fracking process alone. In addition, the injection of produced water into disposal wells has negatively affected some areas. There have been recent incidents where the injection has induced earthquakes in Oklahoma and Ohio. As a result, some areas have placed restrictions on the injection of produced water into disposal wells. This has led to a lack of capacity and high disposal prices for produced water. Hydroflare alleviates all of these issues. The new technology takes natural gases produced by the fracking process and uses it to provide energy to evaporate this produced wastewater. Ship & Shore Environmental and Hydrozonix have created a revolutionary solution that is long-term and efficient.

Coal, fracking, Amish or what? --Sometimes you can have your cake and eat it, too. But when it comes to energy you cannot! The law of conservation of energy is a fact we must all live by. If you want energy, (the ability to do work, which includes electrical, motion, heating, cooling, building, etc.) you must first have energy. Energy can only come from energy, and our modern society requires vast amounts of it. Currently, we are getting a majority of our energy (electricity) from coal, but there are several others options available and many more possibilities yet to be explored.  Coal has been our go-to energy source since the industrial revolution.  Without the energy locked up in coal, none of the work required for the industrial revolution would have been possible. . But there are other sources of energy that are powerful, plentiful, and not-as-dirty. Natural gas is one such alternative. Vast amount of natural gas has recently, within the last 20 years, been discovered deep within our nation’s bedrock. Natural gas is powerful and plentiful, the northern great plains of America have been described as the Saudi Arabia of natural gas. When natural gas is burned, instead of coal, far less carbon dioxide (CO2) is released into the atmosphere, reducing the greenhouse effect. Therefore, natural gas has many of the benefits of coal as a suitable national energy source. However, it too has negative side effects when it is used on an industrial scale. The extraction of natural gas is the major problem when compared to coal. The extraction of natural gas requires a modern technique called Hydrological Fracturing, . In times of water shortages, should we be using our fresh water resources for extraction of natural gas? Or we can go Amish. With all respects to the Amish people, their belief in living simple on the earth forbids them to use electricity within their daily lives. I do not know too many people who could carry on their daily lives without the assistance of electricity, which has been generated by the combustion of coal or natural gas. The truth is we need our electricity! Electricity is energy, and coal and natural gas are the two resources we have available to use. You choose: coal or natural gas? You cannot say no to both, energy must come from somewhere.

Vermont Gas Pipeline: Safety Concerns Presented To Governor, Federal Pipeline Safety Administration | Global Justice Ecology Project: Concerned Vermonters have compiled evidence of serious and chronic safety issues surrounding construction of the Vermont Gas pipeline from Colchester to Middlebury. These were detailed and documented in a letter delivered to Governor Scott and a similar letter also delivered to the federal Pipeline Hazardous Material Safety Administration on Monday, April 10th from eight Vermont organizations (listed below). Vermont Gas plans to add flammable gas, under pressure, to the pipeline within the next few weeks. The letters state: “The pipeline has been constructed in haste and without consistent and effective regulatory oversight. Those living near the pipeline are now at risk of harm from a potential pipeline failure, leak or explosion.” Evidence gathered from numerous public records requests and observations show a wide range of problems involving electrical safety, problems with welds and coatings, incorrect placement and handling of pipe and more. Indications are that the company did not even have the essential and required comprehensive written specifications for construction in place. Contractors were therefore left without proper guidelines. Workers were not properly qualified for tasks. Inspectors were not provided with protocols for inspection and required onsite technical experts were not present as required. These problems were raised throughout multiple years of construction and in most cases appear never to have been resolved while construction was allowed to continue. The pipeline now lies buried underground.A prior communication from the groups to the federal Pipeline and Hazardous Material Safety Administration (PHMSA) in October 2016 led to an announcement in January 2017 that the federal agency would open an investigation. Since then, many additional problems have come to light and are presented in detail in documents delivered along with the letters.

Environmental group asks court to block work on Pinelands pipeline until appeals are heard: Citing “imminent environmental harm,” the Pinelands Preservation Alliance on Tuesday asked the Appellate Division of New Jersey Superior Court to block the start of construction of South Jersey Gas’ pipeline through the Pinelands while the court considers several appeals against the project. The motion for a stay further asserts that the Pinelands Commission’s Feb. 24 approval of the project violated its own comprehensive management plan, or charter; that the commission did not conduct proper hearings before the approval; and that two commissioners who voted for the project had potential conflicts of interest. The 22-mile-long pipeline would begin in Maurice River Township in Cumberland County and serve a natural gas-fired electrical-generation plant in Upper Township, Cape May County. Ten miles of the route would run through a protected Pinelands forest where, opponents say, such infrastructure is barred by the Pinelands Commission’s comprehensive management plan. Before a vocal crowd of about 800 at the Crowne Plaza Hotel in Cherry Hill, the Pinelands Commission’s board approved the route by a vote of 9-5 with one abstention. Three years earlier, it had rejected the identical project on a 7-7 vote.  “We contend the company [South Jersey Gas] is not substantially harmed by waiting until the appeal is decided before starting construction. In contrast, any construction would cause environmental harm and be entirely unnecessary.”

Don't Call It a Comeback - It's Not Your Father's Haynesville Natural Gas Shale Play - After spending the past few years on the backburner with declining production volumes, the Haynesville Shale natural gas play, which straddles the Northeast Texas-Louisiana border, is back in the headlines. Rig counts in the region have doubled in the Haynesville in the past six months or so. Exco Resources—which has four rigs operating there currently—last week said it is divesting its Eagle Ford assets in favor of boosting drilling investment in the Haynesville. At the same time, there’s a new crop of operators in the play dedicated specifically to drilling in the Haynesville. While total basin production volumes have yet to take off, all signs point to a Haynesville resurrection of sorts. But there are also early clues that much has changed since the first go-round and the drilling profile of today’s Haynesville is likely to look much different than it did nearly 10 years ago. Today we begin a look at RBN’s latest analysis of production economics in the Haynesville Shale. Our blog title today is from the first line of LL Cool J’s tune, “Mama Said Knock You Out,” that pleads: “Don't call it a comeback, I been here for years.” And so it goes for the Haynesville Shale. The mostly pure gas play came on the scene in 2008 and quickly became the darling of the Shale Revolution But when gas prices began falling, drilling economics there were priced out of the market and the play eventually lost favor among producers, hanging on for a time as some wells continued to be drilled to hold leases (for more on HBP, or held-by-production leases, see Hold on Tight). The Haynesville never entirely went away, except perhaps from the headlines, but it’s been largely sidelined in recent years—that is, until now.

Coming soon to the US: more LNG terminals? — If Gary Cohn gets his way, the U.S. could be the biggest exporter of liquefied natural gas in the world. The director of the White House’s National Economic Council — and former Goldman Sachs Group Inc. president — said the administration would step up approvals for LNG export terminals, starting with a project in the Northwest that he didn’t identify. At present, Cheniere Energy Inc. is the nation’s sole LNG exporter from the lower 48 states. “We could be and should be the largest exporter of LNG in the world,” Cohn said at the Institute of International Finance forum in Washington. “We’re going to permit more and more of these LNG plants.” Federal regulators are reviewing about two dozen applications from companies seeking to send America’s gas bonanza overseas. That’s putting the U.S. on course to become a net exporter of natural gas by 2018, the first time that’s happened since the 1950s. Veresen Inc.’s Jordan Cove LNG export project in Oregon has been denied a permit twice by regulators. After Cohn’s comments, shares of the Calgary-based company jumped the most since the beginning of February. The company had no comment on Cohn’s remarks, according to Riley Hicks, a spokesman.

US LNG exports set to tip the gas market scales in 2017 - U.S. LNG exports via Cheniere Energy’s Sabine Pass LNG export facility are poised to be a major demand driver of the domestic natural gas market in 2017. Pipeline deliveries to the terminal have more than tripled since mid-2016 and are set to climb further as more liquefaction capacity ramps up. With two liquefaction trains already operational, the Federal Energy Regulatory Commission last month approved Train 3 to begin operations and also green-lighted the start-up of Train 4 commissioning. Today, we provide an update of Sabine Pass’s export activity and its potential effect on U.S. gas demand this year. Exports are a significant and growing driver of the U.S. natural gas supply/demand balance. As our analysis of gas supply and demand data a few weeks back in You Keep Me Hangin’ On showed, gas exports, including pipeline deliveries to Mexico and Cheniere Energy’s Sabine Pass LNG export facility, soaked up 4.2 Bcf/d of U.S. supplies in 2016, 1.3 Bcf/d (46%) more than in 2015. That incremental demand went a long way toward helping offset the effects of a mild winter (from November 2015 to March 2016) that had led the U.S. gas storage inventory to the highest March-ending level in more than five years. In fact, despite gas demand in the power sector setting records in most months in 2016, the biggest increase in demand in 2016 versus 2015 came from exports. For the full year on average, about 0.8 Bcf/d of the increase came from exports to Mexico and 0.5 Bcf/d from Sabine Pass LNG. But by the end of the year, LNG exports were nearly a third of all U.S. natural gas exports. More recently, they’ve grown to be more than 40% of total average U.S. gas exports. And that is the case in spite of exports to Mexico also growing substantially during the same period. As such, LNG exports are expected to be a major contributor to a tighter gas supply/demand balance this year versus 2016.

 Exxon Mobil plans multi-billion dollar plant near Texas — Exxon Mobil Corp. and a Saudi partner plan to build a multi-billion dollar petrochemical plant near the Texas coast, Texas' governor said Wednesday. The project will be a venture involving Exxon and Saudi Arabia Basic Industries Corp. Exxon officials have said it'll be among the largest ethane steam cracker plants in the world, with an opening scheduled for 2024. The plant will be built in Portland, just north of Corpus Christi, on roughly 1,300 acres (526 hectares). Estimated to cost about $10 billion, the plant will produce components used to make polyester, anti-freeze, plastic bottles and other items. In formally announcing the project, Gov. Greg Abbott said the plant "illustrates that our business climate is exactly what leading and growing companies are seeking when investing in their future." Yousef Abdullah Al-Benyan, CEO of SABIC, added: "We are focused on geographic diversification to supply new markets." The project has received state and local tax incentives. The Gregory-Portland Independent School District board voted last month to approve $1.2 billion in tax incentives, and San Patricio County commissioners OK'd a $210 million package. Abbott said Wednesday that more than $6 million was offered in state tax breaks. Officials said the project is expected to create thousands of jobs, an important consideration for leaders in San Patricio County. The Corpus Christer Caller-Times reported the area lost more than 800 jobs in the last three months of 2016 with the closure of a plant and a series of layoffs at a manufacturing company. But the project has also generated criticism. Some residents circulated a petition citing safety and environmental concerns. The plant is set to be built less than 2 miles (3.22 kilometers) from the district high school.

How soaring sand costs and water-disposal expenses threaten producer gains in key shale plays. In the past few years, producers in shale and tight-oil plays have made great strides in reducing their drilling costs and improving the productivity of their wells. But the trends toward much longer laterals and high-intensity well completions have significantly increased the volumes of sand being used—some individual well completions use enough sand to fill 100 railcars or more! An even bigger concern for many producers is the rising cost of disposing of produced water—that is, the water that emerges with hydrocarbons from these supersized wells. Today we begin a surfing-themed series that focuses on how the two key components of any beach vacation—sand and water—are impacting producer profitability. Our initial focus is on sand. We’ll get to water-disposal costs later in this series. Put simply, the Shale Revolution would not have been possible without sand­­—and large volumes of it. As we said in Tales of the Tight Sand Laterals, freeing the vast amounts of oil, gas and natural gas liquids (NGLs) trapped in shale and tight sands requires horizontal drilling to access the long, horizontal layers where the trapped hydrocarbons reside, and proppant (natural sand, ceramics and resin-coated sand) that, when forced out of the horizontal portion of wells at high pressure (using water and other fluids), fracture openings in the surrounding shale/tight sands. When the pressure is released, the fractures attempt to close but the proppant contained in the fluids keeps them open, making a ready path for oil, gas and NGLs to flow into the well bore.

Sand mining grows in Texas along with faith in energy rebound as 'real deal' - Longview News-Journal — 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 as many as 1,000 trucks to haul enough of this sand to frac a single large well. 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. "What's more important? Breathing or having water to drink?"  Sand companies contend they follow regulations to limit silica air pollution and that they have almost no carbon emissions. They are pressing ahead to take advantage of demand and prices that have doubled in a little over a year. Several new sand mines or expansions, covering thousands of acres are proposed in Texas. Sand is mixed into fracking fluids that crack shale rock to prop open the fissures to allow oil and gas to escape, hence the industry name "proppant" to describe the fine grains. The largest wells now consume up to 25,000 tons — 50 million pounds — of sand each, up from 1,500 tons, or about 3 million pounds, per well during the boom years through 2014.When oil prices crashed and companies sought ways to lower production costs, drillers began experimenting with the idea of using more sand — cheaper than chemicals and ceramic proppants — to increase oil and gas output. Drillers are creating much longer wells that extend a mile or two horizontally and sometimes pumping more than 5,000 pounds of sand per foot, according to energy analysts and executives, including Rick Shearer, the chief executive of sand manufacturer Emerge Energy Services.

Why The Permian Doesn’t Keep OPEC Awake At Night | The recent headlines have been eye-popping. “The Permian Basin Keeps On Giving”. “A $900 Billion Oil Treasure Lies Beneath West Texas Desert”. “Shell’s New Permian Play Profitable at $20 A Barrel”. “The World’s Hottest Oil Play”. “Permian Basin Prevails”. “The Permian Basin: An existential Threat To Canadian Oil As The War On Cost Heats Up”. “This Texas Oilfield Is Messing With OPEC”. The articles contain analysis and commentary concluding that no matter what happens in the rest of the world, the future of oil prices will be heavily influenced by U.S. light tight oil (LTO) producers and more specifically, the Permian. This is more of the popular thesis OPEC is dying or dead and the United States has replaced Saudi Arabia as the world’s swing producer. Except it is not true. If you believed every word you would conclude there are only two sources of oil on earth: the Permian Basin and everyone else. While the Permian is a wonderful and significant mass of hydrocarbon-rich formations, its impact on world oil prices in the next few years is overstated. A typical pro-Permian article appeared in Forbes November 21, 2016 under the title “The Permian Keeps On Giving”. It followed a report by the U.S. Geological Survey (USGS) following a new assessment of the Permian including a relatively undeveloped horizon called the Wolfcamp shale. The USGS reported some 20 billion barrels of oil was yet to be discovered and is technically recoverable; Following the USGC report Bloomberg ran a headline reading, “A $900 Billion Oil Treasure Lies Beneath the West Texas Desert”. Expanding on the Wolfcamp assessment, Bloomberg wrote, “That’s almost three times larger than North Dakota’s Bakken play and the single largest U.S. unconventional crude accumulation ever assessed. At current prices, that oil is worth almost US$900 billion”. Of course, that’s if every barrel is discovered and recovered and before any costs.

Why Exxon Is Giving Its Shale Unit a Long Leash - In a matter of weeks, crews working for Exxon’s XTO Energy Inc. unit will begin erecting drilling rigs across a patch of southeast New Mexico to exploit the region’s mile-thick strata of oil-soaked rock. ExxonMobil Corp. paid almost $6 billion for the drilling rights in late February—its biggest acquisition in more than six years—but that’s where the parent company’s involvement ends: Decisions on when and how to harvest the crude fall solely on the shale experts at XTO. Exxon Chief Executive Officer Darren Woods and his top lieutenants at corporate headquarters in suburban Dallas are intentionally staying out of the way of the tightly knit phalanx of XTO engineers, physicists, and geologists leading the oil major’s advance into shale.  The top-down and heavily structured approaches they use on megaprojects—building a liquefied gas export complex or pumping crude that lies miles beneath the sea surface—won’t work with shale. Rigs and roughnecks must be hired or moved at a moment’s notice in response to emerging opportunities or volatile crude prices. “Historically, the major operators have been slower-moving beasts,” Barrett says. But in the age of shale, “the ability to be flexible is a huge advantage.”To that end, XTO managers aren’t constrained by the purchasing order system that governs project spending at the rest of Exxon, the people said. The practice, conceived for projects that can take a decade to build and cost $50 billion, is too burdensome for shale’s $6 million wells, which can be up and running within weeks. XTO’s special dispensation means it can hire a bulldozer to clear a drilling site or summon a fracking crew to complete a well without enduring the monthslong wait for signoffs by multiple layers of middle and upper management. XTO planners are also free from the usual Exxon practice of submitting—and strictly adhering to—12-month operating blueprints that undergo arduous vetting and amendment as they make their way through manifold HQ filters.

Tribal Members in Oklahoma Defeat Natural Gas Pipeline Company The U.S. District Court for the Western District of Oklahoma has ordered a natural gas pipeline operator to cease operations and remove the pipeline located on original Kiowa Indian lands Anadarko.The ruling in Davilla v. Enable Midstream Partners,, L.P., issued at the end of March, found that Enable Midstream was continuing to trespass on the land and ordered the company to remove the pipeline within six months.The plaintiffs are 38 enrolled members of the Comanche, Caddo, Apache, Cherokee and Kiowa Tribes of Oklahoma. Additionally, the Kiowa Tribe of Oklahoma has an interest in the land. The interests vary from nearly 30 percent to less than 9/10th of a percent. “It’s very significant,” said plaintiffs’ lawyer David Smith.David Klaassen, a spokesman for Enable, said the company doesn’t comment on active legal issues. The Bureau of Indian Affairs approved an easement across the land in 1980 for Enable’s predecessor, Producer’s Gas Company, to construct and install a natural gas pipeline. The original easement expired in 2000, according to court documents. By 2002, the company had changed to Enogex, Inc., and had submitted a right-of-way offer to the BIA and the plaintiffs for another 20 years. The majority of the landowners rejected the offer.In 2008, the BIA’s interim superintendent of the Anadarko Agency approved Enogex’s application to renew the easement for 20 years. The plaintiffs appealed the decision in 2010, and the BIA vacated the opinion.“The BIA determined that it did not have authority to approve the right-of-way without the consent of plaintiffs or their predecessors in interest and that the price offered by defendants was unreasonable,” according to court documents. “The BIA remanded the case for further negotiation and instructed that if approval of a right-of-way was not timely secured that Enogex should be directed to move the pipeline.” A new right-of-way has not been granted and the natural gas pipeline continued to operate, according to the court documents. The plaintiffs filed a trespassing violation and sought preliminary and permanent injunction in November 2015. Smith said the judge agreed with the tribal members that federal law applies and that there can be an accounting for the money made off the land during the period deemed a trespass, which is 17 years. Smith said there are similar issues all across Indian country.

Trump's EPA to reconsider oil and gas emissions rule | Reuters: The U.S. Environmental Protection Agency will reconsider a rule on greenhouse gas emissions from oil and gas operations and delay its compliance date, the agency said on Wednesday in the Trump administration's latest move to reduce regulations. Oil interest groups, including the American Petroleum Institute and the Texas Oil and Gas Association, had petitioned the EPA a year ago to reconsider the rule limiting emissions of methane and other pollutants from new and revamped oil and gas wells and systems. The EPA said in a statement that it would delay the rule's June 3 compliance date by 90 days and take public comments during that period. Under Democratic President Barack Obama, the EPA released the first methane limits on the facilities in May 2016, saying it would cost energy companies $530 million, but would lead to $690 million in benefits, including lowering medical bills. Scott Pruitt, the EPA chief in the administration of Republican President Donald Trump, joined dozens of other states in challenging the rule when he was attorney general of oil-producing Oklahoma. Pruitt has said he does not believe that greenhouse gas emissions are the main driver of climate change. Energy companies had complained that the methane rule would add costs to wells that were not producing much oil and gas, and that it was duplicative as the sector had already reduced the emissions.

Does methane rule review shut out public input? -  Don Nelson estimates he can spot 60 or 70 natural gas flares from his North Dakota ranch — even now that the state has raised its gas capture rate to nearly 90 percent.  Ahead of the release of the Bureau of Land Management's final Methane and Waste Prevention Rule, Nelson attended two hearings to testify in support of the regulation to curb gas flaring, venting and leaking from oil extraction operations on federally controlled lands."I think it's the biggest waste I've ever seen in my life," he said.  Nelson joins a chorus of Westerners and environmentalists calling on President Trump's Interior Department not to shut out public input on its reconsideration of the BLM rule (Greenwire, April 12). Following the release of Trump's "energy independence" executive order, Interior Secretary Ryan Zinke called for a 21-day review to determine whether the rule — and at least two other department regulations — was fully consistent with the new administration's policies.Zinke handed down his order March 29. The review process isn't unlike efforts by previous administrations to look back at rules introduced by their predecessors, according to an Interior spokeswoman. The executive and secretarial orders simply offer a more formal process, the agency says. Putting a 21-day deadline on the process is not typical, said Alexandra Teitz, who previously served as counselor to former BLM Director Neil Kornze.

Dakota Access, ETCO oil pipelines to start interstate service May 14 - The Dakota Access Pipeline and connected Energy Transfer Crude Oil Co pipeline will start interstate service May 14, opening access for up to 470,000 b/d of Williston Basin crude to move to the Texas Gulf Coast, according to regulatory filings. The pipelines' developers announced the startup timing in separate tariff filings to the US Federal Energy Regulatory Commission posted Thursday. Dakota Access' uncommitted rate is $6/b to move Bakken crude from one of several field points to Patoka, Illinois, and $7.50/b from the field to Nederland, Texas. Shippers that sign a five-year agreement to move at least 5,000 b/d from the field to Illinois would pay $5.25/b.Seven-year committed rates from the Bakken field points to Texas range from $5.60/b for more than 90,000 b/d to $6.50/b for 5,000-29,999 b/d. Ten-year committed rates from the Bakken to Texas range from $5.50/b for more than 90,000 b/d to $6.25/b for 5,000-29,999 b/d. The shipping cost to move crude only on ETCO, from Illinois to Texas, is $1.85/b, according to its tariff filing. Dakota Access received the federal easement it needed to start work at the final unfinished segment in North Dakota on February 8 and has been racing to complete construction and put the delayed project into service.

East Coast refiner shuns Bakken delivery as Dakota Access Pipeline starts | Reuters: Philadelphia Energy Solutions Inc, the largest refiner on the U.S. East Coast, will not be taking any rail deliveries of North Dakota's Bakken crude oil in June, a source familiar with delivery schedules said on Tuesday - a sign that the impending start of the Dakota Access Pipeline is upending trade flows. At its peak, PES would have routinely taken about 3 miles' worth of trains filled with Bakken oil each day. But after the $3.8 billion Dakota Access Pipeline begins interstate crude oil delivery on May 14, it will be more lucrative for producers to transport oil to refineries in the U.S. Gulf Coast. The long-delayed pipeline will provide a boost for Bakken prices and unofficially end the crude-by-rail boom that revived U.S. East Coast refining operations several years ago. "It's the new reality," said Taylor Robinson, president of PLG Consulting. "Unless there's an unforeseen event, like a supply disruption, there will be no economic incentive to rail Bakken to the East Coast." PES declined to comment for this story. The 1,172-mile (1,885-km) Dakota Access line runs from western North Dakota to a transfer point in Patoka, Illinois. From there, the 450,000 barrel per day line will connect to large refineries in the Nederland and Port Arthur, Texas, area.

Montana tribes want Keystone XL away from their drinking Water -  In Montana, the Sioux and Assiniboine tribes are working to protect their drinking water from any potential risks the Keystone XL pipeline poses. The Fort Peck Indian Reservation is home to both American Indian nations, and they know firsthand what can happen when oil drilling destroys a water source. Rolling Stone explores this history and the tribe’s ongoing battle in a story published yesterday (April 19).The 1,179-mile long pipeline is set to cross west of the reservation on the Missouri River—the same body of water the Sioux people fought to protect against the Dakota Access Pipeline. The Fort Peck Indian Reservation's only source of fresh water, from an intake plant, sits downstream. People on the reservation used to pull groundwater from their own wells. Then, in the ’90s, tribal members began to notice changes in their tap water: It was salty.As it turned out, the Murphy Oil Corporation dumped 42 million gallons of wastewater brine into unlined pits between 1952 and 1955, a 2013 investigation published in the University of Montana’s graduate journal found. This water contained benzene, a carcinogen, and reservation residents have seen a cluster of cancer cases as a result.Now, they’re worried about what the Keystone XL pipeline can do."Oh, what the hell, just do it to the Indians: I'm afraid that's just a lot of people's attitudes," said Margaret Abbott, who lives on the reservation, to Rolling Stone. Tribal leaders have attempted to meet with TransCanada, the pipeline developer, but the company canceled a March 16 meeting after protestors picketed tribal headquarters. Another meeting is “tentatively planned,” writes Rolling Stone.

Oil Industry Worried About Trump’s “Buy American” -- U.S. President Donald Trump signed an executive order on Tuesday that would promote his “Buy American, Hire American” trade policy, an agenda that is worrying oil pipeline companies.Trump’s executive order is vague in details. The “Buy American” part of the executive order seeks to tighten the standards in U.S. government procurement programs, which essentially means that federally-funded construction projects use more American-made goods. It is not at all clear how this will alter current policy. The administration wants to close what it sees as too many loopholes, such as nearly-finished imported goods being completed in the U.S. and then deemed to be “Made in America.”The “Hire American” agenda calls for a reform of the H-1B visa program, which allows companies to hire skilled foreign workers.The executive order, if carried out, would affect companies building oil pipelines in the U.S., requiring them to use U.S. steel in their projects. But the order is imprecise and incomplete, and fleshing out the specifics of the plan could take more than a year. Crucially, beyond the splashy headlines, Trump’s executive order is the start of a process, not the end of one. Moreover, all the order does is ask federal agencies to review certain rules; it doesn’t require them to necessarily do anything concrete. Trump also made some comments on Tuesday that surely raised some eyebrows in the Canadian oil and gas industry. “And we're going to make some very big changes or we are going to get rid of NAFTA for once and for all. It cannot continue like this, believe me,” he said on Tuesday. Characteristically lacking in specifics, the President’s comments will only add to uncertainty.

US pipeline developers push back on Trump's call for domestic steel -  : US oil and gas pipeline developers, including the company behind the newly finished Dakota Access Pipeline, are pushing back on President Donald Trump's call for future pipelines to be built with domestic steel. Energy Transfer Partners -- a major owner of the Dakota Access pipeline that will next month carry Bakken crude from North Dakota to Illinois -- said such a requirement would have a "significant adverse impact." "The impacts of such a restriction are expected to severely delay project schedules, drive up costs, decrease availability and lower quality," ETP said in comments filed to the Commerce Department earlier this month. Days after his inauguration, Trump signed an executive memorandum calling on the Commerce Department to develop a plan "under which all new pipelines, as well as retrofitted, repaired, or expanded pipelines" use US-sourced materials "to the maximum extent possible and to the extent permitted by law." The caveats left considerable wiggle room for any eventual policy, but Trump has nevertheless characterized the memo as a directive to pipeline companies to "buy American." Trump's memo gave Commerce until late July to submit a plan to him.

Undaunted by oil bust, financiers pour billions into U.S. shale | Reuters: Investors who took a hit last year when dozens of U.S. shale producers filed for bankruptcy are already making big new bets on the industry's resurgence. In the first quarter, private equity funds raised $19.8 billion for energy ventures - nearly three times the total in the same period last year, according to financial data provider Preqin. The quickening pace of investments from private equity, along with hedge funds and investment banks, comes even as the recovery in oil prices CLc1 from an 8-year low has stalled at just over $50 per barrel amid a stubborn global supply glut. The shale sector has become increasingly attractive to investors not because of rising oil prices, but rather because producers have achieved startling cost reductions - slashing up to half the cost of pumping a barrel in the past two years. Investors also believe the glut will dissipate as demand for oil steadily rises. That gives financiers confidence that they can squeeze increasing returns from shale fields - without price gains - as technology continues to cut costs. So they are backing shale-oil veterans and assembling companies that can quickly start pumping. "Shale funders look at the economics today and see a lot of projects that work in the $40 to $55 range" per barrel of oil, said Howard Newman, head of private equity fund Pine Brook Road Partners, which last month committed to invest $300 million in startup Admiral Permian Resources LLC to drill in West Texas. Data on investments by hedge funds and other nonpublic investment firms is scant, but the rush of new private equity money indicates broader enthusiasm in shale plays.

Wall Street Is Pouring Money Back Into Shale --With oil prices seemingly on firm footing, Wall Street is pouring money back into the shale sector, expecting profits even at $50 per barrel. The private equity industry raised an estimated $19.8 billion in funds for energy investment in the first quarter of this year, or about three times as much as the same period in 2016. The figures indicate a more aggressive approach from private equity in shale drilling, and rising expectations that the oil market is set to rebound. The data comes from Preqin, and was reported on by Reuters.The optimism comes even as oil prices have languished in the $50 per barrel range since November, after briefly dipping into the $40s last month. The hopes of a stronger rebound by now have been dashed, and oil analysts have steadily revised their expectations, pushing out their projections for stronger price gains. The extraordinary gains in U.S. crude oil inventories in the first quarter caught the market – and OPEC – by surprise, killing off hopes of oil heading north of $60 per barrel. But the new money from Wall Street need not depend on $60+ oil. Lenders are confident that their investments will turn out to be profitable even at the prevailing market price today. That is because shale drillers have dramatically cut their costs, pushing breakeven prices down. "Shale funders look at the economics today and see a lot of projects that work in the $40 to $55 range," Howard Newman, head of private equity fund Pine Brook Road Partners, told Reuters. His firm dumped $300 million in Permian driller Admiral Permian Resources LLC in March. Lenders are already doing much better than they expected. JPMorgan Chase, Wells Fargo and Citigroup announced that they have an additional $370 million from the first quarter to use at their disposal, a collective sum that had been set aside to be used for expected losses on their energy portfolios.  A survey from Haynes & Boone of oil companies, banks and private equity found a high degree of confidence that the ongoing credit redetermination period – a twice-a-year review by lenders of their credit lines to drillers – will be favorable to the energy industry. Of the 163 people surveyed, roughly 76 percent said they expect credit lines to either remain unchanged or even increase. In other words, banks are not backing away from the shale industry, and in some cases, they are pouring more money in.

Shale Producers Take the Strain of Lower Prices | Rigzone - As I wrote last week, hedging is one way U.S. oil producers endure the pressures of low prices. And a recent survey by Bloomberg Intelligence found many large E&P firms are locking in pretty low prices for their expected output this year. In particular, producers in the Permian shale basin tend to be hedging at lower prices than rivals centered on less-attractive basins such as the Bakken and Eagle Ford basins. The chart below shows the proportion of 2017 output hedged by these companies at the average price locked in. I've color-coded them according to their main basin exposure, and the bubbles represent the absolute amount of oil covered by hedges: Permian-weighted companies such as Pioneer Natural Resources Inc., Energen Corp. and RSP Permian Inc. tend to dominate that upper-left part of the chart, meaning they have hedged more of their expected production at lower average prices. This is a result of aggressive drilling programs (with hedging providing comfort for the lenders and investors funding it). But the willingness of Permian-weighted firms to take lower prices in general should be noted by anyone who is long of oil. Companies more focused on the Eagle Ford basin are clearly less hedged and generally at higher prices, likely reflecting the tougher economics there. EP Energy Corp. is an outlier in that respect, but this reflects aggressive hedging taken early in 2016, when oil prices rallied, and the company's need to deal with its high leverage, with net debt at 6.1 times Ebitda at the end of 2016, according to data compiled by Bloomberg. The Bakken crowd are also hedged at generally higher prices than those in the Permian basin, but the weighted average is still less than $50 for the five in the chart . Granted, some big Bakken producers, such as Hess Corp. and Continental Resources Inc., haven't hedged any production, according to Bloomberg Intelligence. Yet, with the North Dakota Industrial Commission reporting the state's oil production nudged back above 1 million barrels a day in February, anyone keeping track of U.S. supply trends shouldn't keep their lens focused solely on West Texas.

Many diversified E & Ps in major realignments, shifting toward an oil focus. -- After cutting capital investment 71% between 2014 and 2016, the 13 diversified U.S. exploration and production (E&P) companies examined in our Piranha! market study are planning to increase 2017 capital spending by 30%. While this seems like a lackluster rebound compared to the 47% boost announced by oil-focused E&Ps, the diversified group’s totals are skewed by the pull-back strategy of giant ConocoPhillips. Excluding ConocoPhillips, the 12 other companies are guiding to a 48% increase in 2017 investment—very similar to their oil-weighted peers. Today we continue our Piranha! series on upstream spending in the crude oil and natural gas sector, this time zeroing in on E&Ps with a rough balance of oil and gas assets. U.S. oil and natural gas E&P companies, anticipating continuing low crude oil and natural gas prices, have been reshaping their portfolios to focus on a half-dozen top-notch resource plays whose production economics can hold up even if prices were to soften further. The biggest of these asset purchases and sales grab the headlines, but countless other, smaller-bite deals are having profound effects too. Taken together, this piranha-like devouring of E&P assets in the Permian, the SCOOP/STACK and other key production areas is transforming who owns what in the plays that matter most, and positioning a select group of E&Ps for success.  We examine this ongoing transformation in Piranha!, our new market study of 43 representative U.S. E&Ps. Of that 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.

 Prudhoe Bay well continues venting gas - Alaska Dispatch - Natural gas continues to seep from a Prudhoe Bay well that sprayed crude oil and vented gas beginning Friday, a state environmental agency said Sunday.  Employees with BP Alaska discovered an "uncontrolled gas release" from the top of a well, as well as what the Alaska Department of Environmental Conservation described as an "initial spray" of crude oil caused by the venting gas, on Friday.  On Saturday night, workers were able to enter the wellhouse and bleed off pressure from the well, the DEC said in a Sunday situation report.  There are two leaks on the well: one near the top, and one farther down. The top leak was halted with activation of a safety valve; the lower leak "has been reduced but is currently leaking gas," the situation report said.BP was working to plug the top leak, the result of a damaged pressure gauge, according to the situation report."The plan needs to be implemented before well killing operations can take place," the report said. There have been no reports of impact on wildlife, and no evaluation of whether the spraying oil may have reached snow-covered tundra beyond the gravel wellhead pad, the report said. The DEC has not estimated how much crude oil sprayed from the well.

BP Struggles to Control Damaged Well in Alaskan Arctic -- The British oil giant BP worked through the weekend to control a damaged oil well on Alaska’s remote North Slope that had started spewing natural gas vapors on Friday morning, the company and Alaska officials said. There have been no injuries or reports of damage to wildlife, but crews trying to secure the well have failed amid frigid winds gusting to 38 miles an hour. Alaskan and federal officials have identified two leaks venting methane gas, a powerful greenhouse gas linked to climate change. While some crude has sprayed out of the well with the gas, BP said infrared cameras on a flight over the site appeared to confirm that the oil released was contained on the gravel pad surrounding the well head and did not reach the tundra. By Sunday afternoon, crews had shut down one leak with a surface safety valve, but the second leak, although reduced, was still spouting gas, federal and state officials said. Specialists from Boots and Coots, a well control company, were arriving in the area on Sunday to assist in closing down the well. The damaged well is on state land several miles outside Deadhorse, a remote town. “Crews are on the scene and are developing plans to bring the well under control,” said Brett Clanton, a BP spokesman, “and safety will remain our top priority as we move through this process.” He said that it was unknown how much gas had leaked and that the company would investigate the causes of the accident after repairs were made. Oil workers operating near the well were evacuated because of the possibility of an explosion. There are large quantities of gas in the northern Alaskan fields around Prudhoe Bay in part because, without enough pipelines to bring it to market, oil companies have been pumping excess gas back into the ground for decades. “The cause of the discharge is unknown at this time,” federal and state officials said in a statement late on Saturday. The statement said that an effort to secure the well on Friday night “was unsuccessful due to safety concerns and damage to a well pressure gauge.”

Leaking BP Arctic Oil Well: Too Unstable to Shut Down -- BP and U.S. Environmental Protection Agency officials spent the holiday weekend trying to repair a leaking oil well on Alaska's North Slope. Officials said the well is too unstable to shut down because of frigid temps in the high Arctic, but have released the pressure on one of the main leaks. It appears that 1.5 acres of the remote area near Deadhorse, Alaska have been affected by the spill. Native communities were notified and non-essential workers were forced to evacuate. However, no injuries to crew or wildlife have been reported. "Crews are on the scene and are developing plans to bring the well under control," said BP spokesperson Brett Clanton, in a release on Saturday. "Safety will remain our top priority as we move through this process." There were initially two main leaks, one near the top of the rig that was releasing methane and the other down the assembly line spraying crude oil in a mist over the ice. Officials were able to detect both leaks using infrared cameras. "Based on an overflight with infrared cameras, the release appears to be contained to the gravel pad surrounding the wellhead and has not reached the tundra," Clanton said. Crews are still getting the situation under control and no updates have been reported in the last 12 hours. As natural gas operations have begun taking shape in Alaska, reports of leaks have become more frequent. There is an ongoing, and very large leak occurring at Cook Inlet , spewing 210,000 cubic feet of gas per day. Officials said it is too dangerous to repair and letters to the Trump administration have gone unanswered for more than three months as devastation to the pristine landscape is still taking place, threatening critically endangered beluga whales , fish and other wildlife.   "Oil companies continue to treat Alaska with reckless abandonment, threatening its pristine waters, wildlife and communities," said Dan Ritzman, director of Sierra Club's Alaska Program.

BP is still struggling to get control of an Alaska North Slope well that has been leaking natural gas since Friday - A damaged BP well on Alaska’s North Slope is no longer spraying crude oil, although workers still haven’t been able to stop the uncontrolled venting of natural gas from the well.The Alaska Department of Environmental Conservation said in an incident report Sunday that the crude oil spray does not appear to have spread beyond the snow-covered drilling pad around the well.  But BP, whose public image is still recovering from the 2010 oil spill in the Gulf of Mexico, was still putting together a plan for plugging the well. Experts from Boots and Coots, a well control company, were arriving at the site Sunday to help devise plans to kill and plug the well.“There have been no injuries and no reports of harm to wildlife,” BP spokesman Brett Clanton said Saturday. “Safety will remain our highest priority as we work through this process.”It isn’t clear what caused the leaking well, which is an oil and natural gas production well near the airport for Deadhorse, a town devoted to serving the giant Prudhoe Bay oil fields that began producing 40 years ago. Because there is no pipeline for natural gas from Prudhoe Bay, companies pump oil and inject gas back into the wells.An earlier report by the Alaska DEC said that the pressure in the well had caused the well assembly and equipment to rise three to four feet, hampering efforts to shut off the gas leak.On Saturday night, responders from BP, the Environmental Protection Agency and the Alaska Department of Environmental Conservation were able to connect hoses to valves and bleed pressure from the space surrounding the well’s underground steel pipe.The re sponders were working in tough conditions with temperatures no higher than 14 degrees Fahrenheit; a weather advisory warned of limited visibility and winds that could gust up to 40 miles per hour on Sunday.

Alaska Senators Introduce Bill to Expand Offshore Oil Drilling in Arctic Ocean and Cook Inlet  -- Senators Lisa Murkowski and Dan Sullivan, both Republicans from Alaska , have introduced legislation to expand oil and gas drilling in the Arctic Ocean and Cook Inlet, putting fragile ecosystems and endangered wildlife at risk. In December, President Obama permanently protected large areas of U.S. waters in the Arctic from oil and gas drilling. The new bill—Senate Bill 883—would effectively cancel these protections and force the Department of the Interior to quickly approve new oil and gas leasing. "It's not possible to drill safely in the Arctic, as we just saw from the leaking oil and gas well on the North Slope," said Miyoko Sakashita, ocean programs director at the Center for Biological Diversity. "This legislation's nothing more than a giveaway to oil companies. It'll hurt Alaska's healthy habitat and endangered wildlife." S. 883 would require Interior to add at least three leases each in the Beaufort and Chukchi seas and one in Cook Inlet to each five-year leasing plan. The agency would be required to establish a new near-shore Beaufort planning area with annual lease sales for the next three years. The bill would also overturn President Obama's decision to stop exploration and drilling permanently in most of the Chukchi and Beaufort seas under Section 12(a) of the Outer Continental Shelf Lands Act. These areas are home to several endangered species , including polar bears and bowhead whales . "If we let oil companies drill the Arctic, a catastrophic oil spill is just a matter of time," Sakashita said.

Study fortifies link between fracking and earthquakes in British Columbia - -- A new study examining earthquakes in northeastern British Columbia strengthens the link between hydraulic fracturing – or fracking – and increased seismic activity, a research scientist says.The study, published in this month’s Bulletin of the Seismological Society of America, analyzed 676 earthquakes that occurred between October, 2014, and December, 2015.Honn Kao, a Natural Resources Canada seismologist and one of the authors of the study, in an interview said the risks created by such earthquakes should not be ignored just because the magnitudes have been relatively small.“There is essentially no doubt in the research community that injection operations will be able to cause induced earthquakes,” he said. “The question now is whether or not the induced earthquakes can be big enough to have implications.”In fracking, fluids are injected deep underground to shatter rock and release trapped oil and natural gas. The controversial practice created an energy boom in North America but also raised concerns about groundwater contamination and increased seismic activity. In northeastern British Columbia, the number of earthquakes jumped from about 20 a year in 2002 to nearly 200 by 2011. Most have been small and might never have been detected if not for new recording devices placed in the region by government, industry and regulatory bodies.In December, 2015, the B.C. Oil and Gas Commission found a 4.6-magnitude earthquake in northeastern British Columbia earlier that year was caused by fracking. It was the largest induced seismic event ever recorded in the province. The commission has said induced seismicity is “an event resulting from human activity” that “can be caused by industries such as mining and natural gas development.” The study published this month found the earthquakes typically occurred above the area where fracking was taking place. Dr. Kao, who leads Natural Resource Canada’s induced seismicity research, said the study also examined a 4.6-magnitude earthquake that occurred in August, 2015. The study found that quake had an epicentre approximately 1.5 kilometres from a Progress Energy Canada Ltd. fracking operation. “Because most of the earthquakes induced by injection are relatively shallow, compared to tectonic natural earthquakes, given the same size, you would expect larger shaking close to the epicentre area,” he said. “So, in other words, if this kind of event occurred in a populated area, then the level of shaking … can possibly exceed the damage threshold of structures.”

Alberta research shows fracking fluids have ‘detrimental’ effects on fish - The Globe and Mail: Research has found that liquids released from fracked oil and gas wells can harm fish even at low concentrations. “When we put these frack fluids in, the fluids themselves generate chemicals that have detrimental biological effects,” said University of Alberta biologist Greg Goss. It’s long been known that chemicals used in fracking – which uses fluids under high pressure to fracture rock formations and release oil and gas – are environmentally toxic. Prof. Goss and his colleagues conducted a study intended to consider how toxic they are by using water that flowed from an actual fracked well. “The real risk comes from the disposal process, where [companies] have to truck it to a new site or pipeline it to a new site,” Prof. Goss said Tuesday. “If we do have a spill, what are the concerns they have to worry about?” His paper notes that Alberta has experienced more than 2,500 such spills between 2011 and 2014. The researchers exposed rainbow trout to “sub-lethal” levels of such fluids. The levels were intended to simulate exposure fish or other organisms would be subject to from a pipeline leak or a spill near a water body. Even at dilutions as low as 2.5 per cent – 2.5 litres of process water to 100 litres of fresh water – fish showed significant impact on their livers and gills. Prof. Goss calls the effect “oxidative stress.” That means chemicals in the water force liver and gill cells to age and die more quickly. “Oxidative stress is associated with damage to membranes,” he said. Some chemicals in the water, which have been shown to cause hormone disruptions in other studies, were absorbed by the fish.

Exodus From Canada's Oil Sands Continues as Energy Giants Shed Assets -- When ConocoPhillips signed a $13.3 billion deal last month to shed many of its Canadian assets, it became the latest in a growing list of foreign firms to sell tar sands holdings to a Canadian company.  A series of recent deals have signaled that multinational energy giants are diverting their money to cheaper and less-polluting resources. But while the message about their investment priorities is clear, the implications for future tar sands production—and climate change—are less so. All told, five American and European companies have sold nearly $25 billion worth of Canadian oil and gas projects over the past 12 months, the vast majority of them in the tar sands. This week, Reuters reported that Chevron is exploring a sale of its major oil sands stake. Tar sands projects are among the most expensive sources of oil, and the extraction produces more greenhouse gas emissions than most conventional drilling. With oil prices remaining low, multinationals are shifting investment to higher-return projects like shale in the United States. When Marathon Oil announced the sale of its tar sands projects for $2.5 billion in March, for example, it also highlighted a $1.1 billion purchase in the Permian Basin of New Mexico and Texas. While economics is the leading factor in the sales, some advocates argue that climate change is playing a role, too. Energy companies—European ones in particular—are facing increasing pressure to lower their carbon footprints, and are doing so by shifting away from heavier fuels like the tar sands and toward more natural gas and renewables. Just as Shell announced the sale of nearly all of its tar sands operations last month, for example, it also disclosed details of a new policy to tie executive bonuses to emissions reductions. Days after itsold its oil sands assets in December, Norway's Statoil announced a $42.5 million winning bid to lease acreage for a wind farm off the coast of New York. With the completion of the five recent sales, about two-thirds of oil sands production will be concentrated in the hands of Canadian companies, That means investment likely will shrink…

Oil demand growth seen slowing for a second year --The International Energy Agency expects growth in the global demand for crude oil to slow for a second consecutive year in 2017.The Paris-based agency expects growth of 1.3 million barrels a day this year, compared with 1.4 million barrels previously forecast, due to stalled demand in the U.S., Middle East, Russia and India.In its monthly report released Thursday, the IEA, a body that advises major oil-consuming nations, says production will grow this year, even when considering pledges by OPEC countries to limit output. The combination of factors could keep a lid on oil prices, which have risen in the past six months after a three-year slump.

Chevron warns of medium-term LNG supply gap -  Countering the prevalent LNG market theme of a supply glut, Chevron’s vice chairman Michael Wirth has warned of a supply gap, which is likely to open up in the LNG industry if investor appetite for new projects does not pick up. “In the short term, LNG supply is coming online faster than demand is growing, but with continued demand growth in the next decade the market will rebalance,” Wirth said, speaking at an April 4 gas industry conference in Japan. “So while we expect ample supply in the next few years ... a supply gap could eventually confront us in the years to follow if we don’t eventually sanction new LNG projects,” he said, in comments cited by Reuters. Although Wirth’s message covered the global gas market, it comes at a time when other Chevron executives have pointed to the natural gas supply shortages already faced by Australia’s East Coast following the start-up of Queensland’s LNG export terminals, as well as a low oil price environment and ongoing regulatory uncertainty. Australia is about to become the world’s top exporter of LNG, but faces a gas shortage at home, as producers have focused on supplying gas to overseas plants that have locked in long-term export contracts. However, Chevron has experienced the sharp end of several cost blowouts in Australia’s LNG industry, epitomised by the Chevron-led Gorgon plant at Barrow Island off Western Australia, where the final costs have soared from US$37 billion to US$54 billion. Chevron is also operator at the Wheatstone LNG project, where an 8% cost overrun revealed last October has lifted the overall cost to US$34 billion for the shareholders. The size of the cost overruns announced by several major LNG projects, plus a precipitous drop in LNG prices in Asia in the last three years, have been key drivers in a tailing-off of final investment decisions (FIDs) for large LNG export schemes.

PNG LNG production surges 20% above nameplate capacity in Jan-Mar: Oil Search -   Papua New Guinea's LNG project continued to operate well above nameplate capacity during January-March 2017 and has ample feed gas to sustain the strong production levels, while discussions to increase capacity will take place later in the year, project partner Oil Search said Wednesday. PNG LNG operated at an annualized rate of 8.3 million mt/year during the quarter, which is some 20% above the nameplate capacity of 6.9 million mt/year, said Australian-listed Oil Search, which is a 29% equity holder in PNG LNG. "The recent independent recertification of the resources within the PNG LNG project fields has confirmed that there is more than sufficient gas available to support this higher level production and will enable the project to optimally place additional volumes in either term contracts (for uncommitted production above 6.6 million mt/year) and/or the spot market, subject to achieving suitable terms and conditions," Oil Search said. It will be for volumes above 6.6 million mt/year, rather than the current nameplate capacity of 6.9 million mt/year, because that was what the project's capacity was thought to have been when it was first sanctioned in 2009, a spokeswoman for Oil Search said.

NYMEX May gas falls 2.6 cents to settle at $3.159/MMBtu - Natural Gas | Platts News Article & Story: The NYMEX May natural gas futures contract fell 2.6 cents to settle at $3.159/MMBtu Thursday, following Wednesday's 4-cent climb, as the weekly storage report showed a higher injection than expected. The May contract fell after rising a few cents earlier in the day, and traded between $3.134/MMBtu and $3.219/MMBtu. The official weekly gas storage report from the US Energy Information Administration showed a total injection of 54 Bcf in the week that ended Friday, compared with the 47-51 Bcf build estimated by a consensus of analysts surveyed by S&P Global Platts. The most recent reporting week's injection is 48 Bcf above a 6-Bcf build at the same period a year ago, and 19 Bcf above the 35-Bcf five-year average injection.The higher-than-expected build weakened the supply/demand balance, putting storage levels at 2.115 Tcf, some 14.8% below the 2.483 Tcf total at the same time a year ago, but 15.4% above the five-year average of 1.833 Tcf. "While prices have weakened on the news, we note that May natural gas continues to trade above Tuesday's $3.114[/MMBtu] low, a recently confirmed technical support. A break of this level would make a stronger bearish statement," Tim Evans, energy futures specialist at Citi Futures, said in an email.  Platts Analytics' Bentek Energy unit projects total US demand will average 68.3 Bcf/d through April 28, before declining to an average of 66.1 Bcf/d through May 5 on weaker residential and commercial consumption. The latest monthly forecast for May from the National Weather Service, posted Thursday, predicted normal temperatures in the northwestern portion of the US, including the western half of the Upper Midwest.

Exxon asks Trump administration for waiver from Russia sanctions | TheHill --  Oil giant Exxon Mobil Corp. is seeking a waiver from the Trump administration to work with Russia’s state oil company on a joint venture, The Wall Street Journal reports. Citing people familiar with the matter, the Journal reports that Exxon asked the Treasury Department in recent months to drill for oil alongside Rosneft. The drilling would take place in the Black Sea, an area covered by sanctions instituted by the United States to prevent certain business dealings in retaliation for Russia’s annexation of Crimea from Ukraine. Secretary of State Rex Tillerson was Exxon’s CEO in 2012 when he struck the joint venture deal, worth hundreds of billions of dollars, with Russian President Vladimir Putin. The State Department is one of the agencies that helps Treasury decide on sanctions waivers. Tillerson promised to recuse himself from matters related to Exxon for his first two years at the State Department. Tillerson was awarded Russia’s Order of Friendship in 2013 due to the deal and his relationship with Putin. That caused numerous senators to question during his confirmation process whether he was too close to Russia and Putin. It is unclear if Exxon applied for the waiver before or after Tillerson was confirmed as Trump’s top diplomat, the Journal said. Treasury does not speak publicly about such waivers or their considerations, and Exxon did not return a request for comment.

The Treasury Department Won’t Give Exxon Mobil a Waiver to Drill in Russia - The Treasury Department said it will not give Exxon Mobil a waiver to drill for oil in Russia despite U.S. sanctions against the country. Treasury Secretary Steven Mnuchin said Friday in a statement that the administration, "will not be issuing waivers to U.S. companies, including Exxon, authorizing drilling prohibited by current Russian sanctions," according to the Associated Press. Exxon was seeking a waiver in order to continue drilling in the Black Sea, the AP reports. The company previously had an agreement with Russian oil company PAO Rosneft. Exxon would not confirm whether or not it was seeking the waiver at all earlier this month, Reuters reports. Exxon's former chief executive Secretary of State Rex Tillerson lobbied against the sanctions in 2014. Sen. John McCain (R-Ariz.) called the request for a waiver "crazy" last week in a tweet linking to a report by the Wall Street Journal. The move comes as the FBI and Congressional intelligence committees are investigating Russian hacking that allegedly attempted to influence the 2016 presidential election, as well as possible contact between Russian officials and members of President Donald Trump's campaign.

Russian oil groups brave cold of western sanctions to explore Arctic - His fur coat heavy with snow and protecting him from temperatures of minus 18C, Igor Sechin, the chief executive of Russian oil company Rosneft, clutched the radio in his thick gloves and relayed to his engineers the simple order he had just been given by Russian President Vladimir Putin: “Start drilling.” A rig operator confirmed his request. Moments later, a drill began its 5,000m journey downwards, in search of oil deposits that the country is banking on to provide more than a quarter of its future output. Perched on the edge of a peninsula deep in the Arctic Circle, Tsentralno- Olginskaya-1 will be Russia’s northernmost oil well. Closer to the North Pole than to any city, it is a feat of engineering that uses equipment shipped 3,600km through icy waters navigable only for two months of the year. The well is one of the most technologically challenging ever attempted in Russia. With the deposits located beneath the icy, frequently frozen waters of the Laptev Sea, cutting-edge horizontal drilling techniques will be used to reach up to 15,000m from the main site. But it was also a moment of triumph for Mr Putin, who was beamed in via video conference from St Petersburg as Mr Sechin braved the frigid elements and who celebrated the start of drilling as an act of homegrown ingenuity. Three years ago, when the US and EU imposed sanctions on the country that restricted companies such as Rosneft from foreign capital and technology, complex wells were exactly the kind of ambitious projects that were supposed to be rendered impossible. Western governments hoped that pressure on Russia’s main energy companies would help change Mr Putin’s political calculations. But as projects like Tsentralno-Olginskaya-1 attest, Russia’s oil and gas majors have found ways to carry on regardless. “Horizontal drilling is a complex and high-tech operation. This is just the first well. There is much more work ahead,” Mr Putin told Mr Sechin in the heavily scripted conversation.

North Sea to see 30 new oil and gas projects by 2020 -- Around 30 new crude oil and natural gas projects are expected to start operating in the North Sea by 2020. That’s according to research and consultancy firm GlobalData, which says the UK will lead the resurgence with 19 projects, followed by Norway with 10 and Denmark with a single installation. A new report from the company suggests the downturn cycle witnessed in the region over the last few years is now easing slightly. It states projects agreed upon in 2016 cost around half as much as projects finalised in 2013 and says this illustrates how companies have made clear improvements in cost efficiency. GlobalData also notes operating costs have halved from nearly $30 per barrel (£24) to just more than $15 per barrel (£12) and production forecasts are on the rise. The projects are expected to contribute around 690,000 barrels of oil per day to global crude production and about 1,255 million cubic feet per day to global gas production.

2017 may give VLCC tankers a wild ride on oil market volatility - video - As the crude oil industry deals with wild cards like the OPEC deal, the narrowing spread between oil benchmarks and shifts in market share between major oil producing countries, VLCC tankers are feeling the waves too. Will the oil market volatility be the hero or the villain for VLCCs in 2017? In this video, Alex Younevitch, Peter Farrell and Gillian Carr explore the dynamics in VLCC freight and ton-mile demand, giving an outlook for the rest of 2017.

Banned at sea: Venezuela's crude-stained oil tankers | Reuters - In the scorching heat of the Caribbean Sea, workers in scuba suits scrub crude oil by hand from the hull of the Caspian Galaxy, a tanker so filthy it can't set sail in international waters. The vessel is among many that are constantly contaminated at two major export terminals where they load crude from Venezuela's state-run oil company, PDVSA. The water here has an oily sheen from leaks in the rusty pipelines under the surface. That means the tankers have to be cleaned before traveling to many foreign ports, which won't admit crude-stained ships for fear of environmental damage to their harbors, port facilities or other vessels. The laborious hand-cleaning operation is one of many causes of chronic delays for dozens of tankers that deliver Venezuela's principle export to customers worldwide, according to three executives of the state-run firm, Neither PDVSA nor Venezuela's Oil Ministry responded to requests for comment about the firm's maritime operations. The tankers sidelined for cleaning provide a vivid example of the firm's downward spiral: Lacking the cash to properly maintain ships, refineries and production operations - or to pay business partners on time - PDVSA can't boost exports, which is its only option for raising more cash. Venezuela's crude exports declined 8 percent to 1.69 million barrels per day (bpd) in the first quarter versus the same period in 2016, according to Thomson Reuters data. When oil prices were high, crude and fuel exports almost entirely financed an elaborate system of government price controls and social subsidies that maintained the popularity of late President Hugo Chavez, the socialist firebrand. Although embattled Venezuelan President Nicolas Maduro insists the government has maintained social programs, he has publicly acknowledged that lower oil prices have left the government with less money to finance them.

Latin America’s Oil-Dependent States Struggle to Repay Chinese Debts  --As Chinese loans pour into Latin America, concerns over how the money is spent and how it will be repaid are growing on both sides of the bargaining table. Of most immediate concern for China is whether economically unstable governments such as Venezuela can pay back multi-billion dollar loans amid globally low prices for crude oil.By the close of 2015, China held $53 billion of Venezuelan debt. However, U.S. think tank Inter-American Dialogue suggests that figure could be as much as $65 billion. Despite Venezuela’s deepening recession, China has continued to lend, offering $2.2 billion in November 2016 alone. “Many thanks for all the support you have given Venezuela in 2014, 2015, and especially 2016. Our older sister China has not left Venezuela alone in moments of difficulty,” said Venezuelan President Nicolás Maduro in a televised speech.But the changing global economic environment means that China cannot continue lending to Latin American countries worry-free. Analysis by Inter-American Dialogue shows that in 2016, 92 percent of China’s loans to Latin America went to Ecuador, Venezuela, and Brazil, nations that are all facing serious economic challenges according to the World Bank.The Brazilian economy has been shrinking since 2011, while the economy in Venezuela also continues to deteriorate. In 2015, 15 years of sustained economic growth came to an end in Ecuador.Experts say the main challenge facing economic cooperation between China and Latin America is whether Chinese investment could better promote sustainable development that is less risky and more environmentally responsible.

Exxon plans to boost shale gas output in Argentina: governor - ExxonMobil plans to ramp up natural gas production from the Vaca Muerta shale play in Neuquen, Argentina, the governor of that province said. Neuquen Governor Omar Gutierrez said he met with senior executives of Exxon and its XTO unit in Houston, Texas, last week during a road show to promote a series of tenders for 56 blocks in the southwestern province, according to a statement Monday. The Irving, Texas-based company "is evaluating the potential of gas development in the Los Toldos 1 Sur block," and is poised to request a 35-year production license for the block, Gutierrez said. Exxon's focus is to be on developing gas from Vaca Muerta, among the world's most promising shale plays, where the company will have invested $750 million by the end of this year, the governor added.

Oil Companies Exploiting Famine And Financial Ruin In South Sudan - South Sudan’s vulnerable financial state is making the civil-war-torn state easy prey for opportunistic oil and gas companies that could be offering Juba a fraction of the energy profits they would earn under stable circumstances.The South Sudanese government and three humanitarian agencies declared a famine in some parts of the country in February, while the newly independent nation is desperately trying to bring its oil back online. A string of deals signed by President Salva Kiir over the past four months has demonstrated the country’s desperation for fresh streams of revenue as the civil war now approaches its four-year anniversary.“The government is working hard to reinvigorate the petroleum industry in South Sudan by creating an enabling environment for international oil and gas companies to invest and operate,” according to Petroleum Minister Ezekiel Lul Gatkuoth. “It is up to the oil companies to come in, explore and produce. Partnership is what fuels the oil industry.” The East African reported this week that oil companies with regional headquarters in Kampala, Nairobi, Addis Ababa, as well as several European cities are setting up meetings with top South Sudanese officials, and Kiir’s administration is happy to oblige the invitations. Toward the end of last year, Suiss Finance Luxembourg AG announced a $10.5 billion deal that could rise to $105 billion in value when joint ventures in infrastructure and transportation are taken into account. While some may view this as a large stepping stone toward bringing back its oil revenues, Kiir’s critics were quick to attack the leader over the deal once news broke, referring to what they called “shadowy” businessmen from Kampala who had brokered the contract. Another recent deal involves Oranto Petroleum, which has committed to a $500 million comprehensive exploration campaign, starting immediately” to evaluate oil prospects in the 25,150 kilometers that make up Block B3. Juba approved the block a couple of weeks ago, giving Oranto a 90 percent share, while keeping only 10 percent for the government’s Nile Petroleum (Nilepet). The East African said the deal with Oranto has drawn harsh criticism due to a report from technical officials in the Ministry of Petroleum in which claims were made that the company lacked the technical expertise and financial capacity to manage the Block B3 project.

Vietnam's Bach Ho crude likely to flood Asian secondary market: traders - Low sulfur crude suppliers across Southeast Asia and Oceania may have to put in extra effort to clear their June-loading barrels this month as close to 2.5 million barrels of Vietnamese light Bach Ho crude are expected to flood the Asian secondary market, regional traders said Tuesday. Award details of recent spot tenders from Vietnam raised concerns among rival producers in neighboring Malaysia as PetroVietnam Oil Corp. recently sold 82,500 b/d of light Bach Ho for loading in June to Socar Trading Singapore, Gunvor, Vitol and Glencore. Traders said the entire lot being bought by trading companies made other regional producers worried as there was a high chance that most of the medium sweet Vietnamese crude will slip back into the secondary market. "You could say this was possibly the worst-case scenario for [rival] producers [across Asia and Oceania]. The best outcome [for rival suppliers] would have been for a big Chinese end-user to have taken the entire [June barrels offered by PV Oil] ... but it wasn't to be," said a Singapore-based sweet crudes trader.Light Bach Ho, with a gravity of 39-40 API, was rarely offered in the spot market in recent years. However, it was offered via spot tender late last month ahead of the upcoming turnaround at the country's 130,000 b/d Dung Quat refinery, market sources said.

China’s Crude Oil Imports Hit a New Record -   China’s General Administration of Customs reported that China’s crude oil imports rose to 9.21 MMbpd (million barrels per day) in March 2017. China’s crude oil imports rose 10.7% month-over-month and 19.4% YoY (year-over-year). Imports rose due to the rise in demand from its teapot refineries. Imports are at the highest level ever. The previous high was in December 2016 when imports were at 8.6 MMbpd. The rise in crude oil imports from China supports crude oil prices. China is the second-largest crude oil consumer after the US. China’s crude oil imports and demand:

  • China’s crude imports will rise 5.3% to 8 MMbpd in 2017, according to China National Petroleum. It also added that China’s crude oil consumption will rise 3.4% to 12 MMbpd in 2017.
  • China’s crude oil production fell 4.6% YoY to 3.9 MMbpd in March 2017. Slowing Chinese crude oil production due to aging could also increase China’s crude oil imports.
  • The EIA estimates that China plans to build 500 million barrels of strategic crude oil reserve space by 2020. It could also add to imports.
  • Demand from teapot refineries could support oil imports in 2017.
  • China’s fuel exports hit a record high at 1.06 MMbpd in 1Q17—22% higher than the same period in 2016. The rise in Chinese fuel exports will put pressure on refined product margins. To learn more, read How Lower Refinery Margins Impact Crude Oil Prices.

Where Does The World's Biggest Oil Importer Get Its Crude --China is the world’s largest net importer of crude oil, and in recent years, China’s crude oil imports have increasingly come from countries outside the Organization of the Petroleum Exporting Countries (OPEC). As the EIA reports in a recent blog post, while OPEC countries still made up most (57%) of China’s 7.6 million barrels per day (b/d) of crude oil imports in 2016,crude oil from non-OPEC countries made up 65% of the growth in China’s imports between 2012 and 2016. Leading non-OPEC suppliers included Russia (14% of total imports), Oman (9%), and Brazil (5%). On an average annual basis, China’s crude oil imports increased by 2.2 million b/d between 2012 and 2016, and the non-OPEC countries’ share increased from 34% to 43% over the period. Market shares for China’s top three non-OPEC suppliers (Russia, Oman, and Brazil), all increased over these years. While still comparatively small as a share of China’s crude oil imports, imports from Brazil reached a record high of 0.6 million b/d in December 2016, and imports from the United Kingdom reached a high of 0.2 million b/d in February 2017.Growth in China’s total crude oil imports in 2016 reflected both lower domestic crude oil production and continued demand growth. After increasing steadily between 2012 and 2015, China’s crude oil production declined significantly in 2016. Total liquids supply in China averaged 4.9 million b/d in 2016, a year-over-year decline of 0.3 million b/d, the largest drop for any non-OPEC country in 2016. U.S. crude oil production fell by more than 0.5 million b/d in 2016, but total liquids declined by less than 0.3 million b/d because other liquids production increased by less than 0.3 million b/d. Much of Chinese production growth from 2012 through 2015 was driven by more expensive drilling and production techniques, such as enhanced oil recovery (EOR) in older fields. As oil prices declined during 2016, investments in developing new reserves also fell and were not high enough to offset the natural production declines of older fields.

Analysis: China seen moving swiftly to rein in oil blending frenzy -  China is inching closer to imposing a consumption tax on mixed aromatics, light cycle oil and bitumen blend, a move that will likely curb inflows of those products and stem surging oil product exports by Asia's biggest oil consumer. The planned policy change will also likely increase China's imports of lighter crudes for gasoline production to offset the squeeze in the blending pool if consumption taxes are imposed, market participants told S&P global Platts. Beijing is widely expected to levy consumption taxes on mixed aromatics and light cycle oil. Although there has been no official confirmation, market participants expect details to be released some time between May 1 and July 1. Sources with knowledge of the matter said the consumption taxes for mixed aromatics, LCO and bitumen blend would use the current consumption taxes on gasoline, gasoil and fuel oil as a reference; these currently stand at Yuan 1.52/liter, Yuan 1.20/liter and Yuan 1.20/liter respectively. "This means importers will have to pay Yuan 1,000-2,000/mt more for importing those products, which is expected to largely curb inflows of these grades, just like what happened to fuel oil a few years ago," a market source said. China's fuel oil imports have fallen dramatically since Beijing imposed the consumption tax in 2008.

Saudi Aramco chief warns of looming oil shortage  -- The head of Saudi Arabia’s state energy giant has warned of a looming oil shortage as a $1tn drop in investments into future production takes effect.  Amin Nasser, chief executive of Saudi Aramco, the world’s largest oil producing company, said on Friday that 20m barrels a day in future production capacity was required to meet demand growth and offset natural field declines in the coming years. “That is a lot of production capacity, and the investments we now see coming back — which are mostly smaller and shorter term — are not going to be enough to get us there,” he said at the Columbia University Energy Summit in New York. Mr Nasser said that the oil market was getting closer to rebalancing supply and demand, but the short-term market still points to a surplus as US drilling rig levels rise and growth in shale output returns. Even so, he said it was not enough to meet supplies required in the coming years, which were “falling behind substantially”. About $1tn in oil and gas investments had been deferred and cancelled since the oil downturn began in 2014.  Riyadh believes its national oil group is worth the money but investors have doubts as IPO nears The remarks come as the kingdom embarks on an ambitious task to sell a 5 per cent stake in Saudi Aramco, its main revenue generator. While the move is the centrepiece of reform plans to overhaul Saudi Arabia’s economy and end reliance on the volatile oil sector, hydrocarbons will remain the backbone of the country’s wealth. Conventional oil discoveries had more than halved over the past four years, Mr Nasser said, compared with the previous four-year period. He added that it should not be assumed that major oil and gas companies would invest in sizeable projects.

Iran Boosts Gas-Output Capacity With New Projects at Giant Field | Rigzone-- Iran, holder of the world’s biggest natural gas reserves, boosted output by inaugurating six projects at the giant South Pars offshore field. The country raised total production capacity at South Pars to 570 million cubic meters a day of gas, putting it almost on par with neighboring Qatar, which produces from an adjacent portion of the same deposit, Oil Minister Bijan Namdar Zanganeh said Sunday at a ceremony in the port city of Assaluyeh. Iran invested $20 billion to complete the six projects, or phases, President Hassan Rouhani said at the event. Iran is on track to out-produce Qatar, the world’s biggest exporter of liquefied natural gas, at the Persian Gulf deposit. Iranian officials want to gain market share for gas shipments and attract foreign investment, even as U.S. President Donald Trump ratchets up confrontational rhetoric against Iran. Even so, Iranians won’t have much gas to export because they are likely to use most of the new production themselves. Half of Iran’s gas goes to warming homes, with the rest used mostly to generate power and for industrial use. New production can barely keep up with domestic demand, and consumption almost doubled to 191.2 billion cubic meters in 2015 from 102.7 billion in 2005, according to BP Plc statistics. Each of the new projects produces 28 million cubic meters a day, Zanganeh told reporters late Saturday. They include phases 17 through 21, with phase 19 having two parts. Qatar announced earlier this month that it was ending a 12-year ban on new projects at its section of the shared field. Qataris call their part of the deposit the North Field, which together with South Pars forms the world’s largest reservoir of non-associated gas. Iran has no plans to interfere with Qatar over its activities at North Field, Zanganeh said. “They can carry out their development projects as we do ours,” he said. “We do our job and let them do theirs.”

Iran would support unanimous OPEC decision to extend output cuts: minister -  Iran's petroleum minister believes most OPEC members would endorse an extension of the group's current initiative on production cuts, and Iran would support an extension if unanimously supported by other members, oil ministry news agency Shana quoted the minister as saying Sunday. "OPEC and non-OPEC crude oil producers have displayed a historic esprit de corps in implementation of the organization's output cut plan, which has proved a success, and producers have shown more cooperation month after month," Shana quoted Bijan Zanganeh as saying. Noting that international benchmark crude prices returned last week to around $55/b following a slump, Zanganeh said the recent market reaction showed investors were recognizing that OPEC was living up to its November 2016 decision to cut output by a total of 1.2 million b/d in H1 2017, and that the ensuing decision by other major international producers to join OPEC by contributing additional cuts had been taken in earnest. Iran had honored the initiative and, providing all other OPEC members followed suit, would stick to the plan to cut output, Zanganeh said ahead of the inauguration of several major gas and petrochemicals projects in Iran's southern Assalouyeh region. In the December 2016 agreement, 24 international producers -- including OPEC's 13 members, Russia and Oman -- pledged to deliver nearly 1.8 million b/d of total H1 cuts.Due to the toll that years of international nuclear sanctions had already taken on its oil output, Iran was exempted from making further cuts and was instead permitted under the agreement to raise production by up to 90,000 b/d to match the country's pre-sanctions output of around 4 million b/d, Shana reported.

OPEC’s production cuts aren’t cuts at all -- The OPEC Monthly Oil Market Report is out with OPEC’s crude oil production numbers for March 2017. All data is through March 2017 and is in thousand barrels per day. Looking at the above chart it seems obvious what most OPEC nations were doing. They announced in the summer of 2016 that there would likely be quota cuts beginning in 2017. And those cuts would be a percentage of their current production. So everyone began making heroic attempts to increase production by the end of 2016. Now, after everyone who felt that they should cut, has cut, they are right back to the level that they were at before the cuts were proposed. There is always a considerable difference between what the OPEC nations say they are producing and what the “Secondary Sources” say they are producing. The March MOMR had Saudi producing 9,797,000 bpd in February while Saudi said they were producing 10,011,000 bpd. The April MOMR has revised Saudi’s February production up by 155,000 bpd. This is a snip from one of my Excel spreadsheets. It shows revisions made in the previous two months’ data by “Secondary Sources”. For instance, Saudi Arabia’s January production numbers were revised down by 56,000 bpd while their February production numbers were revised up by 155,000 bp. OPEC 13 Jan. numbers were revised down by 73,000 bpd while their Feb. numbers were revised up by 124,000 bpd. Not much is happening in Algeria. They peaked almost 10 years ago and have been in slow decline ever since. Angola peaked in 2010 but have been holding pretty steady since. Ecuador peaked in 2015. They will be in a slow decline from now on. Any change in Gabon crude oil production is too small to make much difference. Iran has increased production the last three months, though down slightly in March. However, one source says it is a fallacy. We believe Iranian destocking is being misinterpreted as production, and actual production will decline as the year moves forward. Iraq is down 73,000 bpd from their December peak. Kuwait is down 166,000 bpd from their November peak. That is about 5.8%. Libya still has problems, and will likely continue to have problems. Related: Is The Oil Price Rally Running Out Of Steam? Nigeria and Libya are exempt from quota cuts because of rebel problems. Don’t look for those problems to clear up any way soon. Qatar has been in decline since 2008. Her decline will continue albeit at a very slow pace. Saudi Arabia cut in January, then stopped cutting. I think this is where we will be for some time unless there is a real shake up in OPEC.Venezuela’s problems will continue. They ae now below two million barrels per day. They are at 1,972,000 bpd. Last March their production was 2,286,000 bpd. They have dropped 314,000 bpd in 12 months. That’s 13.7 percent in one year. Eyeballing the chart, it looks like World oil production, total liquids, is down about two million barrels per day since peaking in November 2016. OPEC crude production is down 1.45 million barrels per day since November so Non-OPEC liquids, plus OPEC NGLs, would be down just over half a million bpd since then.

OPEC hopes more non-OPEC producers will help manage market: Barkindo -  OPEC is hoping to attract other oil producers from outside the bloc to join in its efforts to manage the oil market, Secretary General Mohammed Barkindo said Wednesday. OPEC in December signed a deal with 11 key non-OPEC producers led by Russia to cut a combined 1.8 million b/d to hasten the market's rebalancing, but Barkindo told S&P Global Platts on the sidelines of the GCC Petroleum Media Forum in Abu Dhabi there is still time for other non-OPEC nations to sign on. "We are calling on all non-OPEC producers who are not yet part of the broad platform of the 24 countries that signed the declaration of cooperation," he said. "It is in their interest to join this platform. It's a broad global platform that is in the best interest of the industry as well as the global economy. So if I am a producer who has not signed the declaration of cooperation I would rush to do it now. This is the time to join."No other countries have committed so far, Barkindo acknowledged, but he said he was "using this opportunity to invite them." UAE energy minister Suhail al-Mazrouei said he agreed with Barkindo's call for increased non-OPEC participation in market management efforts. Specifically, with the deal signed in December, he said many of the non-OPEC countries were "hesitant" to cut production and only participated through natural field declines. Should the deal be extended, as OPEC will consider at its May 25 ministerial meeting in Vienna, Mazrouei said he hopes those non-OPEC countries step up their commitments.

Who Holds The Power In Today’s Oil Market? -- Amidst the din of analysts speculating about whether oil prices will rise or fall, observers may well be overlooking some pressing questions about the very nature of the global oil market. The most significant of these questions relates to whether Saudi Arabia is losing its grip on the global oil market and if U.S. oil and gas producers are replacing the Saudis as the key global swing producer. By the mid-70s, the Kingdom of Saudi Arabia wielded the power to swing oil prices at its will by turning on and off the taps. Presently, after 44 years, the scenario is quite different. In fact, the recent Vienna accord where OPEC and NOPEC producers agreed to cut 1.8mbpd of oil, and now its possible extension, is symptomatic of the internal weakness. In 2014 when Saudi Arabia refused to cut production to stabilize prices, and instead increased production to protect market share, an oil price war began. But the strategy to drain out the high cost producers has gone awry. U.S. production continues to rise, while Saudi Arabia’s economy is suffering from lost oil revenue. U.S. Shale producers appear to be recovering market share and have managed to lower breakeven prices through a technological revolution.Welcome to the era of “Fracking 2.0”, where a “company man” 100 miles away from an oil rig can give instructions to his workers via an app called “ISteer.” EOG Resources, one of the largest independent oil and gas companies in U.S. and ranked as Texas’ fifth largest gas producer, is doing wonders as it outperforms its competitors. EOG can now drill horizontal wells in just 20 days, which is down from 38 in 2014. The company has pumped consistent quantities of oil irrespective of the drop in prices. And that is just one example.

Oil end at a 1-week low as traders eye U.S. crude output - Oil prices fell Monday to mark their lowest finish in about a week, pressured by data showing gains in the number of active U.S. oil rigs over the past 13 weeks and expectations for a rise in monthly domestic shale production. May West Texas Intermediate crude fell 53 cents, or 1%, to settle at $52.65 a barrel on the New York Mercantile Exchange. Prices, which posted a gain of roughly 1.8% last week, settled at their worst level since April 7, FactSet data show. In London, June Brent crude on the ICE exchange also fell 53 cents, or 1%, to $55.36 a barrel. On Monday, shortly before the Nymex settlement, a monthly report from the Energy Information Administration forecast a rise of 124,000 barrels a day in May to 5.193 million barrels a day for crude-oil production in seven major U.S. shale-oil plays. New well oil output per rig in the Permian Basin was forecast at 662 barrels a day in May on a rig-weighted average, unchanged from April, according to the EIA. But, according to Curt Taylor, president of Opportune LLP’s Ralph E. Davis Associates, the average productivity of a rig in the Permian before April 2009 was less than 100 barrels a day. “This, along with the increasing rig count and another increase in the [drilled but uncompleted] well count (up another 111 wells), means that U.S. production supply will continue to move up,” he said. Baker Hughes data Thursday showed that the U.S. oil rig count rose for the 13th straight week in the week of April 13. At a total of 683, the current tally is the highest in two years.

Oil prices fall on expected surge in U.S. shale output: (Reuters) - Oil prices fell on Tuesday on news that U.S. shale oil output was expected to post the biggest monthly rise in more than two years, fuelling concerns that U.S. production growth is undermining OPEC-led efforts to rein in oversupply. The latest U.S. government drilling data showed shale production in May was set to rise to 5.19 million barrels per day (bpd), with output from the Permian play, the largest U.S. shale region, expected to reach a record 2.36 million bpd. Global benchmark Brent crude futures were down 26 cents at $55.10 a barrel at 0803 GMT. They touched an intraday low of $54.98, the weakest level in 11 days. U.S. West Texas Intermediate (WTI) crude futures traded down 21 cents at $52.44 a barrel, the lowest since April 10. "EIA (U.S. Energy Information Administration) estimates for a combined 124,000 barrels-per-day growth in U.S. shale production over May have added another bearish element to the market," wrote analysts at JBC Energy, based in Vienna. More barrels could be on their way to market from U.S. shale fields as financial companies are investing billions in production, a Reuters analysis showed. Members of the Organization of the Petroleum Exporting Countries are cutting oil production by 1.2 million bpd from Jan. 1 for six months, the first reduction in eight years. The energy minister of OPEC member the United Arab Emirates said on Tuesday he saw healthy oil demand growth this year and believed inventories would fall. A preliminary Reuters poll showed analysts expected U.S. crude stocks to have fallen in the week to April 14, building on a surprise decline the previous week.

U.S. Shale Surging, But Oil Holds Steady - Oil prices dropped to their lowest levels in nearly two weeks, down slightly on expectations of rising U.S. oil production. The EIA reported in its Drilling Productivity Report that it expects an increase of 124,000 bpd in May, with output gains in the Permian (+76,000 bpd) and the Eagle Ford (+39,000 bpd). Big banks and private equity are stepping up their investment in the U.S. shale patch, so analysts foresee further production gains ahead. . Top OPEC members Saudi Arabia, Iraq and Kuwait are reportedly targeting $60 per barrel, according to the WSJ. At that price level, government finances would stabilize a bit while it would still be low enough to prevent a dramatic resurgence of U.S. shale. “Iraq wants prices to rise to $60. This our aim,” said Iraq’s oil minister Jabbar al-Luaibi in an interview. A move up to $60 per barrel would also bolster the valuation of Saudi Aramco ahead of its IPO. However, the danger is that OPEC is underestimating the ability of shale to ramp up. Indeed U.S. shale output is already rebounding. Nevertheless, the desire from OPEC to reach $60 per barrel bodes well for an extension of the collective production cuts.. Investment banks are growing more bullish on commodities, including crude oil. Citi says it sees oil moving up into the mid-$60s later this year. Even as U.S. shale comes “roaring back,” Citi analysts see OPEC efforts as more than sufficient to tighten the oil market. “With a continuation of the OPEC and non-OPEC producer deal in the second half of 2017 and the expected associated inventory draw-down, we expect oil prices to move above $60 a barrel by the second half of the year,” Citi analysts wrote in a research note. China reported a 6.9 percent annual growth rate in the first quarter, much better than expected. It is also setting new oil import records by the month, dispelling fears that its economy and crude oil demand was slowing down. Imports hit a record high 9.21 million barrels per day in March, an increase of 11 percent from February. That spike is likely temporary, but China no longer appears to be the downside risk to oil prices that many analysts had feared earlier this year.

Drilled and Uncompleted - The Roadblock to Higher Oil Prices -- Beginning in September 2016, the United States Energy Information Administration (EIA) began to include estimates of the number of drilled and uncompleted wells (DUCs) in its monthly Drilling Productivity Report.  This data is critical to gaining an understanding of where U.S. oil production may be headed, information that provides us with a measure of whether there will be upward or downward pressure on future oil production, a key factor in future oil prices.  Drilled and uncompleted wells are those wells that have been drilled but are standing suspended (i.e. they are not producing hydrocarbons).  These wells have production casing in place but potentially productive formations have not been perforated or hydraulically fractured (i.e. completed).  Obviously, a high and growing inventory of drilled and uncompleted wells has the potential to impact the domestic supply of oil, a factor which has the potential to impact oil prices, especially in the current market where the balance between oil supply and demand is quite delicate. The drilled and uncompleted wells reported by the EIA fall into one of seven regions; the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica as shown on this map: Here is a bar graph showing the how the number of drilled and uncompleted wells in the lower 48 has grown since the data was first reported in August 2016: In just nine months, the number of drilled and uncompleted wells has grown from 5065 to 5512, an increase of 8.8 percent. Here is a table showing which regions have the most drilled an uncompleted wells in both February and March 2017:As you can see, the two regions with the most drilled and uncompleted wells are located in the Permian Basin and Eagle Ford of Texas. While oil production is down from its peak of 9.627 million BOPD in April 2015, according to the EIA, United States oil production is rebounding from its lows of 8.567 million BOPD in September 2016 to  8.835 million BOPD in January 2017 as shown here: From the EIA data on drilled and uncompleted wells, we can see that it is quite likely that oil prices will be under downward pressure for some time to come unless, of course, OPEC agrees to cut production levels further or a significant number of these wells turn out to be poor producers.

Fracking and horizontal drilling will reduce oil prices to historic lows - Anjli Raval’s perceptive review of Robert McNally’s Crude Volatility (“A refined take on the volatile oil price story”, April 17) correctly states that McNally “argues that price gyrations are an intrinsic feature of the oil industry and that the world should ‘buckle up’ for the perils of another boom-bust era”. McNally crisply sums up his thesis in his final sentence in Crude Volatility: “Welcome back to boom-bust.” Based on his systematic research of crude prices extending back to 1859, McNally concludes his Epilogue with the observation that: “For the first time in over eighty years we appear to have what many have craved and clamoured for: a genuinely free, unmanaged market for crude oil, the world’s most strategic commodity.” Stressing the extreme fluctuations in crude prices for most of the century and a half he has so carefully researched, McNally is confident we shall see similar volatility from low to high in the decades ahead. Another excellent study of the same subject appeared a year earlier, The Price of Oil by Roberto F Aguilera and Marian Radetzki, but reaches a diametrically different conclusion. Having reviewed the “exceptional price changes over the past several decades”, the authors conclude that, nevertheless, “we are likely to experience a turnround from accentuated scarcity and increasing prices into a new era characterised by relative abundance and price falls as two just emerging revolutions mature and spread internationally. The two revolutions are based on recent technological progress perfecting the combination of horizontal drilling and fracking”. These, in combination, will have “an overwhelming impact on global oil supply . . . and a strong price depressing impact”. After weighing the arguments in these two expert studies of the world’s crude markets, this reader is convinced McNally’s view is unduly influenced by his understanding of the past price history and that Aguilera and Radetzki are correct. As fracking and horizontal drilling continue to revolutionise the extraction of oil, I believe crude prices will decline significantly and eventually fall to historically low levels.

Saudi Oil Exports Drop to 2015 Low as Kingdom Sticks to Cuts | Rigzone - Saudi Arabia, the world’s largest crude shipper, trimmed exports to a 21-month low in February as local refineries took advantage of more abundant supplies and processed a record amount of crude. Oil exports fell to 6.95 million barrels a day, the lowest since May 2015, from 7.7 million a day in January, according to data published Tuesday on the Riyadh-based Joint Organisations Data Initiative website. The kingdom boosted production to 10 million barrels a day from 9.7 million a day, the data show. Saudi Arabia is bearing the brunt of the output cuts that members of the Organization of Petroleum Exporting Countries pledged to make in the first six months of this year. It committed to pump no more than 10.058 million barrels a day, as OPEC and other major producers sought to rein in global oversupply and support prices. Saudi refineries increased the amount of crude they processed in the month by 26 percent to 2.67 million barrels a day, the highest in JODI data going back to January 2002. The amount of crude used directly as fuel in power plants and other facilities also rose, as did volume in storage. Stockpiles increased to 264.7 million barrels at the end of February from almost 262 million barrels in January. Saudi Arabian Oil Co. was planning an 80-day maintenance work at its Riyadh refinery starting in late February to last through mid-May, according to two people with knowledge of the situation. The refinery has capacity to process 120,000 barrels of crude a day, according to data compiled by Bloomberg. “It seems that Aramco is preparing for the long shutdown of the Riyadh refinery by increasing production from other refineries as they need to keep some products in stocks while the refinery is closed,” “The amount of crude not being processed at the Riyadh refinery is reflected in the oil stockpiles in February as they increased from January.” The country plans to double refining capacity to as much as 10 million barrels a day within 10 years, Saudi Energy Minister Khalid Al-Falih has said. Saudi Arabian Oil Co., the state producer known as Saudi Aramco, expects to start operating a 400,000 barrel-a-day refinery next year at Jazan on the Red Sea, adding to two other plants of the same size that have come online since 2013. /p>

Oil Slides After Saudis Unexpectedly Cast Doubt On Production Cut Extension - One week after "unnamed sources" reported that Saudi Arabia had backed the proposed 6 month extension to oil production cuts, this morning oil is lower after the world's biggest oil producer appeared to backtrack on its trial balloon from last week, when Saudi Arabia’s energy minister said it is "too early" to decide whether OPEC will extend its crude-production-cutting agreement for the rest of the year. Quoted by the WSJ, Khalid al-Falih, told reporters in Riyadh Monday that “it is premature to talk about extending the cut.” OPEC’s 13 national ministers are scheduled to decide that question on May 25. Falih’s unexpectedly cautious tone "has taken some of the wind out of the bulls’ sails," according JBC analysts. It wasn't just the sudden Saudi retiscence: as the WSJ adds, Falih’s comments were among a range of factors keeping pressure on oil prices, chief among them that U.S. drilling is now set to increase by 123,000 barrels a day in May, according to the U.S. Energy Information Administration, the steepest monthly rise since February 2015. The EIA figures are the latest sign that U.S. companies have been quick to increase production because of higher prices and has “added another bearish element to the market,” said JBC analysts.  A surge in U.S. production is a major threat to OPEC’s effort to reset the still-oversupplied global oil market. The U.S. oil rig count has been on the rise 13 weeks and now stands at its highest level in two years, according to oil-field services firm Baker Hughes Inc. The number of U.S. active drilling rigs rose again last week—by 11 to 683.“You have supportive data from Saudi Arabia showing a large drop in exports but on the other hand you have an increase in U.S. production,” said Olivier Jakob from Switzerland-based consultancy Petromatrix.  “The prices are going lower,” he said. “Meanwhile, even as data due on Wednesday is expected to show U.S. inventories shrinking for only the 2nd week in 2017, US drillers have continued to add rigs for past 13 week. "At this rate, the U.S. is likely to reach a new recent record level of production by the end of the third quarter” Olivier Jakob added.

WTI/RBOB Tumble After Unexpected Build In Gasoline Inventories -- Despite last week's unexpected crude draw (and product draws) WTI/RBOB has faded since (even with a lower dollar) as OPEC production cut questions trump inventories for now. However, prices tumbled immediately after API report a smaller than expected draw in crude (-840k) and an unexpected build in gasoline (+1.37mm) .API

  • Crude -840k (-1.4mm exp)
  • Cushing -672k
  • Gasoline +1.374mm (-2mm exp)
  • Distillates -1.8mm

Smaller than expected draw in crude and unexpected build in gasoline...

Oil Prices Edge Lower As Imports Keep Inventories Buoyed --After a lesser draw than expected to crude inventories, oil is selling off on this third Wednesday in April. As strong imports from the Middle East this week should help to buoy inventories for next week's report, here are five things to consider in oil markets today.

  • 1) Much is being made of Saudi Arabia's February exports, which showed a drop to the lowest since mid-2015, according to JODI data. But we can see in our Clipperdata that this drop is superseded by a solid rebound in March exports. We see exports rebounded to over 7.2 million barrels per day, with flows bound for East Asia (think: Japan, South Korea, China) accounting for 45 percent of loadings.
  • 2) It is also interesting to note that Saudi Arabia oil inventories rose in February amid the export lull. We discussed earlier in the month how JODI data showed that oil inventories dropped to 262 million barrels in January, down from a peak of 329 million barrels in October 2015.
  • 3) As the Dakota Access Pipeline (DAPL) starts up, the largest refiner on the East Coast - Philadelphia Energy Solutions (PES) - is not expected to take any deliveries of Bakken crude by rail in June. Once DAPL starts up, it is more profitable for oil to be sent by pipe to the U.S. Gulf Coast than it is to send it by rail to the East Coast. As our ClipperData illustrate below, the marginalization of Bakken barrels to the East Coast has been underway for a good while. Waterborne imports bottomed out in early 2015 - at exactly the same time that Bakken shale crude production was peaking out.
  • 4) Today's key EIA inventory numbers have been driven in large part by big swings on the US Gulf Coast. While total US refinery runs rose by 241,000 bpd, an increase of 260,000 bpd was seen from Gulf Coast refiners. This uptick in Gulf Coast refining activity, in combination with imports remaining somewhat in check, has meant oil inventories have drawn down on the Gulf Coast by 3 million barrels. Next week's report is set to be impacted by super-strong waterborne imports from the Middle East, but for now, the increase in refining activity is taking center-stage. Crude inputs are now a whopping 958,000 bpd above year-ago levels.
  • 5) Finally, the IMF has published its April 2017 World Economic Outlook. It projects world economic growth is going to be at 3.5 percent in 2017, rising to 3.6 percent in 2018. As we know all too well, all paths lead back to energy, hence downward revisions have been made to Latin American and Middle East nations due to the impact of lower oil prices and production cuts.

Barkindo says OPEC, non-OPEC committed to restore market stability | Reuters: OPEC Secretary-General Mohammad Barkindo said on Wednesday that all oil producers taking part in a supply-cut pact are committed to bringing global inventories down to the industry's five year average and restoring stability to the market. Barkindo, speaking in the United Arab Emirates, said compliance data in March is showing better conformity by the oil producers with the agreement than in February. OPEC and non-OPEC producers agreed in December to cut supplies for six months, helping lift oil prices to about $55 a barrel after a two-year slump. OPEC will review policy for the second half of this year at a May 25 meeting. Barkindo would not say whether the agreement will be extended for another six months, but that any decision taken would be in the interest of all producing and consuming countries.

WTI Slides After Smaller-Than-Expected Draw, Production Hits 20-Month Highs --Following API's surprise gasoline build (and small crude draw), DOE dismissed the markets concerns with a sizable draw in both gasoline and distillates. Crude inventories drew down for the 2nd week in a row. WTI prices slipped though as production rose to its highest since Aug 2015. DOE:

  • Crude -1.034mm (-1.4mm exp)
  • Cushing +276k (+175k exp)
  • Gasoline +2.973mm (-2mm exp)
  • Distillates -2.153mm (-1mm exp)

Crude inventories dropped for the second week in a row and product inventories continues to trend seasonally lower...

Oil prices just tanked into the close; 4% slide puts crude back near $50: U.S. oil prices fell nearly 4 percent Wednesday, reaching a session low of $50.28 per barrel and marking their biggest daily percentage decline since early March, as inventories posted a less-than-expected decline for the week. U.S. crude futures closed the day down 3.76 percent, trading at $50.44 per barrel and hovering only slightly above the key $50 level, while Brent crude futures dropped nearly $2.30 to trade around $52.70 a barrel. Earlier on Wednesday, the U.S. Energy Information Administration (EIA) said U.S. crude stocks fell 1 million barrels on the week, a bit less than anticipated. A surprise build in gasoline inventories despite heavier refining activity, along with an increase in U.S. crude production, largely pushed prices lower. "[Wednesday's] crude drawdown was not as large as expected," John Kilduff, founding partner at Again Capital, told CNBC in an interview Wednesday. "There was also a large jump in refinery capacity utilization ahead of the peak summer driving season. That's weighing on the perception of the [EIA] report." "In other words, production of these refined products is expected to rise, increasing inventories." Kilduff also noted that U.S. daily production increased to 9.25 million barrels per day. "That's another bearish sign for oil prices." The selling intensified into the close on some maneuvering by traders.U.S. crude for May expires Thursday, and traders are dumping their oil contracts ahead of that, one analyst also noted.

Oil futures fall sharply after data shows US gasoline build -  A surprise build in US gasoline stocks last week triggered a sharp sell-off across the oil complex Wednesday, even though weekly US inventory data also showed draws in both crude and distillate inventories. Gasoline stocks rose 1.542 million barrels to 237.672 million barrels in the week ending April 14, Energy Information Administration data showed. Analysts surveyed Monday by S&P Global Platts were looking for a draw of 2 million barrels.On the Atlantic Coast, home to the New York Harbor-delivered NYMEX RBOB futures contract, gasoline stocks fell 1.276 million barrels, but still sit at a 5 million barrel surplus to the five-year average for this time of year. Distillate stocks fell 1.955 million barrels last week, EIA data showed. Analysts were looking for a draw of 1.4 million barrels. Inventories have fallen 10 straight weeks by a total of 22.5 million barrels to 148.266 million barrels, a surplus of 19 million barrels to the five-year average for this time of year. NYMEX May ULSD fell 4.06 cents Wednesday to settle at $1.5813/gal. Crude stocks declined 1.034 million barrels to 532.343 million barrels in the week ended April 14, EIA data showed Wednesday. Analysts were looking for a draw of just 50,000 barrels. NYMEX May RBOB settled 5.20 cents lower at $1.6590/gal.

Why the crude rally has fizzled: Market analysis series --Prices had been trading comfortably above $50/b since late March, with bulls re-trenching on the idea that Saudi-led OPEC supply cut will soon tighten balances. And while today’s price declines could prove temporary, a measure of caution is advised to all bulls, for two key reasons — reasons that we’ve been watching closely since November. First, the expectation that the OPEC supply cuts will tighten global crude supply is overdone. While there is likely a limi to how many OPEC barrels US shale can replace, anyone who thinks the godfathers of the shale revolution are going to sit idly by as prices soar probably wrote a book on peak oil. Second, global refined product stocks are ample and will have to clear — with a noticeable increase in crack spread and differentials — before forecast demand growth can meet expectations. The bulls say given enough time, OPEC-led supply cuts will drive prices higher. A recent S&P Global Platts survey pegged OPEC compliance on stated cuts at around 115% over January to March. That is truly incredible, and clearly part of any bull’s fundamental calculus. But if cuts are actually taking place, what effect are they actually having?  The market’s ability to flood Asia and Europe with crude has become entirely unshackled. How long will it be before cut OPEC and Russia volumes are replaced by barrels out of Latin America, the US, Canada, North Sea and West Africa? And isn’t that already happening? Is this not the new normal?

Hedge fund confidence in OPEC starts to fray: Kemp (Reuters) - OPEC and some of the most important hedge funds active in commodities reached an understanding on oil market rebalancing during informal briefings held in the second half of 2016. OPEC committed to implement credible production cuts and reduce global crude stocks while hedge funds responded by establishing bullish long positions in both flat prices and calendar spreads. OPEC effectively underwrote the fund managers’ bullish positions by providing the oil market with detail about output levels and public messaging about high levels of compliance. In return, the funds delivered an early payoff for OPEC through higher oil prices and a shift from contango to backwardation that should have helped drain excess crude stocks. The understanding was initially successful between December 2016 and February 2017, with reports of strong compliance from OPEC, spot prices rising $10 per barrel and calendar spreads moving from contango to flat or, albeit briefly, backwardation. But the understanding started to unravel with the calendar spreads collapsing after Feb. 21 and flat prices dropping from March 8 ( The sharp reversal in both spreads and flat prices inflicted substantial losses on many bullish hedge funds in February and March. The correction came amid growing doubts about whether OPEC was really cutting oil supplies to the market by as much as anticipated. Global stocks of crude and refined products showed little sign of drawing down during the first three months of 2017. Bullish fund managers have pushed the time horizon for expected stock draw downs back to the second half of the year. OPEC has come under pressure to reconfirm the faith of hedge fund bulls with an early commitment to extend current output cuts beyond June.

Why The Relationship Between OPEC And Hedge Funds Is On The Verge Of Falling Apart --Following years of acrimony between OPEC and the hedge fund community, which the cartel dismissed simply as "speculators", things suddenly changed in 2016 when the two groups got so close, there were outright reports of collusion between the two on various occasions. We documented this last month in "Why OPEC Is Colluding With Hedge Funds." However, as Reuters' energy analyst John Kemp pointed out on twitter this morning, that relationship may be ending as hedge funds start to lose confidence in OPEC.Taking us to the beginning, Kemp notes that OPEC and some of the most important hedge funds active in commodities reached an understanding on oil market rebalancing during informal briefings held in the second half of 2016. OPEC committed to implement credible production cuts and reduce global crude stocks while hedge funds responded by establishing bullish long positions in both flat prices and calendar spreads.OPEC effectively underwrote the fund managers’ bullish positions by providing the oil market with detail about output levels and public messaging about high levels of compliance. In return, the funds delivered an early payoff for OPEC through higher oil prices and a shift from contango to backwardation that should have helped drain excess crude stocks.The Reuters analyst then notes that the understanding was initially successful between December 2016 and February 2017, with reports of strong compliance from OPEC, spot prices rising $10 per barrel and calendar spreads moving from contango to flat or, albeit briefly, backwardation. But the understanding started to unravel with the calendar spreads collapsing after Feb. 21 and flat prices dropping from March 8.

API: US petroleum demand in March at highest level since 2008 - Oil & Gas Journal: Total petroleum deliveries in March increased 0.2% from March 2016 to average nearly 19.7 million b/d—the highest March deliveries in 9 years, according to data from the American Petroleum Institute. For this year’s first quarter, total US petroleum deliveries, a measure of US petroleum demand, were up 0.4% compared with first-quarter 2016 to average 19.5 million b/d. These were the highest first quarter deliveries since 2008. According to the US Bureau of Labor Statistics report, issued Apr. 7, the US added 98,000 jobs in March. In addition, the unemployment rate at 4.5% and the number of unemployed persons at 7.2 million were both down from a month ago as well as last year. Gasoline deliveries, meanwhile, were up in March from the previous month, but down from the prior year as well as last year’s first quarter. Total motor gasoline deliveries increased 4.3% from February, but were down 1.7% from March 2016 to average 9.2 million b/d. These were the second-highest March deliveries ever recorded. “The strong steady demand for fuel expanded economic activity in the manufacturing sector last month and the overall economy grew for the 94th consecutive month. Good news for workers and the economy,” said Chief Economist Erica Bowman. US crude oil production increased in March for the third straight month, up 1.4%, but posted declines compared with levels in the previous year as well as last year’s first quarter. At an average of 9.2 million b/d, US crude oil production decreased 0.2% from March 2016 and was down 1.8% from first-quarter 2016. Natural gas liquids production was up from the previous month and last year’s first quarter, but was down from the prior year. NGL production in March averaged 3.4 million b/d, which was the second-highest level for the month on record. This was 0.4% above February’s output and 0.8% higher than first-quarter 2016. 

RPT-Murky oil inventory picture leaves market grappling for clarity | Reuters: The jury is still out over whether an OPEC-led production cut aimed at tightening oil markets is working, or if the producer club has simply enabled higher prices without making much of a dent in the global fuel supply overhang. Analysts say there are early indications that at least some inventories, key in gauging the health of the market, are starting to draw down. However, inventory levels are hard to judge outside of the United States, as many countries do not release specific figures. Oil shipments show an ongoing excess, while price activity in oil futures suggests sagging optimism the imbalance is being corrected. Over two years into a 50 percent price slump, the Organization of the Petroleum Exporting Countries (OPEC) and some other producers, including Russia, pledged to cut production by almost 1.8 million barrels per day (bpd) during the first half of the year. But more oil than ever is currently traversing the world's oceans. Thomson Reuters Eikon data shows global crude shipments, which monitor tanker movements but exclude pipeline flows, hit a record 47.8 million bpd in April, up 5.8 percent since December, before cuts were implemented. This is in part due to a jump in production and exports from producers who did not agree to cuts, especially the United States. "OPEC seems more like a magician who is keeping the audience's attention fixed firmly on his hands (its production policy) while the actual trick takes place elsewhere (non-OPEC supply)," said Carsten Fritsch, oil analyst with Commerzbank. U.S. production is soaring, jumping by almost 10 percent since mid-2016 to 9.25 million bpd. This brings its output close to the world's top two producers, Saudi Arabia and Russia.

Preliminary agreement reached among some OPEC ministers to extend production cuts: Falih - Saudi energy minister Khalid al-Falih on Thursday said that he saw an extension of the OPEC/non-OPEC production cut agreement likely if global oil inventories do not fall to sufficient levels. "There has been a strong level of commitment in the past three months," Falih said at the GCC Petroleum Media Forum in Abu Dhabi. "Unfortunately we still have not reached our goal." If stocks remained too high, "we will extend this agreement to nine or even 12 months (from January 1) because our target is the level of (inventories), and this will be the indicator of the success of our initiative," he added. OECD stocks remained 336 million barrels above the five-year average at the end of February, the International Energy Agency said in its most recent monthly oil market report. OPEC ministers have said their aim with the production cuts is to bring inventory levels down to the five-year average. Under the six-month deal, which expires in June, OPEC was to cut 1.2 million b/d of crude production from October levels and 11 key non-OPEC producers led by Russia to cut output by 558,000 b/d. OPEC ministers will meet on May 25 in Vienna to decide whether to extend the production cuts, with a monitoring committee composed of Kuwait, Algeria, Venezuela, Russia and Oman to provide a formal recommendation before that.

Saudi Arabia, Kuwait signal likely extension of oil output cut | Reuters: Leading Gulf oil exporters Saudi Arabia and Kuwait gave a clear signal on Thursday that OPEC plans to extend into the second half of the year a deal with non-member producers to curb supplies of crude. Consensus is growing among oil producers that a supply restraint pact that started in January should be prolonged after its initial six-month term, Saudi Energy Minister Khalid al-Falih said. "There is consensus building but it's not done yet," Falih told reporters at a conference in the United Arab Emirates. Kuwait's oil minister Essam al-Marzouq said he expected the agreement to be extended. "Russia is on board preliminarily ... Compliance from Russia is very good," Marzouq said. OPEC Secretary-General Mohammed Barkindo, noting that Marzouq chairs a committee that measures compliance with the cuts, said: "It is significant that the Kuwaiti minister has come out in public and said this." OPEC is keen that non-member producers play their promised part in supporting the group's efforts to lift prices, which have recovered to $53 a barrel from lows last year below $30. The Organization of the Petroleum Exporting Countries and non-OPEC meet on May 25 to discuss extending the curbs that total 1.8 million barrels daily, two-thirds of that from OPEC.

Brent Physical Oil Market Weakens Again Despite OPEC Output Cuts The Brent physical oil market is flashing signs of weakness again as dwindling Asian purchases, an influx of American crude to Europe, and supplies flowing out of storage all combine to recreate a glut in the North Sea. The weakness comes at a time when speculators have started rebuilding bullish positions after a sell-off last month, betting the market will tighten in the second quarter. Yet, Brent physical oil traders say the opposite is happening so far, according to interviews with executives at several trading houses, who asked not to be identified discussing internal views. “We need to see the market going really into deficit for oil prices to rise,” Giovanni Staunovo, commodity analyst at UBS Group AG in Zurich, said. “If this is temporary, it could be weathered, but it needs to be monitored.” The weakness is particularly visible in so-called time-spreads -- the price difference between contracts for delivery at different periods. Reflecting a growing surplus that could force traders to seek tankers as temporary floating storage facilities, the Brent June-July spread this week fell to an unusually weak minus 55 cents per barrel, down from parity just two months earlier. The negative structure is known in the industry as contango. "Keep a wary eye on the Brent contango," said Jan Stuart, energy economist at Credit Suisse Securities LLC in New York. "Bellwether Brent time-spreads have been counter-seasonally widening.”

Oil Stumbles Back To $50 Handle As Saudi/OPEC Jawboning Fails - Oil prices limped higher overnight as desperate jawboning of OPEC production cut deal extensions by the Saudis supported a recovery from yesterday's post-inventories plunge. However, confirming the market's lack of faith in OPEC (and Saudi's ability to hold the deal together), WTI prices are sliding back towards a $50 handle as jawboning half-lives slump. As The FT reports, oil producers are moving closer towards agreement on extending the Opec-led deal to limit output, Saudi Arabia’s energy minister said on Thursday, as the cartel battles excess stockpiles and a resurgent US shale industry that have weighed on prices. Khalid al-Falih said the deal could be run for another three to six months beyond the end of June. Under the terms of the existing accord, Opec members and countries outside the cartel, including Russia, agreed to cut their output by about 1.8m barrels a day throughout the first half of 2017. A preliminary agreement to extend the deal had been reached by most, but not all, producers, he said. “Consensus is building, but it is not done yet,” Mr Falih told reporters on the sidelines of an energy industry event in Abu Dhabi. “We are still in consultations.” But the market is not buying it...

Don't Believe The Hype: Oil Markets Far From Recovery - Arthur Berman - Global oil inventories are falling because of OPEC and non-OPEC production cuts, but the road to market balance will be long. Production cuts have removed approximately 1.8 million barrels per day (mmb/d) of liquids from the world market since November 2016 (Figure 1).Saudi Arabia has cut 619 kb/d (35 percent of total) and the Gulf States Cooperation Council—including Saudi Arabia—has cut 1,159 kb/d (65 percent of the total). Other significant contributors outside the GCC include Iraq (12 percent), Russia (12 percent) and Mexico (9 percent) (Table 1). Nigeria’s cuts are probably involuntary since it was exempted from the OPEC agreement. Iran and Libya–also exempted–and both increased production.OECD inventories began falling in July 2016, four months before the OPEC production cuts were finalized. Stock levels have declined approximately 107 mmb according to recently revised EIA STEO data (Figure 2). That includes the January 2017 increase recently noted in the April IEA Oil Market Report. Although this represents progress toward market balance, stocks must fall at least another 260 mmb to reach the 5-year average level to support oil prices in the $70 per barrel range. Almost three-quarters (73 percent) of OECD decline was from non-U.S. inventories. Perhaps the intent of OPEC’s November cuts was to stimulate a decrease in U.S. inventories (about 45 percent of the OECD total). U.S. stocks and comparative inventories were increasing at the time of the cuts and did not start to fall until February 2017 (Figure 3). Since mid-February, U.S. stocks and comparative inventory have each declined 20 percent. Still, U.S. inventories must fall another ~143 mmb to reach the 5-year average (Figure 4). The immediate results of the OPEC cuts were an increase in oil prices and an important change in the term structure of crude oil futures contracts. Before the cuts were announced, the term structure of the WTI oil futures curve was in contango (prices are higher in the near-future). That favored storing rather than selling oil and contributed to growing inventory levels (Figure 5).In early March 2017, however, oil prices fell as investors lost confidence that the cuts were working. Forward curves moved into weak backwardation (prices are lower in the near-future). Now, prices have increased with outages in Canada and Libya, and the forward curve has moved into stronger backwardation. That favors selling rather than storing crude oil and contributes to decreasing inventory levels.

OilPrice Intelligence Report: Why Oil Prices Are Seeing A Steep Correction -- Oil is heading for its largest weekly drop in over a month as doubts resurfaced over OPEC’s resolve. That comes despite the highly optimistic comments from top officials from Saudi Arabia and Kuwait. There seems to be a growing consensus within OPEC in favor of an extension of the deal. But the one holdout could be Russia, without which an extension is uncertain. Russia’s energy minister Alexander Novak was guarded when asked about Russia’s support for an extension, declining to take a position while citing progress that has already been made in the reduction of oil stocks.  "The situation has gradually been improving since the beginning of March," Novak said to reporters.. Oil was down sharply over the past few days, but Goldman Sachs tried to reassure the markets, saying that there is no evidence to justify the price declines. The investment bank tells investors to keep their focus, pointing to ongoing declines in crude oil inventories, drawdowns that are expected to pick up pace this quarter. Goldman says this week’s price declines of about 4 percent were driven more by speculative moves than the fundamentals. As a result, prices should firm up.  Goldman says there is nothing to worry about, but the U.S. EIA reported an unexpected increase in gasoline stocks last week, raising fears of softer-than-expected demand. The stock build sent a shudder through the oil market this week. “If there’s too much gasoline, then refineries turn off and that’s bad for crude. This is the first week it has really been a concern,” Sam Margolin, an analyst at Cowen & Co., told the WSJ The FT reported on Russia’s foray into the Arctic, describing the persistence from the state and the government owned-Rosneft to go it alone on some of the most complex oil projects in the world.  International sanctions put on Russia back in 2014 were thought to prevent Russia from accessing the capital, drilling technology and expertise needed to tap oil in the Arctic as well as in Russian shale. But, the FT reports that sanctions have forced Russia to make progress on its own. Oil inventories are declining around the world even as they remain near record highs in the U.S. OPEC compliance is high and the drawdowns are evidence that the OPEC deal is finally bearing fruit. But the market is still uncertain if the cuts will be enough to sufficiently drain stockpiles.

OPEC Rumor-Mill Utterly Fails - Oil Tumbles On Production-Cut Deal Extension Chatter -- Just as Reuters' John Kemp warned, it seems the hedge funds have abandoned OPEC. In the good ol' days (of the last year), one mention of production cut deal extensions, or high production cut compliance rates, would have been enough to see levered buying with both hands and feet, self-reinforcing the 'success' of OPEC's plan. Today - that failed!  WTI plunges below $50 and we tweet that OPEC is due any time now... Sure enough seconds later the following headline drop... *OPEC TECH COMMITTEE SAID TO SEE NEED FOR 6-MO CUTS EXTENSION   But the reaction was a disaster...As we noted previously, reported stocks need to start falling soon if hedge fund managers’ confidence in rebalancing is to be maintained.Which is why the daily jawboning by OPEC in the form of its recurring messaging about high levels of compliance has lost much of its effectiveness and is no longer enough to justify a bullish position in crude.As a result, reported stock changes now matter more for oil prices and calendar spreads than compliance assessments by OPEC’s secondary sources.Kemp's conclusion: "OPEC’s credibility is on the line: stocks need to show a significant draw during the second and third quarters or many hedge funds are likely to give up on the bullish narrative prevailing since late 2016."

BHI: US rig count adds 10 units, continues onshore drilling spike The US drilling rig count during the week ended Apr. 21 climbed by double-digits for the 10th time in its 14-week streak of increases, Baker Hughes Inc. data indicate (OGJ Online, Apr. 13, 2017).  The overall tally of active rigs rose by 10 to 857, up 453 units since the nadir of the drilling downturn on May 20-27, 2016, and its highest point since Sept. 4, 2015. Land-based rigs gained 11 units to 834, with horizontal rigs jumping 12 units to 718, up 404 since May 20-27. Directional drilling rigs lost 4 units to 60. Rigs drilling in inland waters were unchanged at 3, while offshore rigs dropped a unit to 20. Fitch Ratings projects the US Lower 48 land rig count to grow to 850-875 units by yearend, averaging around 800 for the full year, given the expectation of growing production, higher oil and gas prices, and leaner cost structures leading to increased cash flows for producers (OGJ Online, Apr. 21, 2017). “Capital allocation is expected to be weighted toward the highest-return shale plays with growth potential such as the Permian, Eagle Ford, STACK, Haynesville, and Marcellus basins,” Fitch said. Separately, Wood Mackenzie Ltd. said that US Lower 48 onshore operators are beginning to experience cost inflation following a flurry of first-quarter development activity (OGJ Online, Apr. 20, 2017). The research and consulting firm forecasts 15% cost inflation in 2017, with variability across basins. WoodMac noted, however, that horizontal rigs will likely see half the cost inflation rates compared with that of pressure pumping as rigs are operating with greater efficiencies and faster drilling times.“Despite our projections for a 10% cost inflation for horizontal rigs this year, it's unclear how much traction drilling contractors will gain on new long-term rig contracts,” the firm said. “Many producers signed long-term rig contracts at peak prices in 2014, which are now expiring in a spot market that's 40% down, triggering deflation in some cases, and likely influencing contracting activity this year.”The use of longer laterals and fewer wells may limit the amount of rig contracts compared with those of previous years, and with operators electing to hedge oil prices and limit drilling within cash flow, rig growth could moderate during the second half, WoodMac said. The US oil-directed rig count gained 5 units during the week ended Apr. 21 to 588, up 372 since May 27, according to BHI data. Gas-directed rigs rose 5 units to 167, up 86 since last Aug. 26. Two rigs considered unclassified remained operating.

Oil ends below $50 as U.S. rig count continues to climb -- Oil futures fell on Friday, with the U.S. benchmark ending below $50 a barrel and notching a weekly loss of roughly 7%. The latest weekly rise in active U.S. oil rigs offered another sign of further growth in U.S. crude production, casting doubts that the Organization of the Petroleum Exporting Countries will agree to extend its product-cut deal into the second half of the year. June West Texas Intermediate crude fell by $1.09, or 2.2%, to settle at $49.62 a barrel on the New York Mercantile Exchange. The settlement was its lowest since March 29, according to FactSet data.   June, which saw its first full day of trading as a front-month contract Friday posted a weekly loss of 7.4%. Based on the most-active contracts, however, prices lost 6.7%. Either way, it was the first weekly loss since the week ended March 24. Declines in WTI accelerated in late morning trading as U.S. equities fell “on France election uncertainty and oil, being in a weak technical position, followed along,” said Phil Flynn, senior market analyst at Price Futures Group. Prices then held on to their losses after Baker Hughes reported another weekly rise in the U.S. oil-rig count.June Brent crude on London’s ICE Futures exchange LCOM7, -2.04%  lost $1.03, or 1.9%, to $51.96 a barrel—ending 7% lower for the week. Signs of a possible extension, which would help to offset output increases in the U.S., have provided some support for oil prices in recent weeks. Saudi Arabia Energy Minister Kalid al-Falih said Thursday that a handful of cartel members have reached a tentative agreement to cut more supplies.

Oil dives, sending U.S. crude below $50 for first time in two weeks | Reuters: Oil prices tumbled more than 2 percent on Friday, notching the biggest weekly decline in more than a month on mounting evidence that U.S. production and inventory growth were offsetting OPEC's attempts to reduce the global crude glut. Brent futures LCOc1 settled at $51.96 a barrel, down $1.03, or 2 percent at the market's close. U.S. crude futures CLc1 ended at $49.62 a barrel, down 2.2 percent, or $1.09. Volumes were heavy, with more than 665,000 WTI futures changing hands, surpassing the daily average of 525,000 contracts. For the week, Brent fell 7 percent, while U.S. crude lost 6.7 percent. It was the largest percentage drop for both benchmarks since the week of March 10, when rising concern about the supply glut undermined big bets on an oil rally. Those speculative bets have been on the rise again. On Friday, the U.S. Commodities Future Trading Commission (CFTC) showed total long positions in U.S. crude rose in the week to April 18 to their highest in more than a month at 355,077 contracts. But oil has sagged in recent days, much as it did in March. Many in the market still expect the Organization of the Petroleum Exporting Countries (OPEC) to renew its production cuts for another six months. On Friday an OPEC and non-OPEC member technical committee recommended extending cuts of almost 1.8 million barrels per day (bpd) at the upcoming May 25 meeting. Still, shipment data shows more oil transiting world oceans than when cuts were put in place. “The reason that we’re seeing the selloff today and really for this week has been related to the fact that we’re seeing higher waterborne imports arriving from the Middle East,” said Matt Smith, director of commodity research at Clipperdata. “We should continue to remain well supplied at least over the next few weeks."

Is Aramco IPO Behind Saudi Eagerness For OPEC Cut Extension? - Clear signs emerged this week that the OPEC production cuts in place since November 2016 may be extended past their June 2017 deadline. On Tuesday, Saudi Arabia expressed their willingness to extend the cuts, and the OPEC monthly production report showed the Saudis continuing their over-compliance, cutting production to 9.9 million bpd in March, around 100,000 bpd below the agreed-upon monthly quota. The total fall in OPEC production was 365,000 bpd, sending total production down to 31.68 million bpd. Saudi over-compliance was one factor in the decline, but there were also involuntary losses in Libya and Nigeria. Along with Saudi Arabia, other OPEC members like Kuwait, Iraq, Algeria and Angola have all said that further cuts will be necessary to return markets to a state of balance. The Middle Eastern producers have indicated that their ideal price target is $60, a level which they feel will allow their economies to recover without enabling further American production, according to the Wall Street Journal. Both the announcement of the Saudi position and the OPEC report helped keep prices buoyant this week, as the late-March rally continued, sending the WTI above $53 a barrel. Research from the KLR Group released on Thursday indicated that global inventories would be normalized late in 2017 if the OPEC cuts were extended. A stabilizing supply-demand situation is also the outlook of the IEA, which predicted demand to decline for the second year in a row in 2017. Neither bearish nor bullish, the IEA outlook hedged on the side of caution, noting that declining inventories and OPEC cuts raising prices would spur new growth in U.S. production, partially offsetting the OPEC gains and repeating the trend of early 2017. In January, reports of huge inventory draws and a surge in shale activity saw the price fall back to its pre-November level.  Both KLR and the IEA believe that further OPEC cuts would tighten supply, leading to greater stock draws and higher prices in the second half of 2017. But not all OPEC producers are keen on the idea of further cuts. Iran, eager to boost production past its pre-sanctions level, only agreed to cuts in November on the condition it was permitted to continue increasing production to 3.8 million bpd. It reached that level in late 2016 and even neared 4 million bpd according to direct communication to OPEC, but there’s a good chance much of Iran’s impressive increase in exports since January 2016 came from storage facilities on and off shore, and that actual Iranian field production may decline without considerable investment. Iranian production declined somewhat in March, falling 28.7 thousand bpd to 3.79 million bpd according to secondary sources.

Reeling From Low Oil Prices, Saudis Look To Freeze Megaprojects - Saudi Arabia will start reviewing a number of multi-billion-dollar infrastructure and development project—remnants from a better past when crude oil prices were in three-digit territory. Some of these, according to government sources, will be shelved and others will be restructured. The review is part of urgent reforms prompted by the oil price rout from 2014, which saw Saudi Arabia plunge into a budget deficit for the first time in its history. As part of efforts to reform the oil-reliant economy, last year Deputy Crown Prince Mohammed bin Salman removed from their positions the Kingdom’s long-serving oil and finance ministers, Ali al-Naimi and Ibrahim al-Assaf. At the time, the Finance Minister defended these same megaprojects that will now be scrutinized by the Bureau of Capital and Operational Spending Rationalization, saying that when the investment decisions were made, the economic outlook was very different from where it was in 2016. At the end of last year, the Saudi government calculated that the cost of completing all these projects would come in at $370 billion (1.4 trillion riyals). Now, those that are deemed still feasible will be retendered, the unnamed sources told Reuters, to be completed through public-private partnerships under build-operate-transfer contracts. This type of contract allows developers to complete a project and operate it for a set period, aiming to get some profit out of it before transferring ownership to the government. The Deputy Crown Prince who is in charge of turning the oil-dependent Kingdom around seems determined to do his job well, including through diversifying the economy into renewable energy with the extremely ambitious Vision 2030 plan, which stipulates that Saudi Arabia could start generating most of its energy from renewable sources as soon as 2030. Meanwhile, however, sources from OPEC have confirmed that the Kingdom, along with other Gulf producers, are seeking oil prices of $60 to patch up their budgets and set aside some cash for new oil and gas investments.

US seeks political solution to Yemen war: Mattis -  US Defense Secretary James Mattis says the conflict in Yemen needs to be resolved "as quickly as possible” through UN-brokered peace negotiations. "Our aim is that this crisis can be handed to a team of negotiators under the aegis of the United Nations that can try to find a political solution as quickly as possible," Mattis told reporters on Tuesday as he flew to Riyadh, Saudi Arabia. "We will work with our allies, with our partners to try to get it to the UN-brokered negotiating table," the Pentagon chief said. Mattis is expected to meet senior Saudi officials, including King Salman bin Abdulaziz Al Saud and Deputy Crown Prince and Defense Minister Mohammed bin Salman. Several UN brokered ceasefires and peace talks have so far failed to end the conflict in Yemen. Mattis gave no details on what additional support, if any, the United States would provide to the Saudi-led coalition. Washington already provides intelligence as well as aerial refueling to coalition warplanes carrying out air strikes in Yemen. Human rights groups have repeatedly criticized the Saudi-led bombing campaign in Yemen for causing civilian casualties. The campaign has claimed the lives of more than 12,000 people, most of them civilians.

BRICS Issues Joint Statement: Illegal Military Intervention in Syria Is Unacceptable -- Brazil, Russia, India, China and South Africa have issued a joint BRICS statement condemning military action in Syria that has not been authorized by the United Nations. The statement also calls for respect of international law, territorial integrity and sovereignty. Some highlights from the statement: BRICS Special Envoys on Middle East expressed their concern about internal crises that have emerged in a number of states in the region in recent years. They firmly advocated that these crises should be resolved in accordance with the international law and UN Charter, without resorting to force or external interference and through establishing broad national dialogue with due respect for independence, territorial integrity and sovereignty of the countries of the region. The participants emphasized the legitimacy of the aspirations of the peoples of the region to enjoy full political and social freedoms and for respect to human rights. They strongly condemned recent several attacks, against some BRICS countries, including that in the Russian Federation. BRICS members stand for consolidating international efforts to combat the global threat of terrorism. They stressed that counter-terrorism measures should be undertaken on the firm basis of international law under the aegis of the UN and its Security Council. In the course of the meeting, the role of the UN Security Council as the international body bearing the primary responsibility for maintaining international peace and security was underlined. It was also stressed that military interventions that have not been authorized by the Security Council are incompatible with the UN Charter and unacceptable. BRICS Special Envoys expressed their deep concern with regard to the continuing violence in Syria, deterioration of humanitarian situation and growing threat of international terrorism and extremism in that country. The participants confirmed their strong support for the sovereignty and territorial integrity of Syria and the need for a peaceful solution, led by the Syrians, to the conflict. They supported all efforts towards a political and diplomatic solution in Syria through talks based on Resolution 2254 of the United Nations Security Council. They welcomed the three rounds of talks held in Astana and the outcome of fifth round of talks in Geneva. They acknowledged that Astana talks paved the way for resumption of Geneva talks. They expressed resolve for renewed and committed efforts to find a political and diplomatic solution in Syria.

Syria Moves Most Of Its Combat Planes Next To Russian Base For Protection -The enemy of my enemy has safe air bases.In a move which either suggests that i) Syria is preparing for more US attacks, ii) really likes Russians, or iii) is simply doing the logical thing, CNN reports that the Syrian government has moved most of its combat planes to a base located in close proximity to the Russian air base in Syria to protect them from potential US strikes. The movement of the aircraft to the air base at Bassel Al-Assad International Airport began shortly after the US's April 6 Tomahawk cruise missile strike on Sharat air base, which destroyed some 24 Syrian warplanes.After the move, the majority of Syria's operation airforce will be located next to Russia's Khmeimim Air Base, where the majority of Russian air forces helping ally Syrian President Bashar al-Assad's regime are based, in Latakia, Syria.The Khmeimim base, along with a naval facility in Tartus, is one of the two of the primary Russian military installations in Syria, and has in the past been shown to be protected by one or more Russian anti-aircraft missile installations.

U.S. says Iran complies with nuke deal but orders review on lifting sanctions | Reuters: The Trump administration said on Tuesday it was launching an inter-agency review of whether the lifting of sanctions against Iran was in the United States' national security interests, while acknowledging that Tehran was complying with a deal to rein in its nuclear program. In a letter to U.S. House of Representatives Speaker Paul Ryan, the top Republican in Congress, on Tuesday U.S. Secretary of State Rex Tillerson said Iran remained compliant with the 2015 deal, but said there were concerns about its role as a state sponsor of terrorism. Under the deal, the State Department must notify Congress every 90 days on Iran's compliance under the so-called Joint Comprehensive Plan of Action (JCPOA). It is the first such notification under U.S. President Donald Trump. "The U.S. Department of State certified to U.S. House Speaker Paul Ryan today that Iran is compliant through April 18 with its commitments under the Joint Comprehensive Plan of Action," Tillerson said in a statement. "President Donald J. Trump has directed a National Security Council-led interagency review of the Joint Comprehensive Plan of Action that will evaluate whether suspension of sanctions related to Iran pursuant to the JCPOA is vital to the national security interests of the United States," Tillerson added. He did not say how long the review would take but said in the letter to Ryan that the administration looked forward to working with Congress on the issue.

Another Flip? Trump Tells Congress Iran Compliant With "Disastrous" Nuclear Deal - On the heels of an apparant avalanche of flip-flops on campaign comments, President Trump has notified Congress that Iran is complying with the "disastrous... worst deal ever negotiated" 2015 nuclear deal negotiated by former President Obama. During his campaign, Trump raised the prospect the United States will pull out of the nuclear pact it signed last year with Iran, alienating Washington from its allies and potentially freeing Iran to act on its ambitions.Trump called the nuclear pact a "disaster" and "the worst deal ever negotiated" during his campaign and said it could lead to a "nuclear holocaust."In a speech to the pro-Israel lobby group AIPAC in March, Trump declared thathis “Number-One priority” would be to “dismantle the disastrous deal with Iran.”All of which makes it fascinating to note that, as AP reports, the Trump administration has notified Congress that Iran is complying with the terms of the 2015 nuclear deal negotiated by former President Barack Obama, a nd says the U.S. has extended the sanctions relief given to the Islamic republic in exchange for curbs on its atomic program. The certification of Iran's compliance, which must be sent to Congress every 90 days, is the first issued by the Trump administration.

U.S. Putting Boots Back On The Ground In Somalia --In October 1993, during the Battle of Mogadishu (the Black Hawk Down incident), 18 US soldiers were killed and 73 wounded, with a pair of Black Hawk helicopters shot down. The US responded by ceasing military operations, and within a few months had withdrawn all troops from Somalia.Today, they are headed back.The new deployment, which US African Command (AFRICOM) is presented as a simple training operation, will be the first time US ground troops are officially deployed to Somalia, though of course the US has had some special forces present on the ground on and off, conducting occasional operations and spotting for US airstrikes."United States Africa Command will conduct various security cooperation and/or security force assistance events in Somalia in order to assist our allies and partners," U.S. Africa Command spokesman Pat Barnes told VOA on Thursday.AFRICOM also insists the new deployment was at the request of the Somali government,though indications in recent weeks has indicated that military officials have been pushing for an escalation of US intervention in the country at any rate, aimed at fighting al-Shabaab.When commanders want to push for fighting in Somalia, al-Shabaab is presented as either ISIS or al-Qaeda affiliated, though in practice the group is largely an independent Islamist operation with a similar ideology.The group’s operations are confined almost exclusively to Somalia, though they have launched some strikes into neighboring countries, as retaliation for those countries (particularly Kenya) being involved in interventions against them.

Hundreds of Palestinians in Israeli jails begin hunger strike - (Reuters) - Hundreds of Palestinians in Israeli jails began a hunger strike on Monday in response to a call by prominent prisoner Marwan Barghouti, widely seen as a possible future Palestinian president. Palestinians termed the open-ended strike a protest against poor conditions and an Israeli policy of detention without trial that has been applied against thousands since the 1980s. Israel said the move by the prisoners, many of whom were convicted of attacks or planning attacks against Israel, was politically motivated. The protest was led by Barghouti, 58, a leader of the mainstream Fatah movement of the Palestine Liberation Organization, serving five life terms after being convicted of murder in the killing of Israelis in a 2000-2005 uprising. The strike, if sustained, could present a challenge to Israel and raise tensions between the two sides as the 50th anniversary of the Israeli occupation of the West Bank, East Jerusalem and the Gaza Strip approaches in June.

Fracking Sweeps Into China - China has turned to hydraulic fracturing to decrease its dependency on foreign natural gas, according to state-run media.China has been trying to use fracking to shifts away from traditional sources of energy such as coal power. Shale gas production has risen by 50.4 percent compared to last year, according to the Chinese National Bureau of Statistics.  China produced 3.8 billion cubic feet of shale gas in March. To put this in some perspective, the U.S. currently produces 1,476 billion cubic feet annually.U.S. experts expect China will continue to push fracking, but don’t see the communist country becoming energy independent any time soon.“It makes perfect sense for Beijing to push as hard as it can to rely on new domestic sources of energy wherever possible,” Harry J. Kazianis, director of defense studies at the Center for the National Interest, told The Daily Caller News Foundation. “And increased shale gas output very much fits into such a strategy.”China aims to boost natural gas’s share of the energy supply from 6 to 10 percent by 2020. In March, Beijing became China’s first city to have all natural gas-fired power plants.Fracking hasn’t gone very far in China because its shale reserves, though large, are expensive and technically difficult to extract. China doesn’t have as favorable geology for fracking, so it will rely on imports for the time being. China’s shale oil could be economically recoverable with oil prices at $345 a barrel.“We must keep in mind that China is highly dependent on external energy supplies to power its growing economy,” Kazianis said. “In times of crisis on the high seas or war, if such energy flows were disrupted or cut off, the economic damage that would result could be quite severe.”China is expected to buy roughly 70 percent of its oil from foreign sources over the next few decades, largely from unstable parts of the world. Sudan provides 7 percent of China’s oil imports, and over one-third of Chinese oil imports come from sub-Saharan Africa. Some of China’s largest oil suppliers — Angola, Sudan, Nigeria, and Equatorial Guinea.

Tanker freight rates tank on China’s proposed consumption tax | Hellenic Shipping News Worldwide: China’s plan to impose a consumption tax on mixed aromatics, light cycle oil and bitumen blend has shaken up everyone from the oil industry to the shipping industry. If implemented, the proposed tax will curb inflows of the said products, hit exports of oil products, and in turn hurt demand for oil tankers, says senior editor Sameer C. Mohindru. Clean Tankerwire brings you the latest in tanker freight and fixture rates, giving you a full view of the most important developments, so you can effectively analyze the tanker market. Clean Tankerwire is a daily report that offers extensive listings and clear analysis of the latest tanker freight and fixture rates as a percentage of the Worldscale figure and an additional cost per metric ton conversion. Welcome to the Snapshot, a series that examines the forces shaping and driving global commodity markets today. If China sneezes, the rest of the world catches a cold. And if China coughs, it is rest of the world that has to clear its throat. Such is the whopping appetite of China for all commodities that policy changes effected in Beijing have a significant impact across the globe. It should not then come as a surprise that China’s plan to impose a consumption tax on mixed aromatics, light cycle oil and bitumen blend, has shaken up everyone — ranging from the oil industry to the shipping industry. The proposal, if implemented, will curb inflows of these products and hit exports of oil products – and in turn hurt demand for oil tankers. Freight rates for medium range tankers have already taken a hit.

China Ready To Cut Oil Supplies To North Korea - Beijing’s patience with North Korea is wearing thin as Pyongyang continues to conduct nuclear missile tests. According to a state Chinese media outlet, Huanqui, China is considering a suspension of its crude oil exports to its neighbor should North Korea conduct a sixth nuclear test.North Korea depends on China for 90 percent of its crude oil supply, and stopping these will wreak havoc on the dictatorship, which China has been trying to avoid, since a regime collapse is likely to result in a massive influx of refugees. It has also opposed President Trump’s urging to penalize North Korea for the nuclear tests so far, but now it seems the mood is changing – having another nuclear neighbor is hardly China’s idea of a stable regional environment.Asia’s biggest economy also has other ways to make Kim Jong Un give up nuclear tests, such as stopping or reducing the food aid it sends to the impoverished nation, or cutting North Korean foreign currency transactions that go through Chinese banks.The White House meanwhile has sent “an armada” to the Korean peninsula, and is now mulling over measures such as an oil embargo, a ban on the country’s only airline, and interception of ships carrying cargo to North Korea. Also among the measures being considered is penalizing Chinese banks doing business with Pyongyang.

North Korea: ‘Thermonuclear war may break out at any minute' | TheHill: A senior North Korean official said Monday the U.S. has created “a dangerous situation in which a thermonuclear war may break out at any minute.” Kim In Ryong, North Korea’s deputy United Nations ambassador, added that the Korean Peninsula is “the world’s biggest hot spot” due to American intrusions there. “[North Korea] is ready to react to any mode of war desired by the U.S.,” he said Monday in Panmunjom, North Korea, according to The Associated Press. Kim additionally derided the U.S.-South Korean military exercises being conducted as the “largest-ever aggressive war drill.” Vice President Pence on Sunday vowed that “the era of strategic patience is over” between the U.S. and North Korea. “The people of North Korea, the military of North Korea, should not mistake the resolve of the United States of America to stand with our allies,” he said during remarks at the demilitarized zone separating North and South Korea. “But all options are on the table as we continue to stand shoulder to shoulder with the people of South Korea for denuclearization of this peninsula and for the long-term prosperity and freedom of the people of South Korea.”

North Korea ‘will test missiles weekly’, senior official tells BBC - North Korea will continue to test missiles, a senior official has told the BBC in Pyongyang, despite international condemnation and growing military tensions with the US. "We'll be conducting more missile tests on a weekly, monthly and yearly basis," Vice-Foreign Minister Han Song-ryol told the BBC's John Sudworth. He said that an "all-out war" would result if the US took military action. Earlier, US Vice-President Mike Pence warned North Korea not to test the US. He said his country's "era of strategic patience" with North Korea was over. Mr Pence arrived in Seoul on Sunday hours after Pyongyang carried out a failed missile launch. On Tuesday, while visiting Tokyo, he called the North Korea regime "the most ominous threat" to the region. He reiterated that while the US and allies would exert economic pressure, "all options are on the table" in dealing with Pyongyang. Tensions have been escalating on the peninsula, with heated rhetoric from both North Korea and the US. Mr Han told the BBC: "If the US is planning a military attack against us, we will react with a nuclear pre-emptive strike by our own style and method."

UN Security Council slams DPRK's ballistic missile launch -  (Xinhua) -- The UN Security Council on Thursday strongly condemned the most recent ballistic missile launch conducted by the Democratic People's Republic of Korea (DPRK). In a press statement, the 15-nation council demanded the DPRK to immediately cease further actions in violation of relevant Security Council resolutions, saying that the council would closely monitor the situation and "take further significant measures including sanctions." The DPRK attempted on Sunday to test-fire an unidentified missile on its east coast, according to the South Korean military. The United States confirmed later that the missile launch had failed. The Security Council expressed their "utmost concern" over DPRK's "highly destabilizing behavior and flagrant and provocative defiance of the Security Council" by conducting the ballistic missile launch, said the statement. It stressed that DPRK's illegal ballistic missile activities are contributing to its development of nuclear weapons delivery systems and are greatly increasing tension in the region and beyond. In order to reduce the tension in the Korean Peninsula, the most powerful UN body demanded the DPRK conduct no further nuclear tests. According to previous Security Council resolutions, the DPRK is banned from conducting any launches that use ballistic missile technology, nuclear tests or any other provocation. To that end, the council has imposed tough sanctions on the DPRK, which includes banning the sale and transfer of coal, iron and iron ore from the country's territory.

North Korea Threatens US With "Super-Mighty Preemptive Strike" -Whether China is right about North Korea conducting a nuclear test on April 25 remains to be seen, but for now Kim Jong-Un is content with merely escalating the verbal warfare and overnight North Korean state media warned the United States of a "super-mighty preemptive strike" following the latest round of comments by Rex Tillerson who said the United States was looking at ways to bring pressure to bear on North Korea over its nuclear programme.The Rodong Sinmun, the official newspaper of the North's ruling Workers' Party, did not mince its words: "In the case of our super-mighty preemptive strike being launched, it will completely and immediately wipe out not only U.S. imperialists' invasion forces in South Korea and its surrounding areas but the U.S. mainland and reduce them to ashes" it said according to Reuters.The threat will hardly come as a surprise: the reclusive communist nation regularly threatens to destroy Japan, South Korea and the United States "and has shown no let-up in its belligerence after a failed missile test on Sunday, a day after putting on a huge display of missiles at a parade in Pyongyang."The comments come in response to Tillerson statement in Washington on Wednesday when he told reporters that "we're reviewing all the status of North Korea, both in terms of state sponsorship of terrorism as well as the other ways in which we can bring pressure on the regime in Pyongyang to re-engage with us, but re-engage with us on a different footing than past talks have been held,"  Furthermore, Paul Ryan said during a visit to London the military option must be part of the pressure brought to bear. "Allowing this dictator to have that kind of power is not something that civilised nations can allow to happen," he said in reference to Kim. Ryan said he was encouraged by the results of efforts to work with China to reduce tension, but that it was unacceptable North Korea might be able to strike allies with nuclear weapons.

China Is Building The World's Largest Nuclear Submarine Facility -- Perhaps it is time to shift attention away from the "rally around the flag" diversion that is North Korea and pay some attention to China, which delighted by the ongoing geopolitical distractions is currently building the world's largest submarine facility, which will be able to produce as many as four ultramodern nuclear submarines at a time. Starting later this year, China's new submarine factory on the Yellow Sea will churn out nuclear-powered attack submarines (or SSNs) ensuring that the sub program of the People's Liberation Army Navy (PLAN) will soon be a deadly global force. Once fully operational, the assembly line will enable China to at least match USN SSN production. Bohai Shipbuilding Heavy Industrial Corporation (BSHIC) is putting the finishing touches on its new facility, which as profiled by Popsci, will start production this year. BSHIC, based in Huludao, Liaoning Province, is China's only builder of nuclear submarines. It previously built the Type 091, 093 nuclear attack submarines (SSN) and Type 092 and 094 nuclear ballistic missile submarine (SSBN).

Unpacking China’s Curious ‘Ivanka Fever’ - Iwanka re (“Ivanka fever”) — the fawning admiration in which Ivanka Trump is held among some sectors of Chinese society — matters only to the extent that it is a symptom of the convergence of the kleptocratic, nepotistic trends in Chinese elite circles with the same tendencies in elite circles in the United States. No longer can there be any pretense to a purported distance between “their” so-called crony capitalism and “our” so-called cleaner version: this distinction was always a misnomer, but the kleptocracy that is embedded in American politics could somehow be concealed better from view. No longer. Ivanka merely personifies the “reveal” in a very public way. There has been a cultural strain in China — as in the United States — to both resent and respect those who rise to the top by dint not of hard work but of family background. The fierce political struggles in China’s recent modern history over the role played by family background and social class are indicative not merely of Maoist excess but of genuine concern and ultimately ambivalence over how birth predestines social success. The dirty secret of American politics and society is that very similar struggles have been engaged over the course of U.S. history, albeit, until recently, in a very different idiom and under very different guises. Those idioms and guises have now more and more become one. That a very white, very blond, very patriarchally-inclined woman — who challenges nothing about an extant unjust system of social reproduction that has given her and her family circle every advantage in the world — should become an icon in China (or in the U.S.) is neither surprising nor even shocking. Unfortunately. In my opinion, it heralds nothing substantive about the U.S.-China relationship in our current moment. It is another piece of fluff that seems to forestall for just another few beats asking and attempting to answer real questions in U.S.-China relations, which are real questions in global life and death more generally. These could include the role of bombing and threats of war in maintaining ostensible U.S. military supremacy in the world; the possibilities of financial and/or economic meltdowns due to deregulated and unregulated capital investments, flows, balance of payments, etcetera; the ever-expanding tendency of China’s and America’s separate and combined global systems of hegemony to direct the concentration of wealth and resources upwards; and perhaps most importantly and alarmingly, the problem of environmental degradation, climate change, and the increasing displacement of those problems onto the global South and/or into urban ghettos and borderland zones of sacrifice (a concept I borrow from my friend Robert Stolz), whose consequent despair and restiveness will require the ever-increasing use of the forces of the national security state. These are among some of the real questions. They demand real discussion and real answers.

China's $8.5 Trillion Shadow Bank Industry Is Back in Full Swing -- China’s shadow banking is back in full swing, an unintended side effect of the government’s campaign against financial leverage, which has curbed traditional lending and squeezed bond financing.  Data from the central bank Friday showed that off-balance sheet lending surged 754 billion yuan ($109 billion) in March, taking the first quarter’s total increase to a record 2.05 trillion yuan. Efforts by the People’s Bank of China to curb fresh lending may have prompted borrowers, especially real estate developers, to resort to alternative forms of financing, said Xu Gao, chief economist at Everbright Securities Co. Since late last year, the PBOC and regulators have taken steps to rein in risks to China’s financial system, including raising short-term interest rates, clamping down on leverage in the bond market, and curbing funding for property speculation. The measures have sent debt-reliant borrowers scurrying to shadow financing, an industry Moody’s Investors Service estimates is worth about $8.5 trillion, and another area where regulators are trying to reduce risk. “You must tread a fine line,” said Everbright’s Xu. “Choking the bond market to death doesn’t mean the financing needs will be curbed as well. Instead, it will drive funding to areas that are more unreachable for the regulators. At the end of the day, risks may be declining in the bond market, but in the overall financial system, they would be rising. The following charts illustrate the measures the government introduced to deleverage the economy, which have contributed to the rebound in shadow banking:

Chinese Investment Scandal Highlights ‘Shadow Banking’ Risks -- Ms. Wang, 61, joined about a dozen other customers in the lobby of a Beijing branch of the bank China Minsheng, pressing employees for details and demanding their money back, after the Chinese news media reported that more than $400 million of investors’ money had disappeared.  The scandal highlights a big and growing risk in the Chinese economy: trillions of dollars of opaque financial products with little regulation and oversight. Typically marketed as low risk, these investments, known as wealth management products, offer tantalizing returns that seem to handily beat the interest rates that banks offer on regular accounts. Lured by the assurances of safety and promises of profit, investors have plowed their savings into the products. But many of the investments have focused on coal, steel and real estate — areas that are facing overcapacity problems in China. As those areas show signs of trouble, the worry is that many of the investments could fail, creating a major shock to the Chinese economy, the world’s second-largest, after the United States’.The products, which are often kept off banks’ balance sheets, are part of a vast, shadowy system of lending that has girded the Chinese economy and kept businesses growing. The Chinese government has stepped in to protect investors, avert ripple effects and ensure social stability.But those bailouts create their own challenges. Investors, assured that the government will come to the rescue, do not worry about the potential risks and continue to pour money into the products. According to the state news media, Chinese investors have put $4.4 trillion into wealth management products, equivalent to about 40 percent of the country’s annual economic output.

IMF raises China growth outlook but warns of risk of 'disruptive adjustments' | Reuters: The International Monetary Fund on Tuesday raised forecasts for China's economic growth in 2017 and 2018, citing expectations of continued policy support, but warned of potential disruptions in the medium term unless the country reduces its reliance on rapid credit growth. The IMF upgraded its estimate for China's 2017 growth to 6.6 percent from 6.5 percent, which it made in January. It also raised its forecast for growth next year to 6.2 percent from the previous 6.0 percent. While higher, the IMF estimates would equate to a significant slowdown from recent growth rates. China's economy grew by a faster-than-expected 6.9 percent in the first quarter of this year, fueled by robust bank lending, higher government infrastructure spending and a housing market that is showing signs of overheating. The IMF said China has made some progress in reducing its industrial production overcapacity, but noted that the economy continues to rely on government stimulus and rapid credit expansion to maintain growth. The report cited China's "policy preference for maintaining relatively high GDP growth", but warned of the consequences of unbalanced growth in the medium term. "The resulting persistent resource misallocation, however, raises the risk of a disruptive adjustment in China in the medium term," which could be exacerbated by continued capital outflows, the report said. Despite vows from policymakers to rein in financial risks and pursue more sustainable growth, China continues to depend heavily on debt and public spending to drive growth.

Japan's 10Y Yield Drops Below Zero Again: All Eyes On The BOJ --With every other asset class roundtripping the November election outcome, it was only a matter of time before Japan's 10Y JGB - which on February 2 briefly peaked above the BOJ's "yield curve controlling" 0.10% yield ceiling, rising as high as 0.15% to the shock of a market ready to declare that Japan had finally lost control of its bond market - retraced the entire "reflationary" move from 0.0% to 0.1%. And, sure enough, following today's violent deflationary capitulation moments ago Japan's JGB 0.1% of 2027 once again dipped back under 0%, sliding as low as -0.003% on Wednesday morning in Japan.What happens next?According to traders, focus will turn to whether the BOJ, in pursuing "yield curve control", will reduce the amount of JGBs it monetizes.  "Amid favorable environment for bonds, focus is on BOJ as whether there will be a reduction in purchase amounts will test the bank’s tolerance for 10-year yield falling into negative," Katsutoshi Inadome, senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, wrote in note according to Bloomberg.As a reminder, in the BOJ's latest "rinban" or open market operation, it bought around 280bn yen of 1-to-3, 350bn yen of 3-to-5 and 450bn yen of 5- to-10-year maturities at previous operation. And material declines from these amounts may lead result in the market roiling again, on fears the BOJ is being forced into an involuntary taper by external deflationary forces.  Meanwhile, the USDJPY continues to track treasury yields tick for tick, and as Yujiro Goto, senior FX strategist at Nomura in London said, the “dollar/yen remains top-heavy with yields falling and weak U.S. economic data. It’s hard to take risk aggressively ahead of the French election, keeping it in 108-109 range."Which means that while continued declines in Japanese yields are virtually assured all else equal, it will be up to the BOJ to telegraph to the market just how low it will let the 10Y drop. Should Kuroda unveil another "taper", the result may be the uncoordinated move in global bond markets, leading to a negative feedback loop of JGB selling and TSY bond buying, which incidentally is the worst case scenario for global central bankers whose primary intention over the past year has been to achieve as much rate coordination as possible.

Japan logged first trade surplus in six years in fiscal 2016, at ¥4 trillion | The Japan Times: Japan posted its first trade surplus in six years in fiscal 2016, standing at ¥4.01 trillion ($37 billion), as the value of imports fell sharply amid persisting low oil prices, government data showed Thursday. With the yen showing an average 10 percent appreciation against the dollar, Japan also saw the value of its exports drop for the year to March 31, the Finance Ministry said in a preliminary report. Imports tumbled 10.2 percent from a year earlier to ¥67.52 trillion, for the third consecutive year of decline, as crude oil and liquefied natural gas imports continued to slide. Exports dropped 3.5 percent to ¥71.52 trillion, down for the second straight year. Resource-poor Japan relies heavily on energy imports, particularly after the 2011 Fukushima nuclear reactor meltdowns, which prompted the nation to seek more fossil fuels as most of its nuclear power plants remained off-line amid heightened safety concerns among the public. But lower energy prices have helped take pressure off Japan’s trade balance. Japan’s imports of crude oil fell 16.1 percent in the reporting year and those of liquefied natural gas plunged 26.6 percent. In March alone, Japan reported a ¥614.7 billion trade surplus, for the second straight month of black ink. Exports grew 12 percent to ¥7.23 trillion, for the fourth consecutive month of expansion, helped by growth in auto parts shipments. Imports surged 15.8 percent to ¥6.61 trillion on increased oil and coal imports.

"Out Of Cash" - More Than 90% Of India ATMs Run Dry -- Five months have passed since the demonetisation drive, but the people of India continue to face a shortage of cash in banks and ATMs. The Times of India reports that more than90% of the ATMs in the northern region do not have cash, and in the southern states as many as 65% of ATMs have run dry. Speaking to TOI, State Bank of India (SBI) deputy general manager Ajoy Kumar Pandit said the customers are losing confidence in them due to the crisis. "Nearly 70 per cent of our 648 ATMs in the three districts are out of cash. The rest will also become dry in the next few days as we do not have cash to refill the machines. We are helpless from our side," he said. A banking source said the RBI has diverted most of the cash to north India due to the recent elections. This has affected the southern parts of the country. "The government's intention is to encourage smart payment systems, but the infrastructure is not up to the mark,"the source said. Many ATMs have not been upgraded with the new software required for handling the new Rs 500 and Rs 2,000 denominations, the source added. notes that the worst hit is the common man, who has been suffering the pinch even as the government has made an effort to make available sufficient cash in ATMs across the nation. The post-demonetisation woes continue to haunt the common man in the country as many ATMs in metro cities seem to be running low on cash for the last one week.

India Claims 500 Pakistanis (Protecting ISIS) Killed In "Treasonous" US Bombing In Afghanistan --While US officials have upped their death count from the Afghan MOAB drop to 94, Indian authorities are claiming that at least 500 Pakistani nationals (who had been protecting the ISIS operatives in this area) were killed in the US bombing in Nangarhar province. One India reports that the area that was targetted was controlled by the Islamic State and protected by the Pakistan army, sources say.The operation that was jointly coordinated by the 201 Selab Corps of the Afghanistan army targeted the caves and tunnels that were used as hiding places by the IS. It is now clear that the Pakistan army was backing these IS operatives in Afghanistan, official sources also confirmed.Indian agencies who are coordinating withe counterparts in Afghanistan have learnt that there are no civilians living in the area. There were a large number of stooges of the Inter-Services intelligence who have been protecting the IS operatives in this area. The US action comes at a time when there was a huge build-up of IS forces in Afghanistan.Indian agencies say that the Pakistan army and the ISI were nurturing these operatives. The entire area that was bombed was under the control of the ISI officials backing the IS, sources also said. The impact of the bomb was so huge that it blew up at least 500 Pakistanis and an equal number of IS operatives. So, while India seems pleased with the result of the US bombing, not everyone else is. Reuters reports that former Afghan president Hamid Karzai accused his successor on Saturday of committing treason by allowing the U.S. military to drop the largest conventional bomb ever used in combat during an operation against Islamic State militants in Afghanistan. "How could you permit Americans to bomb your country with a device equal to an atom bomb?" Karzai said at a public event in Kabul, questioning Ghani's decision. "If the government has permitted them to do this, that was wrong and it has committed a national treason."

Hundreds Of U.S. Marines Headed To Afghanistan -- With the US seeking to slow the mounting losses by the Afghan military in the southern Helmand Province, the Pentagon has announced a deployment of roughly 300 US Marines to the province, with the fighters expected to arrive by the end of the month.The deployment marks the largest single deployment of US Marines in occupied Afghanistan since 2014, which reflects the Afghan military’s growing woes in combat. These troops will join smaller numbers the US had already deployed into the area, who were nominally “advisers.”And while officially, the new Marines are also “advise-and-assist” troops that are being sent in a non-combat role, Col. Matthew Reid confirmed that the Marines are always deployed “with a combat mindset.” Given how poorly the Afghan military has done on its own, it wouldn’t be surprising to find the Marines in combat situations. Large numbers of US and British soldiers were deployed in Helmand earlier in the war, but officials had withdrawn them largely in the transition away from direct combat missions. Since then, Helmand has been among the major targets of the Taliban, and they’ve captured large portions of the province.

Death toll soars in attack on Afghan army base - At least 140 members of the Afghan army were killed on Friday when gunmen disguised in uniforms stormed a military compound in northern Balkh province, officials said, amid widely conflicting reports on casualty numbers. A medical source, who was not authorized to speak on the record, told Deutsche Welle that he had counted 135 dead bodies and more than 50 wounded at the compound's hospital, some of them in a very critical condition. Many of the patients were being transferred to a different hospital. The DPA news agency reported that at least 140 soldiers had been killed, quoting a local official from the Balkh provincial council."The majority of our soldiers were offering Friday prayers" at the time of the assault, the Afghan Defense Ministry said in a statement. It put the number of dead as "more than 100."A spokesman for the Afghan Ministry of Defense, Daulat Waziri, said earlier that several soldiers were killed when the attackers entered the military headquarters in a military vehicle and opened fire near a mosque where soldiers were praying. Waziri put the number of the wounded at 11. Army spokesman Nasratullah Jamshidi said six attackers in two military vehicles told guards at the gates that they were transporting wounded soldiers and urgently needed to enter, before carrying out their attack. One attacker was killed and the other five arrested, Jamshidi said.

General Motors Is Leaving Venezuela After the Country Seized Its Factory — General Motors has stopped doing business in Venezuela after authorities took control of its only factory there in what GM called an illegal judicial seizure of its assets. The plant was confiscated on Wednesday as anti-government protesters clashed with authorities in a country that is roiling in economic troubles such as food shortages and triple-digit inflation. The Detroit automaker said in a statement Thursday that other assets such as vehicles were taken from the plant, causing irreparable damage to the company. GM says the plant was taken in disregard of its right to due process. The company says it will defend itself legally and that it's confident that justice eventually will prevail. GM has about 2,700 workers in the troubled country, where it's been the market leader for over 35 years. It also has 79 dealers that employ 3,900 people, and its parts suppliers make up more than half of Venezuela's auto parts market, the company said. If the government permits it, workers will get separation benefits "arising from the termination of employment relationships due to causes beyond the parties' control," the GM statement said. Dealers will continue to service vehicles and provide parts, the company said.

"All I Have Is Hunger" - Many Venezuelans Too Weak To Protest Despite Maduro Misery --While tens of thousands of angry Venezuelans turned out for the 'mother of all protests' yesterday, facing an increasingly hostile military/police state, the numbers could have been significantly larger but for the fact that legions of poor Venezuelans are simply too frail from starvation to protest. Some say they are intimidated by armed pro-government militias who scour the slums for signs of dissent. Others say they are afraid to lose the few food handouts the cash-strapped government still provides.“We wear our protest on the inside for the fear of losing our bag of food,”said San Félix resident Luisa Gutiérrez, a single mother of three.As The Wall Street Journal reports, President Nicolás Maduro has lost support among the legions of poor Venezuelans that once backed the late Hugo Chávez, but they have largely shown little interest in joining the opposition-led protests that have convulsed the country the past three weeks. Many of the impoverished residents of the vast slums that ring Caracas and other major cities are angry about a collapsing economy and food shortages. ButVenezuela’s political unrest remains mostly confined to middle-class enclaves, underscoring the struggle the opposition here faces in trying to unseat an increasingly authoritarian government.

Mexico’s Economy Is Being Plundered Dry - The government of Mexico has a new problem on its hands: what to do with the burgeoning ranks of state governors, current or former, that are facing prosecution for fraud or corruption. It’s a particularly sensitive problem given that most of the suspects belong to the governing political party, the Institutional Revolutionary Party (PRI), which ruled Mexico uninterruptedly from 1929 to 2000. It returned to power in December 2012 with the election of Enrique Peña Nieto. And it clearly hasn’t changed its ways. Some of the accused governors were so compromised they went on the run. In the last few weeks, two of them, Tomás Yarrington, former state governor of Tamaulipas, and Javier Duarte, former governor of Veracruz, were tracked down. Yarrington, accused of laundering proceeds from drug trafficking as well as helping Mexico’s Gulf Cartel export “large quantities” of cocaine to the United States, was ensnared by Italian Police in the Tuscan city of Florence. He faces possible extradition to the United States. Yarrington’s successor as governor of Tamaulipas, Eugenio Hernández, a fellow PRI member who is also accused of close ties with narcotraficantes and money laundering, has not been seen in public since last June.As for Duarte, he was caught this week by police in Guatemala. Like Yarrington, he wasn’t exactly laying low. Among the accusations he faces is that of buying fake chemotherapy drugs, which were then unknowingly administered by state-run hospitals to children suffering from cancer. He and his cohorts purportedly pocketed the difference. He is also alleged to have set up 34 shell companies with the intention of diverting 35 billion pesos (roughly $2 billion) of public funds into his and his friends’ deep pockets.In just about any jurisdiction on earth, $2 billion is a substantial amount of money, even by today’s inflated standards. But in Mexico, where neither the super rich (accounting for a very large chunk of the country’s wealth) nor the super poor (accounting for roughly half of the population) pay direct taxes of any kind, it’s a veritable fortune. And when the country’s public debt is already growing at an unprecedented pace, rampant corruption becomes a serious problem.

Turkey referendum: Opposition to challenge expanding Erdogan powers The Yes vote in the referendum that grants sweeping new powers to the president of Turkey is valid, the head of the electoral body says. Sadi Guven was speaking after the main opposition Republican People's Party (CHP) cited irregularities, including the use of unstamped ballot papers. President Recep Tayyip Erdogan's push for an executive presidency succeeded with 51.4% voting for it. Observers said the process had flaws such as campaigning restrictions. The Organization for Security and Co-operation in Europe (OSCE) said the referendum took place on an "unlevel playing field" as the two sides did not have equal opportunities. "We observed the misuse of state resources, as well as the obstruction of 'No' campaign events," it said in a statement. "The campaign rhetoric was tarnished by some senior officials equating 'No' supporters with terrorist sympathisers, and in numerous cases 'No' supporters faced police interventions and violent scuffles at their events." However, the OSCE said there were no major problems on referendum day, "except in some regions". The win was met with both celebrations and protests across Turkey. Deputy Prime Minister Nurettin Canikli said legal changes to introduce the new system could be completed within a year. New presidential and parliamentary elections are due on 3 November 2019. Turnout was said to be as high as 85%. The CHP has demanded a recount of 60% of the votes. Its deputy head said the result should be annulled altogether. The pro-Kurdish Peoples' Democratic Party (HDP) also challenged the vote. But Mr Guven said the unstamped ballot papers had been produced by the High Electoral Board and were valid.

Here’s why Turkish opposition parties are contesting the referendum results - Just as polls were closing Sunday in Turkey for a referendum on constitutional amendments that would broaden the president's powers, the country's election authority took an unusual step: It lifted a rule requiring that each ballot have an official seal. The ballot for Turkey's referendum was remarkably simple. A thin piece of paper no longer and wider than a bar of chocolate, it contained only two choices: Evet (Yes) on the white side of the ballot or Hayir (No) on the brown side of the ballot. Voters were given an ink stamp and instructed to mark the side of their choice. Each official ballot was to be stamped with an official seal before being handed to voters. The seal, as one might expect, is meant to signify that the vote cast was valid. But Turkey's Supreme Election Board, or YSK, on Sunday, just as the polls were closing, changed the rule requiring each ballot to be stamped with a seal. Instead, questionable ballots with no official seal were to be considered valid unless there was proof that they were fraudulent. Now, the main opposition party is claiming that as many as 1.5 million “unsealed” ballots — not bearing the official stamp — were cast and counted. In past elections, those votes would have been invalid. That party, the People's Republican Party, or CHP, has vowed to contest the results, as has the pro-Kurdish People's Democratic Party, or HDP. Speaking at a news conference, CHP leader Kemal Kilicdaroglu questioned whether the YSK has the authority to make changes to election law.

Turkey’s referendum fell short of democratic standards, international observers - The referendum in Turkey had a “significant imbalance” tilted toward supporters of sweeping constitutional changes, international observers said Monday.  Both the campaign period and actual vote Sunday failed in numerous ways to live up to international standards for democratic practices, according to a preliminary report from the Organization for Security and Co-operation in Europe and the Parliamentary Assembly of the Council of Europe. Their findings cast further doubt on the legitimacy of President Recep Tayyip Erdoğan’s narrow victory in his bid to expand his executive power. Erdoğan claimed victory in the referendum Sunday with about 51.4 percent of the vote.“We found that it fell short of full adherence” to international standards, said Tana de Zulueta, head of the OSCE’s referendum observation mission. She listed problems at almost every stage, starting with underlying legislation governing the vote to a last-minute move by the top election court to change ballot criteria in the middle of the vote on Sunday afternoon. Advocates of the No campaign were intimidated as part of a state of emergency declared after a coup attempt last summer, she said, prompting “widespread self-censorship.”They also cited inappropriate use of administrative resources to support Erdoğan’s position and a lack of balanced information for voters to make informed choices. Turkey’s main opposition party, known by its Turkish acronym CHP, has called for the results to be nullified, citing irregularities. Ballots were counted in secret for about 90 minutes on Sunday, CHP deputy chairman Bulent Tezcan told reporters, according to the Associated Press. Tezcan also said the electoral court’s midday ruling to accept ballots without the official stamp was “implemented at a moment when it was felt that the No votes were ahead of the Yes votes.” A pro-Kurdish opposition party known as HDP said about 3 million voters were affected by the decision, enough to swing the election. According to Reuters, an HDP spokesman accused election officials of conducting a “coup.”

How a Handwritten Note Gave Erdogan an Uncheckable Election Win - Turkey’s referendum on presidential powers had just finished. Counting was under way. Then, supervisors at more than 167,000 polling stations received an unprecedented order from election central in Ankara. They were told to count every ballot, even the ones without an official stamp to verify their authenticity. It was a clear departure from election rules. And it means that the allegations of fraud that have echoed around the country since the April 16 vote, one of the most momentous in Turkey’s history, can probably never be set to rest. President Recep Tayyip Erdogan has won every election in the past decade-and-a-half, and he won this one too, but not by much. His proposed changes to the constitution were backed by 51.4 percent of Turks who cast ballots, according to official results. The effects are far-reaching: presidential powers will be expanded, the office of prime minister scrapped, and parliamentary oversight curtailed. A new republic, in other words. Erdogan supporters say it’ll be more stable; critics say it tilts Turkey toward dictatorship. With the margins narrow and the stakes high, it’s not surprising that there’s been intense scrutiny of the ballot process. At the heart of it is a handwritten note from Recep Ozel, the governing Justice and Development Party representative on Turkey’s election board. He asked for -- and got -- an exception to the election-law requirement that only stamped ballots be counted. Local waivers have been granted in the past, but not a blanket one nationwide.

Europe fears Turkey will renege on migrant deal -- Europe is braced for a new migrant crisis after the newly victorious Turkish president indicated that he was preparing for a fight with Brussels by restoring the death penalty and demanding visa-free travel across the Continent. European diplomats expect Recep Tayyip Erdogan, who won a narrow victory in a constitutional referendum on Sunday, to consolidate his new executive powers by picking political battles with the EU. Fears are growing that the increasingly authoritarian leader will abandon EU membership ambitions by dropping judicial and democratic reforms and issuing an ultimatum on visa-free travel for Turks. The promise of a deal giving 75 million Turks the right to enter the EU’s Schengen area without a visa has been a key condition of Turkey’s implementation of an agreement that has helped to stem the biggest wave of mass migration to the Continent since the Second World War. In recent days the Turkish government has threatened to allow a new refugee crisis if the EU fails to honour its promise and a new ultimatum is expected imminently. Turkey agreed to stop migrants travelling to Greece, a gateway to Europe, and to take back refugees who were held there. More than 1.3 million migrants have fled to Europe in the past three years from countries such as Syria, Iraq, Afghanistan and Eritrea. In the hours after the vote Mr Erdogan, who now has the right to overrule his own parliament, indicated his willingness to restore the death penalty. Such a move would automatically end talks about visas and Jean-Claude Juncker, president of the European Commission, has said that the issue is a “red line” for the EU. Gianni Pittella, the Italian leader of the socialists in the European parliament, said that his bloc of MEPs would hold talks on whether to veto visa-free travel for Turks next week. “We’ve always been very reluctant to ensure a visa-free regime to Turkey as, in our opinion, Ankara does not match the democratic criteria,” he said. “Now after the referendum our concerns are even bigger.” A senior Greek official told The Times that the country’s military had drawn up emergency plans to cope with a new refugee crisis. The official said: “There was a lot of steamy, bellicose rhetoric made by Erdogan ahead of the referendum. [If] he continues with belligerent policies then Greece will be the first to face the fallout. The fear is real but the question is whether Erdogan will risk turning into a regional pariah.” Omer Celik, the Turkish minister for EU affairs, said that Ankara would propose that Brussels grant visa-free travel and drop the demand for changes to Turkey’s anti-terrorism legislation until the “normalisation of conditions for combating terrorism”.

Ukraine launches big blockchain deal with tech firm Bitfury | Reuters: Ukraine has partnered with global technology company the Bitfury Group to put a sweeping range of government data on a blockchain platform, the firm's chief executive officer told Reuters, in a project he described as probably the largest of its kind anywhere. Bitfury, a blockchain company with offices in the United States and overseas, will provide the services to Ukraine, CEO Valery Vavilov said in an interview on Wednesday. Ukraine's blockchain initiative underscores a growing trend among governments that have adopted the technology to increase efficiencies and improve transparency.Blockchain is a ledger of transactions that first emerged as the software underpinning digital currency bitcoin. It has become a key global technology in both the public and private sector given its ability to permanently record and keep track of assets or transactions across all industries. Ukraine and Bitfury are expected to sign a memorandum of understanding on Thursday, Vavilov said. Though Vavilov said he was unable to estimate the cost of the project, he said it was the biggest government blockchain deal ever so far. It involves putting all of the Ukraine government's electronic data onto the blockchain platform. "A secure government system built on the blockchain can secure billions of dollars in assets and make a significant social and economic impact globally by addressing the need for transparency and accountability," said Vavilov. There are other countries that have started blockchain programs, but they are smaller in scope involving one or two sectors, such as land titles and real estate ownership. Countries that have launched blockchain programs include Sweden, Estonia, and Georgia.

The Combined Surplus of Asia and Europe Stayed Big in 2016 – Brad  Setser - A long time ago I confessed that I like to read the IMF’s World Economic Outlook (WEO) from back to front. OK, I sometimes skip a few chapters. But I take particular interest in the IMF’s data tables (the World Economic Outlook electronic data set is also very well done, though sadly a bit lacking in balance of payments data).* And the data tables show the combined current account surplus of Europe and the manufacturing heavy parts of Asia—a surplus that reflects Asia’s excess savings and Europe’s relatively weak investment—remained quite big in 2016. China’s surplus dropped a bit in 2016, but that didn’t really bring down the total surplus of the major Asian manufacturing exporters. Much of the fall in China’s surplus was offset by a rise in Japan’s surplus. The WEO data tables suggest that net exports accounted for about half of Japan’s 1 percent 2016 growth—Japan isn’t yet growing primarily on the basis of an expansion of internal demand. And the combined surplus of Korea, Taiwan, Singapore and Hong Kong remains far larger than it was before the global financial crisis in 2008. The Asian NIEs (South Korea, Taiwan, Hong Kong, and Singapore) collectively now run a bigger surplus than China. As a result, in dollar terms—and also relative to the GDP of Asia’s trading partners—”manufacturing” Asia’s combined surplus hasn’t come down that much over the last ten years. The size of the combined surplus of Europe and “manufacturing” Asia necessarily means that other large parts of the global economy need to run large deficits in manufactured goods. To be sure, barring an energy revolution, the big oil and gas exporters will necessarily trade oil for manufactured goods (and holidays), and parts of Asia and Europe equally will need to trade manufactures for energy. But the big Asian and European manufacturing exporters could not maintain surpluses of their current scale in the absence of a U.S. trade deficit in manufacturing that is as large as it was back in 2005 or 2006. There are only so many ways the global balance of payments can add up. While the surplus of key parts of the global economy haven’t moved much, the nature of the financial outflows that channel the current account surplus of Europe and Asia (their savings surplus so speak) to the rest of the world has certainly changed. Setting a few countries (Switzerland, and perhaps Singapore***) aside, governments aren’t directly channeling funds abroad through the build-up of their reserves and the assets of their sovereign funds.

Italy And The Future Of The European Union -- Given that Trumpfreak may guarantee relatively pro-EU politicians winning in France and Germany in the near term (France less certain than Germany), many are now looking at Italian elections next year as the next time when there may be a serious threat in a major EU nation of a leader being elected who may want to pull the nation out, following the UK example.  The most likely candidate for pulling off this feat would be Chiara Appendino, the current apparently fairly competent mayor of Turin, and the new rising star of the Fiver Star Party, with Rome’s Five Star mayor having gotten bogged down in corruption scandals, and long time party leader, Beppe Grillo, more likely to stay in the background.  Why might this come about, quite aside from the fact that the Five Star Party is now dead even with the ruling Democratic Party in polls after rising? The obvious main explanation is that the Italian economy has simply been dead flat since around 2000, in contrast to the other large EU nations: Germany, France, UK, Poland, and Spain.  The latter certainly has had some worse experiences in the last decade and a half, notably a much higher unemployment rate.  But that has been coming down in more recent years as Spain has gotten it together and finally gotten growing, despite crises and debt issues.  Italy never had it as bad as Spain, and certainly never as bad as still declining Greece.  But its stagnation has begun to really sour, and those who claimed to fix it have fallen on their faces, with the EU itself increasingly putting unpleasant pressures on Italy that are drawing forth resentment.  The Five Star Movement may be semi-incoherent and contradictory in its populism, but it seems to be rising as the ruling PD (Partita Democratia) has increasingly floundered, and it has a strongly anti-EU position. Frankly it is not obvious why Italy has done so poorly in the last decade and a half, especially in comparison with previous years.  It may be that it is getting into the euro and losing the ability to devalue periodically, while underlying problems in the Italian economy and society remained.  But Italy was quite dynamic prior to the turn of the century, one of the growth stars of the EU in many years, with a strong position in such areas as luxury clothing and expensive sports cars, as well as several other areas.  They continue to have strength in those areas, but have increasingly faced foreign competition in them, with the Chinese playing an important role.  But then the Chinese have been competing with other EU nations. Why has Italy found it so much harder to maintain its position?

Against all odds, a communist soars in French election polls — A specter is haunting Europe — the specter of Jean-Luc Mélenchon. In the latest plot twist in France’s highly contentious presidential election, Mélenchon — an outspoken 65-year-old leftist who often appears on the campaign trail via hologram and who has pitched his proposal to nationalize France’s biggest banks and renegotiate its relationship with the European Union via free Internet games and YouTube videos — is now soaring in the polls. With less than two weeks before the election, his meteoric and unexpected rise is already sending jitters through financial markets and shock waves through an increasingly anxious electorate. For months, analysts have likened the upcoming French election to “Europe’s Stalingrad,” a crucial turning point that will determine the future of a country and a continent. But while commentators worldwide have focused on the steady rise of the far-right, fiercely anti-immigrant National Front of Marine Le Pen, few have paid any attention to the leftist fringe of Jean-Luc Mélenchon, who has vaulted into the picture in the past week and who shares with Le Pen the desire to drastically alter France’s relationship with the E.U., the 28-state bloc it once designed. Mélenchon is running as the candidate of the Unbowed France political movement, in an alliance with the French Communist Party. The latest polls show him narrowly trailing Emmanuel Macron, long seen as the favorite, and Le Pen, expected to qualify for the final round of the two-round vote but to lose to Macron in the end. In the final days of a truly unprecedented campaign, Mélenchon’s unexpected surge is a reminder that radical change is in the air and that its extremist apostles — on the right or the left — may soon hold power. Some have reacted with panic: Investors have begun frantically selling off French bonds, while the head of France’s largest trade union has decried what he described as Mélenchon's “rather totalitarian vision.” But thousands of others have responded with joy. Nearly 25,000 people assembled in this predominantly middle-class northern French city Wednesday night to hear Mélenchon, dressed in his signature Mao jacket, take the stage. With his distinct wit, erudition and rhetorical flair, he charmed his crowd, packed inside and outside a local sports arena, waving communist banners, Palestinian flags and signs adorned with the Greek letter phi, the campaign’s official symbol. Perhaps more than any of the other candidates, it is Mélenchon who best represents 2017’s potential rupture with history, or at least the status quo. Central to his platform is the promise to abolish France’s Fifth Republic, the system of government established by Charles de Gaulle in 1958.

French Election Shocker: Pollsters Baffled by Four-Way Race --The four-candidate battle to reach the runoff in France’s presidential election is putting pollsters to the test as never before.  With just a few days to go before Sunday’s first round of voting, every poll for the past month has shown independent Emmanuel Macron and the National Front’s Marine Le Pen taking the top two spots. Macron would then easily win the May 7 runoff, polls show. Yet both front-runners have been steadily slipping over the past two weeks, and Republican Francois Fillon and Communist-backed Jean-Luc Melenchon are now within striking distance.  It’s a challenge for French pollsters, who have a near-perfect record in forecasting the vote share for the top five finishers in the first rounds in 2007 and 2012 and the subsequent runoffs. Until recently, the expectation was that France wouldn’t have an electoral shock like Britain did with Brexit and the U.S. went through with the election of Donald Trump.   “This situation is totally unprecedented,” said Emmanuel Riviere, managing director of Kantar Public France. “The fact that there are four potential finalists makes the situation very complex.” French political pollsters are aided by heavier reliance on Internet polling than in the U.S. and the U.K. And French elections are simple -- one person, one vote, across the nation. The two-round system means a straight face-off between the top two candidates in the runoff, reducing voter options. The difference for this year’s first round is that the top four candidates are within a range of fewer than 4 percentage points. Given margins of error that are typically between 2.5 points and 3 points, the race is tighter than it might initially appear. On top of that, as many as 40 percent of voters have yet to decide on their candidate, according to estimates by multiple polling firms.  Despite the tightening polls, bookmakers still make Macron the favorite, with a 51 percent chance of winning. Fillon is next at 26 percent, having overtaken Le Pen this week. The National Front leader is at 24 percent and Melenchon at 11 percent. The bookmakers surveyed are based outside of France, where it is illegal to bet on politics.

Nightmare of a Jean-Luc Melenchon-Marine Le Pen run-off spooks global markets --  Investors have become increasingly skittish ahead of Sunday's French presidential election, amid fears that the surging popularity of the radical far-left candidate Jean-Luc Melenchon could produce a nightmare scenario where voters face a choice between two extremist candidates in the second-round run-off.Melenchon – the founder of the movement La France insoumise or Indomitable France – has been the big surprise in the final stages of the campaign, with his popularity soaring after his strong performance in the two televised debates of March 20 and April 4. Between mid-March and early April, his support rose by 3.5 percentage points. In the past fortnight, it has surged a further four percentage points, leaving him nipping at the heels of conservative former prime minister Francois Fillon.Investors are worried that if Melenchon is able to maintain this dynamic in the final days of the campaign, he's likely to qualify for the second round of the vote on May 7, where his opponent could turn out to be the the far-right Marine Le Pen who opposes immigration and wants to pull France out of the eurozone.Melenchon's late surge popularity has scrambled investors' expectations. For months, they've been expecting a second round run-off that pitted Le Pen against a more mainstream candidate, either the centrist Emmanuel Macron, a former investment banker and economy minister in the Socialist government, or Francois Fillon. Analysts argued that either candidate would defeat Le Pen in the second round of voting, as voters opted for a candidate other than the controversial National Front leader.But their complacency has been shaken by recent opinion polls, including the closely watched poll conducted by the Sciences Po research centre (Cevipof) showing that support for the two favourites – Le Pen and Macron – has ebbed over the past fortnight, at a time when the two challengers – Fillon and Melenchon – have made progress. Confusing the situation even further, the Cevipof poll found 28 per cent of voters are not sure that they will even cast a vote. Even among those intending to vote, 28 per cent remain undecided over which candidate to choose.

How Champs Elysees attack could swing the French presidential election: With the motives of the Champs-Elysées gunman considered terror-related, the timing just three days before the first round of the French presidential elections and during a prime time TV "debate" between all 11 official candidates clearly suggests that extremists are seeking to influence the tone of the debate - and perhaps its outcome. If that was the aim, it was a success, as two candidates - Marine Le Pen, the far-Right Front National leader, and conservative François Fillon - cancelled visits on Friday - the final day of the campaign. As they learned of the attack while on air, all the runners adapted their conclusions to pledge to protect the French. "Enough of laxism, enough of naivety," said Ms Le Pen in hers. "The fight against terrorism must be the absolute priority of the next French president," said Mr Fillon, who proposed arresting all suspects on an "S" watch list, like the gunman.With polls suggesting the race is incredibly tight between the top four candidates, many analysts have warned that even at last-minute, something could affect the final result. Although polls suggest she is on track to come in the top two of Sunday's first round vote, along with Mr Macron, political analysts have suggested that Ms Le Pen has been losing steam in recent days and that her campaign has failed to capitalise on early leads. She clearly hoped to claw back support after this latest attack by insisting that France requires a more authoritarian regime. She commands significant support from within the French police, which lost an officer on Thursday night. But while some suggest the Champs Elysées attack could boost her standing, previous terror attacks have not resulted in lasting gains for the far-Right.

Security dominates French election after shooting | Reuters: The killing of a policeman by a suspected Islamist militant pushed national security to the top of the French political agenda on Friday, two days before the presidential election. With the first round of voting in the two-stage election taking place on Sunday, far-right nationalist candidate Marine Le Pen promised tougher immigration and border controls to beat "Islamist terrorism" if elected. Centrist Emmanuel Macron, who narrowly leads a tight race ahead of Le Pen, said the solutions were not as simple as she suggested, and that there was "no such thing as zero risk". Anyone who said otherwise was irresponsible, said Macron, a former economy minister in the government that Le Pen has repeatedly criticized for its security record. There are four leading candidates in a race that is still too close to call. Sunday's voting will be followed by a runoff on May 7 between the top two candidates. The first poll conducted entirely after Thursday's attack suggested Le Pen had gained some ground on Macron. While he was still seen winning the first round with 24.5 percent, his score slipped half a percentage point while Le Pen's rose by one to 23 percent. Conservative Francois Fillon, a former prime minister, and the far left's Jean-Luc Melenchon were both down half a percentage point on 19 percent in the Odoxa poll for the newspaper Le Point. The attack on the Champs-Elysees boulevard in the very heart of the capital added a new source of unpredictability to an election that will decide the management of France's 2.2 trillion euro economy, which vies with Britain for the rank of fifth largest in the world.

Spanish treasury places 1.55 bln euros on market at negative interest rates -  (Xinhua) -- The Spanish Treasury placed on Tuesday treasury bills with a value of 1.55 billion euros (about 1.65 billion U.S. dollars) on the market at negative interest rates, registering a high demand of more than 6 billion euros. A total of 950.12 million euros worth of nine-month treasury bills carried an average interest rate of -0.33 percent, while the remaining 600 million euros worth of three-month treasury bills fetched an average interest rate of -0.487 percent. After the auction, the Spanish risk premium stood at 152 points and Spain's 10-year bond interest rate at 1.7 percent. The Treasury will hold another auction on Thursday when it expects to place between 4.5 billion euros and 5.5 billion euros on the market. This will be the last auction of the month.

 40% Of Spanish Children Live In Poverty --Despite a resurging stock market and stabilized bond risk premia (cough Draghi cough),EurActiv reports the proportion of children living below the poverty line in Spain has increased by 9 percentage points between 2008 and 2014, to reach almost 40%.Spain has the EU’s third highest rate of child poverty, after Romania and Greece. EURACTIV Spain reports. While child poverty in general rose significantly, the sharpest increase (56%) was among households of four people (two adults and two children) living on less than €700 per month, or €8,400 per year. Spain has the third widest gap in the EU, behind Latvia and Cyprus, between the levels of social protection offered to children and people over 65. During the crisis, Spain’s oldest citizens were much better protected than its youngest.According to the Spanish Statistical Office, cited by Unicef, investment in the social protection of families fell by €11.5 billion between 2009 and 2015. Child poverty increased in most developed countries between 2008 and 2014, according to the report, and by two thirds in European countries.But it's not just children, Spanish poverty rates across the whole nation remain extreme.

Greeks Need To Start Having Babies Again Or Face Financial Oblivion --People in Greece can’t afford to have more than one child, and many are opting to have none at all.Fertility doctor Minas Mastrominas tells the New York Times that some women have decided not to conceive, and single-child parents have been asking him to destroy their remaining embryos. He said: After eight years of economic stagnation, they’re giving up on their dreams. It isn’t just Greece suffering low birth rates. In fact the trend spreads to most of Europe, with Spain, Portugal and Italy also reporting dangerously low rates. Unemployment continues to be a serious issue in Greece. Rates are slightly lower than in 2016 when they were 23.9 per cent, but are still very high at 23.5 per cent.The slump has affected women more, with unemployment rates at 27 per cent compared to 20 per cent of men.Child tax breaks and subsidies for large families have decreased, and the country stands at having to lowest budget in the EU for family and child benefits.

Britain set to lose EU ‘crown jewels’ of banking and medicine agencies - The EU is set to inflict a double humiliation on Theresa May, stripping Britain of its European agencies within weeks, while formally rejecting the prime minister’s calls for early trade talks. The Observer has learned that EU diplomats agreed their uncompromising position at a crunch meeting on Tuesday, held to set out the union’s strategy in the talks due to start next month. A beauty contest between member states who want the European banking and medicine agencies, currently located in London, will begin within two weeks, with selection criteria to be unveiled by the president of the European council, Donald Tusk. The European Banking Authority and the European Medicines Agency employ about 1,000 people, many of them British, and provide a hub for businesses in the UK. It is understood that the EU’s chief negotiator hopes the agencies will know their new locations by June, although the process may take longer. Cities such as Frankfurt, Milan, Amsterdam and Paris are competing to take the agencies, which are regarded as among the EU’s crown jewels. Meanwhile, it has emerged that Britain failed to secure the backing of any of the 27 countries for its case that trade talks should start early in the two years of negotiations allowed by article 50 of the Lisbon treaty. The position will be announced at a Brussels summit on 29 April.Despite a recent whistlestop tour of EU capitals by the Brexit secretary, David Davis, diplomats concluded unanimously that the European commission was right to block any talks about a future comprehensive trade deal until the UK agrees to settle its divorce bill – which some estimate could be as high as €60bn – and comes to a settlement on the rights of EU citizens. May will have hoped that draft European council guidelines, leaked last month, which took a tough line on the negotiations, including a clause ruling out a trade deal within two years, would have been softened during consultation with the member states. However, the lack of any questioning of the European commission’s position on the timeline surprised Brussels veterans, wearily used to displays of EU disunity.

Brussels starts to freeze Britain out of EU contracts - FT - Brussels is starting systematically to shut out British groups from multibillion-euro contracts and urging companies to decamp to one of the 27 remaining EU members as it prepares for Brexit.In an internal memo seen by the Financial Times, top European Commission officials have told staff to avoid “unnecessary additional complications” with Britain before 2019, highlighting an administrative chill that is biting even before Britain leaves the bloc. It explicitly calls on EU staff to begin encouraging the UK-based private sector to prepare for the “legal repercussions” of Brexit and consider the need “to have an office in the EU” to maintain their operating permits. Agencies are also told to prepare to “disconnect” the UK from sensitive databases, potentially on the day of Brexit.Sent a week after Theresa May, the UK prime minister, triggered Article 50 exit talks last month, the commission note outlines how Britain will in practice immediately lose out on money and influence, even though it retains the legal rights and obligations of formal membership.Where legally possible, the commission and its agencies will be expected in all activities to “take account” of the fact that Britain may be “a third country” within two years, including in appointing staff and in awarding billions of euros of direct contracts for research projects or services. “Apart from the legal requirement for a contracting party to be established in the EU, there may be political or practical reasons that speak in favour of contracting parties established in a specific member state, not only at the conclusion of the contract, but also throughout the duration of the contract,” the note states.

Ireland seeks common Brexit strategy with Dutch and Danes: Taoiseach Enda Kenny is to meet the leaders of like-minded EU countries to ensure that upcoming Brexit talks move swiftly on to trade and do not get delayed by the UK’s so-called divorce settlement. Mr Kenny will hold a mini-summit next week in The Hague with the prime ministers of the Netherlands and Denmark, the other two countries most affected by Brexit. The Taoiseach, Dutch prime minister Mark Rutte and Denmark’s Lars Løkke Rasmussen do not want the Brexit talks to stall over the “divorce bill” from the EU, which some estimates have put as high as €60 billion. Sources said they are agreed that the “sequencing” of the talks must allow for a rapid move to the second stage of Brexit negotiations, which will lay the foundations for the future EU-UK relationship. Minister of State for European Affairs Dara Murphy said that while Ireland was not seeking to build “formal alliances” a group of countries with similar concerns will “collectively be heard loud and clear when the talks begin”.“We . . . need to reinforce that we are absolutely not alone when it comes to the trading impact of Brexit.” Other countries that are seen to be sympathetic to this approach are Sweden, Estonia and Germany. However, it is acknowledged that Germany also has far wider concerns.

Support for Brexit hits a five-month high, with 55 per cent of UK population now backing exit from European Union - Telegraph - Support for Theresa May's handling of Brexit talks has hit a five month high, with 55 per cent of the population now backing the Prime Minister's approach to the negotiations, a new poll has found.A new survey from Orb International shows a four per cent boost for Theresa May in days after she triggered the start of Brexit talks at the end of last month.Dissatisfaction with Brexit is now at its lowest level since the survey started last November, with just 45 per cent opposed to leaving the EU.  The poll by Orb International also shows that Britons are more concerned about trade talks than immigration for the first time as formal negotiations about Brexit get underway.The survey found that 47 per cent of voters disagreed that “controlling immigration [was] more important than access to free trade”. Analysis of the figures showed that the swing in opinion has been driven by pensioners, with the proportion of those prioritising immigration over trade falling from 61 per cent in March to 47 per cent in April.

British PM May calls for early election to strengthen Brexit hand | Reuters: British Prime Minister Theresa May called on Tuesday for an early election on June 8, saying she needed to strengthen her hand in divorce talks with the European Union by bolstering support for her Brexit plan. Standing outside her Downing Street office, May said she had been reluctant to ask parliament to back her move to bring forward the poll from 2020. But, after thinking "long and hard" during a walking holiday, she decided it was necessary to try to stop the opposition "jeopardizing" her work on Brexit. Some were surprised by May's move - the Conservative prime minister has repeatedly said she does not want to be distracted by campaigning - but opinion polls give her a strong lead and the British economy has so far defied predictions of a slowdown. Growth is faster than expected, consumer confidence is high and unemployment low, but the economy may be poised to pass its peak as consumers start to feel the strain from rising prices. Sterling rose to a four-month high against the U.S. dollar after the market bet that May would strengthen her parliamentary majority, which Deutsche Bank said would be a "game-changer" for the pound. But the stronger pound helped push Britain's main share index to close down 2.3 percent, its biggest one-day loss since June 27, days after Britain voted to leave the EU. "It was with reluctance that I decided the country needs this election, but it is with strong conviction that I say it is necessary to secure the strong and stable leadership the country needs to see us through Brexit and beyond," May said.

Theresa May Announces Surprise Early Election for June 8 --  Yves Smith - Theresa May announced early elections. Other observers had thought snap elections were unlikely earlier but some stars aligned to change the calculus:  Labour is particularly weak and divided right now; elections early are an opportunity to deliver a crushing blow.Brexit popularity is at a recent high, so that will help shore up the Tory position.May would get her own mandate. First Minister of Scotland Nicola Sturgeon has tried to throw a curveball with the threat of a Scottish referendum, which Sturgeon was pushing to take place in 2019. Even though May has the power to say no, that move would hurt the Union and help the SNP. Given the Brexit timetable, the SNP’s timing for a referendum would have been 2019, which was uncomfortably close to the originally scheduled Parliamentary elections in 2020.  However, there are side effects: A bigger Tory majority means the party has the luxury of being more internally divided. That may not be a plus as Brexit is revealed to be a losing proposition for the UK.  The campaign will distract the already too detached Tory leadership from Brexit duties.  From the Financial Times: Theresa May said she would ask Parliament to hold a general election so she can win a direct mandate to take the UK through the Brexit divorce with the EU. The decision, which comes just three weeks after the prime minister began the formal Brexit process, stunned many British politicians as they returned from their Easter break… Mrs May had previously said categorically that the next general election would be held as scheduled in 2020, and many Conservative backbenchers had shown little enthusiasm for a vote. “It isn’t going to happen. There is not going to be a general election,” her spokesman said on March 20. Mrs May blamed opposition parties and the House of Lords for stalling her agenda and weakening her negotiation position with the EU. “The country is coming together but Westminster is not,” she said. “Division in Westminster will risk our ability to make a success of Brexit.”

British General Election Called for May 8th - Ian Welsh - Oh joy.  Makes sense, however, Prime  Minister May’s Conservative party is up 17% over Corbyn’s Labour and she must expect to increase her seat count. In addition there’s a good chance Corbyn is out, if he doesn’t get a lot more seats than expected (he doesn’t have to win, but he does need to beat expectations. Expectations are low, at least.)Corbyn out is good for May because standard centrist-Labour leader X will not undo most of what a Conservative government does even if it wins, whereas Corbyn will undo everything and then kick it into reverse.  I, of course, will be hoping Corbyn does well, but it doesn’t look good. Even if he does better than expected, Scotland appears to be a write-off.  I will remind you that an academic study found that 89% of all newspaper articles lied about Corbyn’s position. He’s an existential threat to the current establishment, after all.This is an awkward election overall, since May is positioning it as a referendum on Brexit, but Labour doesn’t oppose Brexit, the SNP is Scottish and the Lib-Dems (who do oppose it) are violently distrusted by anyone with sense after they helped the Conservatives push thru some of the worst retrogressive policies in generations. Should be fun. This is one I actually care about a bit, so I’ll be hoping the polls are off and that Corbyn gets some wind.

What Does the U.K. Snap Election Mean for Brexit? - Prime Minister Theresa May’s call for a June 8 election reverses her opposition to an early vote. The last election in 2015 took place a year before the U.K. voted in a referendum to leave the European Union. As May prepares for two years of Brexit talks, her Conservative Party enjoys the widest public-opinion margin in three decades over the main opposition Labour Party. That gives her a chance to cement her position and widen her majority.

  • 1. Why is May calling an election now?  - While May has consistently ruled out an early vote since becoming prime minister without an election last year, her majority of just 17 lawmakers in the House of Commons makes her position in Parliament precarious. As things stand, just a few fellow Conservative "Tories," be they "Brexiteers" or ardent "remainers," could tie her hands. With her popularity on the rise and the economy performing better than expected, some polls put the Tories 20 points clear of a divided Labour. An early election could swell the ranks of Conservative lawmakers who have May’s back before the economic data sours.
  • 2. What does this mean for Brexit?  - If May consolidates her majority, she will have a strong personal mandate to push through her own brand of Brexit. So far, she has a pushed for a hard exit, which would take Britain out of the EU’s single market and customs union and give it control over immigration and freedom from the jurisdiction of the European Court of Justice. But Brexit will require compromise and a big win would give her the flexibility to make important concessions without worrying about her support from all wings of the party.
  • 3. What will be the main issues in the election? - Brexit, Brexit and more Brexit, if May has her way. Labour will argue that Conservative rule is creating a more-unequal society and eroding the National Health Service. But May’s domestic agenda, promising to “build a country that works for all,” may blunt that line of attack. The Liberal Democrats will campaign as the only major party that opposes leaving the bloc.
  • 4. What’s the state of the opposition? - Labour is in disarray. Party Leader Jeremy Corbyn fended off an attempted coup in 2016, less than a year into his tenure. While his far-left brand of politics may appeal to the party membership, there’s scant evidence that it appeals to the wider public. The Liberal Democrats, reduced to a rump of just eight lawmakers in 2015 after five years governing in coalition with May’s Conservatives, will relish a new vote as a chance to claw back more seats, having gained one in a special election in 2016. They see their pro-EU stance as a chance to win over the 48 percent of the country who voted against Brexit. In anti-Brexit Scotland, where the pro-EU Scottish National Party all but wiped out the previously dominant Labour Party in 2015, there’s more evidence of a Tory revival than a Labour one.

There is something grubby about Theresa May’s snap election - Since I suggested last July that Theresa May, newly anointed as leader of the Conservative and Unionist party and Prime Minister of the United Kingdom of Great Britain and Northern Ireland, should call an election to both establish her own legitimacy and allow the country an argument over the kind of Brexit it preferred, it would be unseemly to now deplore her belated decision to go to the country. Happily, there remain many other things that may be deplored. Far from the least of these is the manner in which the Prime Minister has made her case for an election. It’s not her fault, you see, that she has (correctly, in my view) gone back on her word. She remains a pretty straight kinda gal, you know. It’s just that the beastly opposition – who contrive, strangely, to be simultaneously hopeless and appallingly obstructive – have forced her to call an election and win a landslide victory. If you are not enthused by the prospect of an election, don’t blame Mrs May, blame the opposition. As it happens, I fancy most voters can easily reconcile themselves to a fresh election, appreciating that there is something in it for most parties. The Tories will win the majority they would likely have won in 2020 anyway, Labour can begin to imagine the possibility of the post-Corbyn era, and the Lib Dems can return to some measure of prominence because, actually, they now have something to say and a constituency plausibly interested in hearing it. Still, there was something grubby about May’s election announcement. Apparently, ‘there should be unity here in Westminster, but instead there is division’. And there was me thinking that was an integral part of the great British democratic bunfight that’s the envy of the world? Evidently not. The opposition’s duty lies in meekly surrendering to the government of the day and to hell with the consequences.

Theresa May urges British voters to reject ‘coalition of chaos’  - Irish Times - Theresa May kicked off seven weeks of campaigning on Wednesday with a promise of strong and stable leadership after MPs overwhelmingly backed her call for a general election on June 8th. Labour, the Liberal Democrats and the Democratic Unionist Party joined the Conservatives to deliver 522 votes in favour of an early election, with just 13 against.Within hours of the vote, the prime minister was in Bolton, outside Manchester, to deliver her first stump speech of the campaign. She portrayed the election as a choice between five years of stability and strong leadership under the Conservatives and a “coalition of chaos” under Jeremy Corbyn’s Labour, propped up by the Liberal Democrats and the Scottish National Party (SNP). With polls pointing to a Conservative landslide, the Labour leader will use his first campaign event on Thursday to cast himself as an underdog facing powerful vested interests.

The Brexit Situation is Developing Not Necessarily to the UK’s Advantage -- Yves Smith - We’ve been neglecting Brexit… Formal progress will be virtually nil till late May. The UK and EU have exchanged their opening communiques, with the EU’s a draft of the process for the negotiations, which need to be fleshed out and then approved by all the 27 remaining members of the EU, hopefully by the end of next month.  However, even with the exchange of missives and related snorting and pawing of earth, it is becoming plenty obvious that it is starting to dawn on Theresa May that she is not in a good position. Yet a fresh poll shows that popular approval for Brexit is at a five month high. May has been retreating by inches. She’s been forced to admit that she’s lost her demand to have trade talks proceed in parallel to exit negotiations, something that the EU nixed from the Brexit vote. Among other reasons, we pointed out it was a non-starter under EU treaties. She’s also had to concede on another hardliner issue, that EU migration will continue during a “transition phase” that she insists on calling an “implementation phase,” as if the rebranding makes a difference. Notice that this “transition phase” has more strings attached than May appears to have ‘fessed up to. The initial European Council guidelines stipulate that the UK must also adhere to EU laws, accept the jurisdiction of EU courts, and continue to pay EU fees. Nevertheless, the Brexiteers are still firmly behind May, just as Trump’s supporters remained stalwart (at least initially) as he retreated from some of his major campaign promises. The EU is almost completely united against the UK. This has happened even faster and more firmly than I expected, and I though I was being unduly dire. I had thought this outcome would come about regardless though how the EU was setting the order of negotiations. The critical bit was putting the settlement of the financial exit tab first, which the UK depicts as an outrage (this despite the fact that Maggie Thatcher negotiated the UK paying lower dues than other member nations). First, this is one area where Eastern European countries, which on other topics are more predisposed towards the UK, are hardliners. Second, one of the norms of negotiation is to address the less divisive issues first so as to create some early successes and forge decent working relations between the two parties. Putting a fractious issue up front where the EU side is of one mind, and the only divergence among them is how bloody minded, will help cement relations among them to the disadvantage of the UK.

More Brexit Miscalculations: UK Can Have Industrial Policy Only With Hard Brexit -- Yves here. From time to time, I’ve stated that in light of Brexit, the UK should have a war-level planning and industrial strategy project underway. The island nation already has a large trade imbalance that is destined to become worse as the EU takes chucks out of US export businesses as a result of Brexit. Financial services and transportation industry manufacturing (car, truck and airplane parts) are two area of vulnerability. It turns out that the Tories are not being completely remiss, despite “industrial policy” being a dirty word in business and neoliberal circles. As the post below describes, the Government, with little fanfare, has presented a Green Paper in which it set forth a first draft of “industrial strategy”. However, “industrial strategy” means among other things providing government backing for what the Japanese liked to call “national champions” as in industries where the nation could develop a competitive advantage. In the US, communications, computer and defense hardware and software have long been explicit national priorities, along with the pharmaceutical business, via the large investments in research paid for via the National Institutes of Health and other Federal agencies. And in Australia, the Commonwealth Scientific and Industrial Research Organisation did R&D in a set of sectors like viniculture where Australia had the potential to become a strong player (CSIRO played an important role when I was in Australia in the early 2000s; I gather it is a shadow of its former self). However, the US more often has had industrial policy by default, as in powerful industries getting support regardless of whether it would benefit parties beyond the incumbents, or would otherwise produce damaging distortions. For instance the banking industry is so heavily subsidized as to not properly be considered private enterprise and as a result has grown faster than the economy as a whole. Yet a raft of recent economic studies have concluded that overly-large financial services industries are a drag on growth, and America’s clearly falls in that category. The nascent industrial strategy plan underscores one of the Big Lies of Brexit: that the UK would be able to free itself from supposedly overbearing EU rules. As the below post details, even the mild version of industrial policy that is palatable to Tories appears to be against the provisions that the EU gets in most of its trade pacts and it would almost certainly require in the upcoming trade negotiations.

Theresa May restates pledge to cut net migration to tens of thousands - Sky - Theresa May has repeated her commitment to cutting net migration to the tens of thousands amid speculation the pledge could be ditched. Doubt had been cast over whether the controversial target would feature in the Conservative election manifesto after a Cabinet minister told Sky News that immigration policy was "not about numbers". Culture Secretary Karen Bradley insisted it was about ensuring the UK had the skilled workforce it needed. However, speaking on the campaign trail in Enfield, in north London, Mrs May said: "We want to see sustainable net migration in this country."I believe that sustainable net migration is in the tens of thousands."Leaving the European Union enables us to control our borders in relation to people coming from the EU, as well as those who are coming from outside."She has always supported the flagship promise to reduce net migration below 100,000, despite repeatedly failing to achieve it during six years as home secretary.Earlier, Ms Bradley had refused to be drawn on whether the target to get numbers down to "tens of thousands" would be in the manifesto.She said: "What we need is to have the right people, to attract the brightest and best."It's not about putting numbers on it, it's about making sure we can deliver where industries need skills, where the brightest and best want to come to Britain."

Setting a low, rigid figure for immigration is pointless if it leaves employers short of workers – editorial - We want to see it at a level our communities and infrastructure can cope with.  THE “tens of thousands” a year target for net migration should be binned. It is a nonsense figure plucked from thin air. This is not The Sun going “soft” on immigration. The total HAS been far too high. We want to see it at a level our communities and infrastructure can cope with. We want our elected Government to control it, and Brexit will secure that power. But setting a rigid, low figure — as the Tories intend in their manifesto — is counter-productive if it leaves employers short of workers, as in some areas and industries they already are. Yes, firms should prioritise training Brits, paying decent wages and not relying on cheap foreign staff.

Brexit upheaval reduces number of new laws to 20-year low - FT -- The number of new laws introduced in Britain fell to its lowest level for 20 years in 2016, highlighting how Brexit put normal business on hold in the government. According to a study by Thomson Reuters, the number of new laws created fell by 29 per cent last year to 1,642, as ministers prepared for the referendum in June and then dealt with the political upheaval that followed. The sharp fall reflects the overwhelming priority given by Theresa May to tackling Brexit, which has consumed her first months in office. In 2015, a period that saw the tail-end of the Conservative-Liberal Democrat coalition government and the first wave of legislation brought forward by David Cameron’s Tory administration, the number of new laws rose 14 per cent to 2,301. Ministers say they struggle to get policy initiatives past Number 10 because of the prime minister’s focus on Brexit. Plans to cut household energy bills and new foreign takeover rules for “critical infrastructure” have been on hold for weeks. Government lawyers and individual departmental legal teams have been focused not just on preparing for an orderly Brexit but also on drawing up contingency plans in case Britain leaves the EU without a deal. The “Great Repeal Bill”, which will transfer EU law on to the British statute book, will be brought forward in next month’s Queen’s Speech, spawning hundreds of pieces of additional legislation to ensure the UK’s legal framework after Brexit.

Britain loses 1 billion pounds through VAT fraud and error by Amazon and eBay sellers | Reuters: Britain is losing up to 1 billion pounds a year in value added tax (VAT) because of fraud or error by sellers using online marketplaces eBay and Amazon, a report by the government auditor said. The National Audit Office (NAO) said on Wednesday that the sellers involved are often based in China and that consumer regulator Trading Standards had found that U.S. companies Amazon and eBay had failed to remove sellers that were flouting VAT rules, even after being informed of the sellers' non-compliance. "The size of the VAT losses due to online VAT fraud or error on transactions taking place on Amazon’s and eBay’s online platforms could be up to 1 billion pounds a year," the NAO said, citing latest figures from the Trading Standards Institute. All retailers selling to customers in Britain must collect VAT of 20 percent of the value of goods sold and pay this to the government. Most western countries operate similar VAT systems. EBay said it is committed to making its platform, where sellers advertise their goods for sale, a fair place to buy and sell. "We will continue to work closely with (British tax authority) HMRC to ensure that all sellers on our platform comply with the law," eBay said in an emailed statement.

No comments: