week ending Apr 8

FOMC Minutes: "A change to the Committee's reinvestment policy would likely be appropriate later this year" From the Fed: Minutes of the Federal Open Market Committee, March 14 - 15, 2017. Excerpts: Provided that the economy continued to perform about as expected, most participants anticipated that gradual increases in the federal funds rate would continue and judged that a change to the Committee's reinvestment policy would likely be appropriate later this year. Many participants emphasized that reducing the size of the balance sheet should be conducted in a passive and predictable manner. .... When the time comes to implement a change to reinvestment policy, participants generally preferred to phase out or cease reinvestments of both Treasury securities and agency MBS. Policymakers also discussed the potential benefits and costs of approaches that would either phase out or cease all at once reinvestments of principal from these securities. An approach that phased out reinvestments was seen as reducing the risks of triggering financial market volatility or of potentially sending misleading signals about the Committee's policy intentions while only modestly slowing reductions in the Committee's securities holdings. An approach that ended reinvestments all at once, however, was generally viewed as easier to communicate while allowing for somewhat swifter normalization of the size of the balance sheet. To promote rapid normalization of the size and composition of the balance sheet, one participant preferred to set a minimum pace for reductions in MBS holdings and, if and when necessary, to sell MBS to maintain such a pace. Nearly all participants agreed that the Committee's intentions regarding reinvestment policy should be communicated to the public well in advance of an actual change. It was noted that the Committee would continue its deliberations on reinvestment policy during upcoming meetings and would release additional information as it becomes available. In that context, several participants indicated that, when the Committee announces its plans for a change to its reinvestment policy, it would be desirable to also provide more information to the public about the Committee's expectations for the size and composition of the Federal Reserve's assets and liabilities in the longer run.

Fed Is Expected to Pare Investment Holdings, Officials Signal - The Federal Reserve expects to start reducing its huge investment holdings later this year, unwinding a giant program undertaken in the wake of the financial crisis to revive the economy. The holdings — which amount to more than $4 trillion in Treasuries and mortgage securities — are a legacy of the Fed’s campaign to help the economy recover from the depths of a recession. The Fed, increasingly confident that the American economy is “at or near maximum employment,” is beginning to loosen its grip on the economy, according to an official account that the Fed published Wednesday. Officials voted at the meeting in March to raise the Fed’s benchmark interest rate — the third time since the financial crisis — to a range of 0.75 percent to 1 percent. Since the meeting, Fed officials have said that it is on course to increase rates by at least an additional half a percentage point this year. Both the low rates and the investments were intended to support growth by encouraging risk-taking and borrowing by consumers and businesses. Now the Fed is gradually reducing that support. No decision was made about the timing or the details of any move to reduce the Fed’s holdings. The markets took the news with relative calm, suggesting that investors share the central bank’s assessment that the economy is getting closer to walking without crutches. The yield on the benchmark 10-year Treasury has traded in a narrow range since December, even as the Fed has raised rates twice. Indeed, some analysts said the Fed might need to take stronger steps to end its stimulus campaign. “Financial conditions remain very accommodative, and in our view the central bank has more work to do to minimize the risks of financial imbalances building up in worrisome ways,” said Bob Miller, the head of BlackRock’s fixed income team.

NY Fed Disagrees With Minutes: Does Not Expect Balance Sheet Renormalization Until Mid-2018 --With the question of the Fed's portfolio normalization now all the rage, accentuated by yesterday's FOMC Minutes announcement that runoff could start later this year - even as many traders admit nobody has any idea what will happen if and when the Fed starts reducing its holdings, mostly of MBS - on Thursday the NY Fed, the Fed's trading desk, provided a glimpse into its thinking on how this will play out in its latest Domestic Market Operations annual report.According to the report, the Fed's bond holdings could drop to about $2.8 trillion by the end of 2021 - a $1.7 trillion reduction over the next 5 years - with the New York Fed now projecting its balance sheet will reach a "normalized" state some two quarter earlier however with approximately $600 billion more assets than in a year-ago estimate. The U.S. central bank currently has some $4.5 trillion in Treasury and mortgage bonds.To be sure, many things can and will happen between now and 2021, including the US may have a new president.Which is why what we found more interesting was the NY Fed's own forecast on the start of renormalization, which disagreed with the FOMC Minutes, in that Bill Dudley's Fed does not expect the Fed to start "renormalizing" until mid-2018, to wit: "the size of the SOMA portfolio is projected to remain largely unchanged at its current level of approximately $4.2 trillion through mid-2018, while full reinvestments continue." What happens to the balance sheet then:

Will The Fed Dump Bonds In The Open Market? -  According to William Dudley, the president of the Federal Reserve bank of New York, we might see the Federal Reserve reducing the size of its balance sheet sooner rather than later. Whilst Dudley seemed to have been hinting at just letting the securities on the balance sheet mature and take the cash out of the market (rather than reinvesting the proceeds), this isn’t the only option on the table. On the exact same day when Dudley discussed the size of the balance sheet of the Fed, the president of the St Louis Fed, Bullard, also launched his own idea. Rather than just slowly reducing the balance sheet of the central bank by not reinvesting the proceeds from securities which reach their maturity date, Bullard openly discussed the potential to just sell the assets. As you can see on the previous image, the total size of the Fed’s balance sheet is approximately 4.5 Trillion, and figuring out how to reduce it perhaps isn’t the worst idea to investigate. After all, by selling securities on the open market, the Fed will be taking more (easy and cheap) cash out of the market as well. So technically and theoretically, selling (hundreds of) billions in assets on the market could have a similar impact as a rate hike.  After all, selling debt securities will reduce the price of those securities and thus increase the yield to maturity. And this could immediately solve another problem the Fed has been facing.According to Morningstar, the flattening yield curve is worrying investors, as the spread between the 10 year bonds and 2 year bonds has decreased to just over 1.1%. This could indicate that ‘either the economy is slowing down, or the riskier asset classes are overpriced’. This might very well be true. Due to the cheap money policy of the Federal Reserve and its European counterparts, it became extremely cheap for companies to issue debt. For most robust and strong companies this was a real blessing as the lower interest rates allowed them to cut the interest expenses, which boosted the bottom lines of these companies. Unfortunately the ultra-low yields (with some companies being able to issue debt with YTM’s of close to 0%) pushed some investors into a ‘yield-chasing’ mode, buying whatever they could to increase the average interest income in their portfolios. This blind yield-chasing has led to some very undesirable results as now even the companies without investment-grade debt quality were able to secure funding.

The Fed Knows Better Than to Be Fooled by 'Soft' Data - Federal Reserve officials continue to anticipate additional monetary policy tightening this year on the order of another two interest-rate increases. They have no reason to back down just yet. The weakness seen in “hard” economic data based on actual performance relative to “soft” data, such as surveys, is enough to temper concerns that they are falling behind the curve and keeps a May move off the table. That means they can be patient and adjust their forecasts, if necessary, before the June 14 meeting. On the dovish side, Chicago Federal Reserve President Charles Evans could support another two rate hikes if the forecast firms, but really maybe only one more. Similarly, St. Louis Federal Reserve President James Bullard is not pushing for an additional hike. On the more hawkish side, Boston Federal Reserve President Eric Rosengren argued for four increases, while San Francisco Federal Reserve President John Williams does not rule out such a scenario. New York Federal Reserve President William Dudley, who has his finger on the pulse of the central tendency of the Federal Open Market Committee, sees the case for three rate hikes this year and action on the balance sheet. More interestingly, he explicitly states that reducing the size of the Fed's balance sheet assets could even be a substitute for a rate increase. Following that logic, and assuming the economy holds its ground this year, the Fed will push up rates another 50 basis points and then shift gears to shrinking the balance sheet by phasing out the reinvestment of maturing securities. Getting to four rate hikes and balance sheet reduction likely requires clear evidence that both the economy is poised to overheat and that financial conditions are not tightening sufficiently in response to monetary policy action. But is this just putting the cart before the horse? Getting a read on the economy is complicated due to the divergence between soft survey measures and hard data. The former surged in the wake of the election, while the latter remained lackluster. For example, the February report on the consumer revealed a meager 0.1 percentage gain in spending, seemingly at odds with strong consumer confidence numbers: On the other hand, some “soft” data is arguably fairly hard. The ISM manufacturing report was again solid in March and appears consistent with a rebound in hard data for that sector: Putting it all together, the Atlanta Federal Reserve currently anticipates a disappointing 1.2 percent gain in first-quarter annualized economic growth. That's not exactly the kind of data you would think the Fed would be using to justify further rate hikes.

A Challenge to the Fed's Normalization Plans: the IOER-Treasury Yield Spread – Beckworth - Over at U.S. News and World Report, I have a new article up on the next big challenge facing the Fed: normalizing its balance sheet. Some excerpts: This path to monetary policy normalization.... may be fraught with surprises and setbacks. Not only must the Fed avoid getting ahead of the recovery with its interest rate hikes, but it must delicately navigate the shrinking of a balance sheet that has grown fourfold since 2008. This latter task may prove to be especially daunting since it puts the Fed in unchartered waters. Never before has the Fed had to shrink its balance sheet...I go on to discuss some of the many challenges the Fed may face in attempting to shrink its balance sheet. One of them is dealing with the potential stresses caused by the new regulatory demands of the liquidity coverage ratio running up against the spread between IOER and treasury bills:The second reason the scaling back of the Fed's balance sheet may be challenging is that post-2008 regulation now requires banks to hold more liquid assets. Specifically, banks now have to hold enough high-quality liquid assets to withstand 30 days of cash outflow. This liquidity coverage ratio has increased demand for such assets of which bank reserves and treasury securities are considered the safest. So, in theory, as the Fed shrank its balance sheet, the banks could simply swap their excess reserves (that the Fed was pulling out of circulation) for treasury bills (that the Fed was putting into circulation). The challenge, as observed by George Selgin, is that the Fed's interest on excess reserves has been higher than the interest rate on treasury bills. This creates relatively higher demand for bank reserves.  Banks would not want to give up the higher-earning bank reserves at the very moment the Fed was trying to pull them out of circulation. This tension could create an effective shortage of bank reserves and be disruptive to financial markets. The solution here would be for the Fed to lower the interest on excess reserves to the level of treasury bill interest rates. The figure below illustrates this potential problem. It shows the Fed's upper and lower bounds on the federal funds, the effective federal funds rate, and the 4-week treasury bill interest rate. These upper and lower bounds have created a successful corridor system for the federal funds rate, but they have not been very good at bounding the 4-week treasury bill yield. Moreover, the spread between the IOER--the upper bound--and the 4-week treasury bill has persistently been sizable and gotten larger on average since the first interest rate hike in December 2015. It is hard to see why banks would want to swap their excess reserves for treasury bills given this spread.

The Economy May Be Stuck in a Near-Zero World - When the Federal Reserve lowered interest rates to close to zero during the financial crisis, it was an extraordinary move. The central bank had hit the limits of conventional monetary policy, leaving the recovery to sputter along with less help than it needed.Now, with that crisis at last behind us, the Fed has begun raising interest rates, and it may be tempting to view its brush with rock-bottom rates as a once-in-a-lifetime experiment and to assume that we are entering a more normal world. If only that were true. A new study suggests that near-zero interest rates — accompanied by a lackluster recovery — may become a common occurrence. That’s troubling for many reasons. If the Fed can’t cut rates as much as required to fight a slowing economy, then recessions will become more common and more painful. It suggests an urgent need to reconsider how we will counter the next bout of bad economic news, preferably before it arrives. If monetary policy won’t be enough, perhaps fiscal policy will be. Certainly, this is no time for complacency. In a nutshell, the American economy appears to have changed in a way that undermines the effectiveness of monetary policy but not fiscal policy, which may need to be wielded more actively.All of this is the result of two broad trends. First, inflation is lower than in the past. From 1950 through 2011, it averaged around 3.5 percent. In January 2012, the Federal Reserve committed to a target of 2 percent, and actual inflation levels have been even lower.Second, the real (inflation-adjusted) interest rate consistent with the economy operating at its full potential has fallen, a trend that the Harvard economist Lawrence H. Summers called “secular stagnation.” Most estimates suggest that this “neutral real interest rate” has dropped from around 2.5 percent to 1 percent, or lower.  Put these pieces together, and a conservative guess is that in “normal times,” the nominal interest rate — the neutral real interest rate plus inflation — has fallen from around 6 percent to 3 percent.

Richmond Fed president resigns, admits to confirming leaked confidential information | TheHill: The president of the Federal Reserve Bank of Richmond unexpectedly resigned Tuesday and admitted to confirming leaked information about potential Fed policy changes to a financial analyst. Jeffrey Lacker, who was set to retire in October, announced his immediate resignation Tuesday afternoon. “I apologize to my colleagues and the public I’ve been privileged to serve,” said Lacker. “I regret that in this instance, I crossed the line in confirming information that should have remained confidential.” The confidential information included potential monetary policy adjustments considered by the Federal Open Markets Committee (FOMC), the Fed’s policymaking arm that raises and reduces interest rates. Information about potential Fed policy changes is highly guarded to prevent insider trading. Lacker said he might have inadvertently confirmed confidential information about the FOMC’s September 2012 meeting during an October 2012 phone call with the Medley Global Affairs analyst. Lacker said he later lied to Fed investigators about whether the analyst had confidential information during a probe months later. Lacker said he revealed that the analyst had confidential information when he was interviewed for a separate investigation by the U.S. attorney for the Southern District of New York. Richmond Fed officials said the bank took “appropriate actions” following the investigation, and that First Vice President Mark Mullinix will lead the bank until it finds a replacement for Lacker.

Soft vs. Hard Data: US Economic Outlook Edition -- Gavin Davies in the FT has an interesting article about how survey/sentiment based information and hard data have diverged. Here is a picture of US GDP, from the official BEA series (3rd release), Macroeconomic Advisers, and e-forecasting, s well as the Atlanta Fed nowcast.  There is a distinct flattening out — although it’s important to recognize the Atlanta Fed nowcast at 0.9% growth SAAR is considerably below, for instance, the 2.72% from the St. Louis Fed. Macroeconomic Advisers forecasts 1.0% for 2017Q1. On the other hand, the indicators that the NBER Business Cycle Dating Committee looks at suggest continued growth (although all these variables are subject to revision, so I won’t “pull an Ed Lazear” and say “no recession”).

Atlanta Fed Slashes Q1 GDP To Just 0.6%, Lowest In Three Years -- Remember when the Fed was "data dependent"? Well, if the Atlanta Fed is right, Janet Yellen will have hiked the Fed's interest rate in a quarter in which GDP has grown by a paltry 0.6% as per its latest just released forecast. If confirmed, this would be the lowest quarterly GDP growth in three years, since Q1 of 2014. Incidentally, just over two months ago, the same forecast stood at 3.4%, it has since fallen by over 80%.From the source:  The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 0.6 percent on April 7, down from 1.2 percent on April 4. The forecast for first-quarter real GDP growth fell 0.4 percentage points after the light vehicle sales release from the U.S. Bureau of Economic Analysis and the ISM Non-Manufacturing Report On Business from the Institute for Supply Management on Wednesday and 0.2 percentage points after the employment release from the U.S. Bureau of Labor Statistics and the wholesale trade release from the U.S. Census Bureau this morning. Since April 4, the forecasts for first-quarter real consumer spending growth and real nonresidential equipment investment growth have fallen from 1.2 percent and 9.7 percent to 0.6 percent and 5.6 percent, respectively. Visually: And now back to those "animal spirited" soft surveys which have also been sliding in the past few months.

Jamie Dimon Warns "Something Is Wrong" With The US --While Jamie Dimon tried to maintain his traditionally optimistic outlook in his annual letter to shareholders, there was a distinct undertone of pessimism in the latest 45 page letter released earlier today, in which he writes that while the U.S. is "truly an exceptional country," probably stronger than ever before, he cautions that "something is wrong - and it's holding us back."Here are the highlights from the gloomy passage reposted below in its entirety.Dimon's letter notes that the economy has been growing much more slowly in last decade or two than in the 50 years before then, with real median household incomes in 2015 2.5% lower than they were in 1999 and the percentage of middle class households shrinking, yet not even someone as intelligent as Dimon can bring himself to fully admit that much if not all of it has to do with America's relentless debt binge, and the gargantuan debt load accumulated and carried by Americans, whether in the form of personal, student, auto debt, be it corporate debt which is at a record high, or, naturally, the sovereign debt which is on the distrubing side of 100% as a percentage of GDP.Among other things, Dimon observes:

• Over last 16 years, U.S. has spent trillions on wars when it could have been investing that money productively.
• Since 2010, when the government took over student lending, direct government lending to students has gone from ~$200b to >$900b, creating dramatically increased student defaults, population that’s "rightfully angry" about how much money they owe, particularly since it reduces ability to get other credit.
• Healthcare costs are essentially twice as much per person vs most other developed nations.
• Labor force participation is too low.

Dimon also writes that the regulatory environment is "unnecessarily complex, costly and sometimes confusing;" says poorly conceived and uncoordinated regulations have damaged economy, inhibiting growth and jobs. He also says that he isn’t looking to throw out entirety of Dodd-Frank or other rules; "it is, however, appropriate to open up the rulebook in the light of day and rework the rules and regulations that don’t work well or are unnecessary."  Furthermore, the JPM CEO sees need for "consistent, transparent, simplified and more risk-based capital standards" and says that it’s clear banks have too much capital, and more of that capital can be safely used to finance the economy, Finally, in the most amusing twist, Dimon sees "Too Big to Fail" as essentially solved and adds that taxpayers won’t pay if a bank fails as shareholders and debtholders are at risk for all losses. Just like in the case of Monte Paschi a few months ago, right?  Here is the full excerpt from Dimon (link to full letter):

Trump Advisor Jamie Dimon Says America Is a 'Slow Train Wreck' -- Thirty years from now, Jamie Dimon imagines one of his successors standing on a stage in Washington D.C., asking, “What happened?”That’s because the current social and economic status in the U.S. is like a “slow train wreck,” JPMorgan’s CEO said during a Tuesday town hall event moderated by Yahoo’s finance editor-in-chief Andy Serwer. Leadership has failed to address a multitude of problems, from the high cost of health care to income inequality, according to Dimon -- a failure he extended to himself. “I am very sympathetic to people who are mad at the leadership of this country, because we are kind of to blame,” Dimon said. “Hopefully we’ll get smarter and act on it.”Overall, Dimon echoed President Donald Trump’s pre-election populist rhetoric, where Trump focused in on the average American experience and a weak U.S. economy. While economists could argue that the GDP is stronger than most people realize, Dimon is convinced it could be even stronger.The CEO, who is also an advisor on the president’s strategic and policy forum, also pointed out that the U.S. has spent trillions on war that could be invested domestically. He said that the labor force participation has dipped among the working age population, or at least for non-working males, due to education and health concerns. And the country’s high corporate tax rate is driving capital and jobs out of America.As for the country’s infrastructure framework, it’s “embarrassing,” Dimon said, adding that America hasn’t built a major airport in over 20 years. While Dimon believes the Trump administration is moving largely in the right direction to correct these outstanding problems, some of which have been 20 years in the making, he admitted Trump wasn’t his first choice. In past meetings with the president, Dimon said it could sometimes be difficult to interpret Trump’s meaning since he can change his mind mid-sentence.  “Mr. Trump doesn't agree with everything he says himself,” Dimon said.

 Trump Continues to Ignore Monetary Policy — And It Will Cost Him - We’re now three months into the new administration and more than a year on from the start of a powerful late-cycle monetary stimulus (otherwise described as “the Yellen Put” in which all planned rate rises for 2016 were halted) by the Federal Reserve. But, we haven’t heard a whimper from the Republicans over the Fed’s extremely timid efforts at ending it’s ultra-easy-money policy. They have been focused instead on Ryancare and the border adjustment tax. Meanwhile in the marketplace the Fed-watchers are back to business as usual — deciphering every word and dot plot change from the leading monetary bureaucrats still at their posts.  Counter-factual historians can wonder how different and better the situation might now be if conservatives and nationalists had begun the Trump era with efforts to rein in the Fed. Instead, what we got was an aborted repeal-and-replace of Obamacare and now a planned “tax reform” that still appears far off on the horizon. Yes, any monetary reform bill would have faced most probably a filibuster in the Senate, but the president has the power to at least point us in the direction of sound money by filling the empty chairs in the Fed and nominating successors-in-waiting to Professors Fischer and Yellen. Several markets deeply infected by asset-price-inflation might indeed have experienced steep drops in speculative temperature. But an accelerated end phase to the present great inflation (most prominent in asset markets) with its roots in the Great Monetary Experiment could have been blamed on the preceding administration.  That might well have been a superior political strategy to allowing the Obama Fed to enjoy a new lease on life after the exit of its appointing president. Instead, the Fed freely sought to extend the Indian summer in asset markets (consistent with two tiny hikes in the official money rate which signal “success” for its inflation targeting).  But the Trump administration seems to be fine with this and has been taking credit for continued asset price inflation as reflecting business and consumer optimism about its policies. Trump has been taking advantage of the present growth cycle upturn stimulated by the Yellen Put of 2016 to pump up credibility of his growth target which makes absolutely no allowance for a recession further ahead.

Democrats Want to Impeach Trump? That’s a Terrible Idea & Here’s Why… Now that Michael Flynn has offered to talk about possible ties between Trump’s campaign & the evil Ruskie-Pinkos, the media has again begun to drool over the democrats’ calls to impeach the president. From the Huffington Post & Time Magazine to email petitions & websites with URLs like “ImpeachTrump.com” & “ImpeachTrumpNow.org,” the neoliberal frenzy is difficult to avoid. Naturally, the thought of getting rid of Orange Mussolini is pretty darn tempting, to say the least — until you start thinking about what it would actually look like… Let’s start from the beginning. First off, “Impeachment” does not remove the president from office. When someone gets impeached, it means that congress wants to interrogate them & anyone else who was involved before making a decision about whether or not they should be removed. Now — let’s assume that the Tiny-Fingered Tweet-Machine was successfully impeached, then actually removed from office by a GOP-controlled congress — what happens next…?  Sorry, democrats — but there are no happy endings, here ( well, no happy legal ones, anyway… ). If Donny Spray-Tan were to be removed, the oval office would simply pass to the next in the line of succession, which, in this case, would be… Mike Freaking Pence Mike Pence is the type of person who writes op-eds that start with the words, “Global warming is a myth.” If Trump goes, we would be looking at a President Pence and the only good thing about a Pence administration would be the fact that we could call him “the big PP.” Not only does this guy oppose abortion but sex education, too — he also opposes gay marriage & voted against expanding medicare. This dingbat praised Citizens United, sees zero problems with free-trade, & sponsored legislation to expand all of the most terrifying parts of the Patriot act. OK, let’s say Trump and Pence were both impeached & removed — up next, we have the speaker of the house. Mitt Romney’s former vice-loser, Paul Ryan, is a student of Ayn “F#@% the Poor” Rand’s evil economic theories and a sworn enemy to welfare, food stamps, & other stuff he suspects might be helping struggling people to get by. Like Pence, he is a GOP-insider who supports free-trade & opposes gay marriage. However, in contrast to Pence, who at least has the nerve to admit he is willfully ignoring science, Ryan is infuriatingly “unsure” about climate change and — even more infuriatingly — he is sure that climate scientists are “unsure” ( whether they know it or not ).

Democrats can do business with Donald Trump - Rana Foroohar - The inability of Republicans in the US Congress to repeal Obamacare — and the shadow this has cast over their tax reform plans — make one thing clear: Donald Trump is going to need Democrats on his side if he wants to accomplish any of the disruptive goals he put forward during his campaign. These range from trade reform and infrastructure investment to putting working-class white men back to work.  You can argue, of course, about how much the president or, more importantly, his advisers are committed to any of this. You can sniff, as many liberals do, that Democratic support for any of the administration’s policy goals “normalises” Mr Trump’s presidency. However, such reservations pale alongside the need to stake out the common ground that exists between the administration and some Democrats. Not only would this be good for the American economy, it would also be good for the Democratic party. I am not for a moment suggesting that liberals accept any of the vitriol or xenophobia that has been put forward by the president or any of his advisers, or that they stop investigating the scandals that have engulfed the administration. But economic policy is a different story. As Sherrod Brown, the Democratic senator from Ohio, recently said: populism is only a bad word when it is used to “push people away, rather than bring more of them under the tent”. For decades, Mr Brown has been calling for an “America first”-style rethink of the US’s trade deals, much along the lines of Mr Trump’s latest executive orders to start renegotiation of the North American Free Trade Agreement and launch a study into abusive global trading practices.  This kind of economic populism is where real growth-enhancing common ground between Democrats and Republicans potentially lies. In many ways, Bernie Sanders, the leftwing Democratic senator from Vermont, and Mr Trump represent different sides of the same political coin: an America more concerned with stagnant wages and falling social mobility than with identity politics of the kind embodied by Hillary Clinton (who was not helped during the presidential campaign by being associated, fairly or not, with her husband’s Wall Street-friendly economic policies).

Democrats have a new and surprising weapon on Capitol Hill: Power -- Democrats in Congress have a new and surprising tool at their disposal in the era of one-party Republican rule in President Trump’s Washington: power. It turns out that Republicans need the minority party to help them avoid a government shutdown at the end of April, when the current spending deal to fund the government expires. And Democrats have decided, for now at least, that they will use their leverage to reassert themselves and ensure the continued funding of their top priorities — by negotiating with Republicans. “I think we have a lot of leverage here,” said Sen. Chris Van Hollen (D-Md.). Republicans “are going to need our help putting together the budget, and that help means we can avoid some of the outrageous Trump proposals and advance some of our own proposals.” The fact that Republicans need Democrats to vote for a temporary spending measure to avoid a shutdown gives Democrats leverage to force the GOP to abandon plans to attack funding for environmental programs and Planned Parenthood. And it also allows Democrats to block Trump’s top priority — the wall along the U.S.-Mexico border — which the president seeks to factor in to this latest round of budget negotiations. It comes at a time when Republicans on Capitol Hill are badly divided and President Trump’s ambitious agenda — a health-care overhaul, his 2018 budget blueprint, a tax proposal and an infrastructure program — has yet to get off the ground.

With Trump approval, Pentagon expands warfighting authority (AP) — Week by week, country by country, the Pentagon is quietly seizing more control over warfighting decisions, sending hundreds more troops to war with little public debate and seeking greater authority to battle extremists across the Middle East and Africa. This week it was Somalia, where President Donald Trump gave the U.S. military more authority to conduct offensive airstrikes on al-Qaida-linked militants. Next week it could be Yemen, where military leaders want to provide more help for the United Arab Emirates' battle against Iranian-backed rebels. Key decisions on Iraq, Syria and Afghanistan are looming, from ending troop number limits to loosening rules that guide commanders in the field. The changes in Trump's first two months in office underscore his willingness to let the Pentagon manage its own day-to-day combat. Under the Obama administration, military leaders chafed about micromanagement that included commanders needing approval for routine tactical decisions about targets and personnel moves. But delegating more authority to the Pentagon — and combat decisions to lower level officers — carries its own military and political risks. Casualties, of civilians and American service members, may be the biggest. The deepening involvement in counterinsurgency battles, from the street-by-street battles being fought in Iraq right now to clandestine raids in Yemen and elsewhere, increases the chances of U.S. troops dying. Such tragedies could raise the ire of the American public and create political trouble with Congress at a time when the Trump administration is trying to finish off the Islamic State group in Iraq and Syria and broaden efforts against similarly inspired groups.

Tensions stoke fears of a first strike against North Korea -  North Korea fired what appears to have been an intermediate-range ballistic missile into waters between the Korean Peninsula and Japan early on Wednesday morning. The launch further heightens tensions in the region shortly before US President Donald Trump is scheduled to hold talks with his Chinese counterpart Xi Jinping in Florida this week. The South Korean government reacted by convening its National Security Council and ordering its troops to a higher state of readiness, while the Japanese government issued a strongly worded condemnation of Pyongyang's latest act of provocation. But what grabbed the attention of many was the terse press release from the US Department of State, underlining the sense of resignation over the question of North Korea that appears to be gaining traction in Washington. 'No further comment' The statement read: "North Korea launched yet another intermediate-range ballistic missile. The United States has spoken enough about North Korea. We have no further comment."   There are some who say that the response, together with other comments coming from the administration, shows President Trump believes there is no other way to bring North Korea to heel other than the application of military force. "Even in South Korea, there are a lot of people who fear that President Trump will do something as dangerous as a first strike against the North,"

 Experts Warn A Single North Korean Nuke Could Blackout National Electric Grid And Kill 90% Of Americans -- For those who are skeptical about North Korea’s capabilities, there is an excellent article presented by The Hill, entitled How North Korea could kill 90 percent of Americans.”  The article is authored by none other than R. James Woolsey, former Director of the Central Intelligence Agency and by Dr. Peter Vincent Pry, the Executive Director of the EMP Task Force on National and Homeland Security and a former analyst with the CIA.  […] As mentioned in previous articles, it will take the President at least 6 months before his actions and effectiveness can be assessed.  Six months is a long time. In the meantime, the U.S. continues to emplace measures such as THAAD (Terminal High Altitude Aerial Defense) being deployed to South Korea. China and Russia view it as an aggressive measure and a threat rather than a defensive strategy to protect South Korea and Japan.  This is partially correct.  The important thing to consider here is that North Koreans and their leader are starting to become more irate regarding the deployment of THAAD, the ongoing military exercises of U.S. and South Korean troops in the latter’s nation, and the demand by Japan for a first strike initiative to occur. Here are some excerpts from the article that readers should keep in mind:“The mainstream media, and some officials who should know better, continue to allege North Korea does not yet have capability to deliver on its repeated threats to strike the U.S. with nuclear weapons.  False reassurance is given to the American people that North Korea has not “demonstrated” that it can miniaturize a nuclear warhead small enough for missile delivery, or build a reentry vehicle for an intercontinental ballistic missile (ICBM) capable of penetrating the atmosphere to blast a U.S. city. Yet any nation that has built nuclear weapons and long-range missiles, as North Korea has done, can easily overcome the relatively much simpler technological challenge of warhead miniaturization and reentry vehicle design.” The article goes on to describe assessments made in February and March of 2015 by former senior national security officials who warned this: “…North Korea should be regarded as capable of delivering by satellite a small nuclear warhead, specially designed to make a high-altitude electromagnetic pulse (EMP) attack against the United States.”

Trump warns US is prepared to act unilaterally on North Korea -  US President Donald Trump said if China will not cooperate in ending North Korea's nuclear and missile threat, the US will move to do so alone. Trump also took the time to respond to claims he is hostile to the EU.The US president issued the warning in an interview with the "Financial Times" newspaper in which he also declined to outline a specific plan for how the US might challenge North Korea's nuclear ambitions."If China is not going to solve North Korea, we will. That is all I am telling you," said Trump, who told the interviewers that he is making a conscious choice to limit how much information he divulges when it comes to strategy.He said he will discuss North Korea with Chinese President Xi Jinping when they will meet for the first time at Trump's Mar-a-Lago resort on Thursday and Friday. "China will either decide to help us with North Korea, or they won't. And if they do that will be very good for China, and if they don't it won't be good for anyone," said Trump.

Trump’s Generals Are Considering a Wider War in Yemen -- The Trump administration is sending signals that it is interested in getting more involved in the Yemen war. Those American voters who saw Trump as an isolationist or antiwar candidate appear to be in for a set of big disappointments. The Yemen conflict is a civil war, with Saudi Arabia and its allies giving air support to the rump government of Abdu Rabbu Mansour Hadi in the south, which is seeking to dislodge from northern Yemen the rival government run by the Houthi militia. The war has created a humanitarian crisis in the country, pushing millions to the brink of hunger, and there is no universe in which further American involvement will redound to Washington’s credit. Trump’s interest is driven in part by Saudi propaganda that the Houthis are Iran-backed.1  Last week, General Joseph Votel testified for the Pentagon before Congress, insisting that Yemen is key to US security. He pointed out that it sits astride the Bab al-Mandeb strait at the mouth of the Red Sea, and could be used by a hostile power to interrupt sea traffic in that key body of water, through which about 10 percent of world trade flows. Arguably, however, it is the war itself that poses the biggest threat to maritime security in the region. In mid-March, what appear to have been Saudi helicopter gunships mistakenly attacked a boatload of Somali refugees fleeing Yemen for Sudan, killing some 40.2 Votel also pointed to the danger emanating from the Yemen-based Al Qaeda in the Arabian Peninsula. The Yemeni press reports that the United States is regularly bombing and droning AQAP there. The murky Yemen civil war, however, is treacherous ground for a superpower. The first significant US military operation in Yemen under Trump was a January 29 raid on an alleged AQAP camp in al-Gheel in southern Bayda Province, in the course of which as many as 30 civilian noncombatants, including children, and one Navy Seal were killed. The main target, Abd al-Rauf al-Dhahab, however, has switched back and forth between allying with Al Qaeda and with the government of Mansour Hadi. He had recently been enlisted by the latter to fight the Houthis. That is, the raid may have been based on old intelligence from before Dhahab’s recent change of allegiance. 3

Congress raises alarm over US confrontation with Yemen’s Houthis -- A bipartisan group of US lawmakers is demanding that President Donald Trump seek the approval of Congress before escalating US involvement in Yemen's civil war. Four House members are collecting signatures on a letter to the president amid growing signs that the White House and the Pentagon want to more directly take on the Iran-backed Houthi rebels. The United States has been selling bombs and weapons to the Saudi-led coalition since its March 2015 intervention, but the Trump administration is reportedly considering helping Saudi and Emirati forces capture the Red Sea port of Hodeida. "Engaging our military against Yemen’s Houthis when no direct threat to the United States exists and without prior congressional authorization would violate the separation of powers clearly delineated in the constitution," reads a draft letter to Trump obtained by Al-Monitor. "For this reason, we write to request that the Office of Legal Counsel (OLC) provide, without delay, any legal justification that it would cite if the administration intends to engage in direct hostilities against Yemen’s Houthis without seeking congressional authorization."Attorney General Jeff Sessions is copied on the letter.  The letter is being circulated by Reps. Mark Pocan, D-Wis.; Justin Amash, R-Mich.; Ted Lieu, D-Calif.; and Walter Jones, R-N.C. Peace groups including the Friends Committee on National Legislation are lobbying for it.The effort comes as the Trump administration has increasingly framed the Houthis as a threat to US interests.

America’s Support For Saudi Arabia’s War On Yemen Must End - According to a report issued by the United Nations on March 27, Saudi Arabia’s war on Yemen’s Houthi rebels has resulted in what is quickly becoming a humanitarian catastrophe, with nearly 7 million people at risk of famine and more than 14 million people without access to medical care. According to the World Health Organization, 7,719 people have been killed and 42,922 have been injured since the start of the conflict in March 2015. And yet the savage war against Yemen, led by Saudi Arabia and the United Arab Emirates, and aided to a significant degree by American weapons and intelligence, shows no sign of letting up.Disturbingly, the US has been acting as a de facto co-belligerent since at least October 2015, when President Obama gave the green light to Lockheed Martin to sell the Saudis four “multi-mission” warships totaling about $11.25 billion. This came only a month after the Saudi-led military coalition earned worldwide censure for its bombing of a wedding party in southern Yemen, killing 135 people. At the time, the Obama administration issued a routine and hypocritical “expression of concern” over the incident. Last week, The Washington Post reported what many had long suspected: that Trump intends to pick up where Obama left off and scale up America’s involvement in the ongoing catastrophe. The administration, according to the Post, is considering “whether to provide support for a proposed UAE-led operation to push the Houthis from the port of Hodeida, through which humanitarian aid and rebel supplies pass.” “Approval of the request,” reports the Post, “would mark a significant policy shift.” This is perhaps not entirely surprising given the fact that Trump has stacked his foreign policy team with Iran hawks who share Saudi Arabia and Israel’s illusory apprehensions of a revanchist Iran. Meanwhile, the US foreign-policy establishment seems all too eager to help compound the administration’s error.

Trump Removes Stephen Bannon From National Security Council Post -- For the first 10 weeks of President Trump’s administration, no adviser loomed larger in the public imagination than Stephen K. Bannon, the raw and rumpled former chairman of Breitbart News who considers himself a “virulently anti-establishment” revolutionary out to destroy the “administrative state.”But behind the scenes, White House officials said, the ideologist who enjoyed the president’s confidence became increasingly embattled as other advisers, including Mr. Trump’s daughter and son-in-law, complained about setbacks on health care and immigration. Lately, Mr. Bannon has been conspicuously absent from some meetings. And now he has lost his seat at the national security table.In a move that was widely seen as a sign of changing fortunes, Mr. Trump removed Mr. Bannon, his chief strategist, from the National Security Council’s cabinet-level “principals committee” on Wednesday. The shift was orchestrated by Lt. Gen. H. R. McMaster, Mr. Trump’s national security adviser, who insisted on purging a political adviser from the Situation Room where decisions about war and peace are made. Mr. Bannon resisted the move, even threatening at one point to quit if it went forward, according to a White House official who, like others, insisted on anonymity to discuss internal deliberations. Mr. Bannon’s camp denied that he had threatened to resign and spent the day spreading the word that the shift was a natural evolution, not a signal of any diminution of his outsize influence. His allies said privately that Mr. Bannon had been put on the principals committee to keep an eye on Mr. Trump’s first national security adviser, Michael T. Flynn, a retired three-star general who lasted just 24 days before being forced out for misleading Vice President Mike Pence and other White House officials about what he had discussed with Russia’s ambassador. With Mr. Flynn gone, these allies said, there was no need for Mr. Bannon to remain, but they noted that he had kept his security clearance. It was one more drama in a White House consumed by palace intrigue, where officials jockey for the ear of the president, angle for authority and seek to place blame for political defeats. Even as Mr. Bannon lost a national security credential, Jared Kushner, the president’s son-in-law and senior adviser, seems to be acting as a shadow secretary of state, visiting Iraq and taking on China, Mexico and Middle East portfolios.

Bannon Taken Off Trump National Security Council in Shake-Up -  President Donald Trump reorganized his National Security Council on Wednesday, removing chief strategist Stephen Bannon from a key committee and restoring the roles of top intelligence and defense officials, according to a person familiar with the decision and a notice published in the Federal Register. The realignment increases the influence of National Security Adviser H.R. McMaster, whose public stances were sometimes at odds with those of Bannon. In addition to gaining greater control over the NSC, McMaster will have the Homeland Security Council under his authority.The change downgrades the role of Homeland Security Adviser Tom Bossert, who had been given authority to convene or chair the NSC’s principals committee under Trump’s original structure. He’ll serve those roles now as delegated by McMaster, according to a presidential memorandum dated Tuesday. The national intelligence director, Dan Coats, and the chairman of the Joint Chiefs of Staff, Marine Corps General Joseph Dunford, are again “regular attendees” of the principals committee, as in the Obama administration. Trump downgraded their roles and put Bannon on the committee in a Jan. 28 memorandum. The secretary of energy, the Central Intelligence Agency director and the United Nations ambassador also were added to the principals committee under Wednesday’s revisions.Bannon, the former executive chairman of Breitbart News, is one of Trump’s most trusted and controversial advisers. He has channeled the populist and nationalist sentiment that propelled Trump’s presidential campaign, and his placement on the NSC committee drew criticism from some members of Congress and Washington’s foreign policy establishment who said it risked politicizing the security advice provided to the president. A White House official portrayed the change as a natural progression rather than a demotion for Bannon. The official, who spoke on condition of anonymity, contended that Bannon was placed on the committee in part to monitor Trump’s first national security adviser, Michael Flynn, and never attended a meeting. He’s no longer needed with McMaster in charge of the council, the official said.

Rick Perry added to National Security Council core; Steve Bannon out: Former Texas Gov. Rick Perry has been added to a core group within the National Security Council in a shakeup of members announced on Wednesday.Perry, the secretary of energy, was one of several officials added to the principals committee, the primary group of policy-makers for national security. Steve Bannon, President Donald Trump’s chief strategist, was removed from the principals committee.Perry, who served as Texas governor from 2000 to 2015, was confirmed as energy secretary in March. The change emerged in a memo made public on the federal register on Wednesday. Adding Perry to the NSC’s principals committee now brings the cabinet official in charge of the nation’s nuclear stockpile into the fold. The lion’s share of the Energy Department’s budget goes toward the National Nuclear Security Administration, which deals with the military application of nuclear science. Perry unsuccessfully ran for the GOP presidential nomination in 2016 and in 2012. During his 2012 run, he included the Energy Department among three government agencies he wanted to abolish.  Perry also becomes the first former “Dancing With the Stars” contestant with a high-level seat at the table to decide national security matters for the United States.

Perry, Haley added to National Security Council principals committee | TheHill: United Nations Ambassador Nikki Haley and Energy Secretary Rick Perry are slated to join the National Security Council’s (NSC) principals committee as part of its latest reshuffling. Haley and Perry will now be "regular attendees" of the committee's meetings, according to a memorandum published Wednesday in the Federal Register. Haley’s addition to the committee comes the same day the U.N. envoy condemned Tuesday’s chemical weapons attack in Syria, which the U.S. has blamed on Syrian President Bashar Assad's regime. The memorandum also solidifies Perry's position as an adviser to Trump on national security issues, as he oversees a vast national security complex in his role as Energy secretary. The two were among those added following White House chief strategist Stephen Bannon's removal from the committee, a move heralded by Democrats.MENTNational security adviser H.R. McMaster made the decision to remove Bannon, a request President Trump approved. McMaster was tapped to lead the NSC following the ouster of national security adviser Michael Flynn in February. The decision to add Bannon in a January reorganization of the NSC was met with ire from Democrats and some national security experts, who argued that his involvement could politicize the NSC. The director of national intelligence and the chairman of the Joint Chiefs of Staff have also been reinstated as regular attendees, while the CIA director has been added to the committee.

In Battle for Trump’s Heart and Mind, It’s Bannon vs. Kushner - NYT — Thick with tension, the conversation this week between Stephen K. Bannon, the chief White House strategist, and Jared Kushner, the president’s son-in-law and senior adviser, had deteriorated to the point of breakdown. Finally, Mr. Bannon identified why they could not compromise, according to someone with knowledge of the conversation. “Here’s the reason there’s no middle ground,” Mr. Bannon growled. “You’re a Democrat.” The schism within Mr. Trump’s perpetually fractious White House has grown in recent weeks, fueled by personality, ideology and ambition. At its core are Mr. Bannon, the edgy, nationalist bomb-thrower suddenly in the seat of power, and Mr. Kushner, the polished, boyish-looking scion of New Jersey and New York real estate. Even as Mr. Kushner’s portfolio of responsibilities has been expanding, Mr. Bannon’s in recent days has shrunk with the loss of a national security post. The escalating feud, though, goes beyond mere West Wing melodrama, the sort of who’s-up-and-who’s-down scorekeeping that typically consumes Washington. Instead, it reflects a larger struggle to guide the direction of the Trump presidency, played out in disagreements over the policies Mr. Trump should pursue, the people he should hire and the image he should put forward to the American people. On one side are Mr. Bannon’s guerrilla warriors, eager to close the nation’s borders, dismantle decades of regulations, empower police departments and take on the establishment of both parties in Washington. On the other are Mr. Kushner’s “Democrats,” an appellation used to describe even Republicans who want to soften Mr. Trump’s rough edges and broaden his narrow popular appeal after months of historically low poll numbers. In the middle is Mr. Trump himself, seemingly torn between the two factions, tilting one way or the other depending on the day, or even the hour, while he seeks to recapture momentum after a series of defeats in Congress and the courts. As he did throughout his career in business and entertainment, Mr. Trump plays advisers off one another, encouraging a sort of free-for-all competition for influence and ideas within his circle, so long as everyone demonstrates loyalty to him.

 Bannon wants a war on Washington. Now he’s part of one inside the White House - WaPo - Stephen K. Bannon — the combative architect of the nationalistic strategy that delivered President Trump to the White House — now finds himself losing ground in an internecine battle within the West Wing that pits the “Bannonites” against a growing and powerful faction of centrist financiers led by the president’s son-in-law, Jared Kushner. Less than 100 days into Trump’s chaotic presidency, the White House is splintering over policy issues ranging from taxes to trade. The daily tumult has created an atmosphere of tension and panic around the president, leaving aides fearing for their jobs and cleaving former allies into rivals sniping at one another in the media. The infighting spilled into full view this week after Trump removed Bannon from the National Security Council’s “principals committee,” a reshuffling that left the president’s chief strategist less fully involved in the administration’s daily national security policy while further empowering Lt. Gen. H.R. McMaster, Trump’s new national security adviser. Bannon, an unkempt iconoclast, has generally chafed at the transition from firebomb campaigning to more modulated governing and for weeks has vented about the possibility of quitting, one person close to him said. This account of the latest West Wing turmoil comes from interviews with more than 20 White House officials and people close to those in the administration, many of whom requested anonymity to offer candid assessments. Despite the demotion, Bannon attended Wednesday’s National Security Council meeting, and his friends and allies say the position on the Cabinet-level security committee was always supposed to be temporary — a way for Bannon to keep watch over retired Gen. Michael Flynn, the controversial former national security adviser who was fired in February after he misled Vice President Pence about his contacts with Russian officials. But the benign explanation for Bannon’s removal belies the growing strife between Bannon, Kushner and Gary Cohn, the National Economic Council director. A registered Democrat who previously was president of Goldman Sachs, Cohn is close to Kushner and his wife, Ivanka Trump, the president’s oldest daughter and adviser.

Report: Trump considering ousting Priebus, Bannon | TheHill: President Trump is considering ousting both White House chief of staff Reince Priebus and chief strategist Stephen Bannon, Axios reported on Friday. Aides and advisers to the president told Axios that, while Trump is considering a major shakeup in the West Wing, it's not clear when it would happen or if Trump will "pull that trigger." "Things are happening, but it's very unclear the president's willing to pull that trigger," one top aide said. Bannon emerged as one of Trump's closest — and most controversial — aides before the president took office. In the early days of his presidency, Trump elevated Bannon to a position on the National Security Council's (NSC) principals committee, and the former Breitbart executive was said to hold considerable influence with the president.SEMENTBut Bannon was removed from the NSC earlier this week, seen by many White House staffers as a sign of his fall from grace inside the administration. The reshuffling of the NSC came as Bannon, a self-described "economic nationalist," finds himself locked in a battle with Trump's son-in-law and senior adviser, Jared Kushner, for influence. Bannon and Priebus represent divergent forces in the Trump administration, with the latter, a former Republican National Committee chairman, serving as the voice of the political establishment in a White House full of political neophytes. Firing them both would be an enormous upheaval for the young presidency, which has yet to hit its 100-day mark. Axios did not say who could replace Bannon as Trump's chief strategist but reported that House Majority Leader Kevin McCarthy (R-Calif.) and Trump economic adviser Gary Cohn were among those being considered to replace Priebus as chief of staff.

Why Is Trump Embracing Establishment GOP Foreign Policy? - National Interest - Is this the Trump administration or is it morphing into the Pence administration? Increasingly, in foreign policy at least, it is looking like the latter--an establishment Republican approach that is rooted in the past. The signs are everywhere. Partly in response to indignation on Capitol Hill from Senators such as John McCain and Lindsey Graham, President Trump is rapidly shifting his rhetorical stance on Syria. A few days ago intervention was out; now it appears that some form of military measures in Syria are in. Personnel changes are taking place as well. Steve Bannon is out and Nikki Haley is in at the National Security Council. The reshuffle of the the NSC’s principals committee suggests a White House adopting a more conventional structure for national-security deliberations, and there is a sharp contrast between Haley’s rise and what many in the media are reporting as Bannon’s fall.    White House sources cited by the New York Times and other outlets say that Bannon was only on the committee to keep watch over Michael Flynn’s works as national security adviser and to “de-operationalize” the NSC after the Obama years. With Flynn gone and the last administration now a fading memory, there was no reason for Bannon to remain. Yet Flynn’s replacement, H.R. McMaster, has clearly intended from the start to reorient the NSC in a more conventional direction. To that end, not only is Bannon gone, but the chairman of the Joints Chiefs of Staff and the director of national intelligence have been restored as “regular attendees,” rather than ad hoc presences, on the committee. According to the national security memorandum announcing the changes in the Federal Register, the director of the CIA, the secretary of Energy, and the U.S. representative to the United Nations have also been added.

Trump's son-in-law, Kushner, flies into Iraq with top U.S. general | Reuters: U.S. President Donald Trump's son-in-law, Jared Kushner, flew into Iraq on Monday with the top U.S. general to get a first-hand assessment of the battle against Islamic State from U.S. commanders on the ground and Iraqi leaders. For Kushner, who has not been to Iraq before, the trip comes at a critical time as Trump examines ways to accelerate a U.S.-led coalition campaign that U.S. and Iraqi officials say has so far been largely successful in uprooting Islamic State militants in Iraq and Syria. The visit appears to demonstrate the far-reaching portfolio of Kushner, 36, who is part of Trump's innermost circle and who has been given a wide range of domestic and foreign policy responsibilities, including working on a Middle East peace deal. Marine General Joseph Dunford, the chairman of the U.S. military's Joint Chiefs of Staff, said he invited Kushner and Tom Bossert, White House homeland security adviser, to accompany him so they could hear "first-hand and unfiltered" from military advisers about the situation on the ground and interact with U.S. forces. "I said, 'Hey, next time I go to Iraq, if you're interested, come and it’d be good," Dunford said, adding he extended the invitation weeks ago. That kind of ground-level awareness of the war helps inform strategic decisions, Dunford said, adding it was the same reason he regularly leaves Washington to visit Iraq.Kushner, who is married to Trump's daughter Ivanka Trump, did not speak with reporters.

The Syrian People Should Decide For Themselves - Ron Paul - Is common sense beginning to creep into US policy in the Middle East? Last week Secretary of State Rex Tillerson said that the longer-term status of Syrian President Assad would be “decided by the Syrian people.” The media reported this as a radical shift in US foreign policy, but isn’t this just stating what should be obvious? What gives any country the right to determine who rules someone else? Washington is currently paralyzed by evidence-free rumors that the Russians somehow influenced our elections, but no one blinks an eye when Washington declares that one or another foreign leader “must go.” It’s only too bad that President Obama hadn’t followed this back in 2011 instead of declaring that Assad had to go and then arming rebel groups who ended up being allies with al-Qaeda. Imagine how many thousands of lives and billions of dollars would have been saved by following this policy in the first place. Imagine the millions of refugees who could still be in their homes, running their businesses, living their lives.Will the Trump Administration actually follow through on Tillerson’s Syria policy statement? It is too early to tell. The President has illegally sent hundreds of US troops to fight on the ground in Syria. Current US positions in eastern Syria suggest that Washington may be looking to carve out parts of oil-rich areas of the country for some kind of future federation. The White House followed up on Tillerson’s comments by stating that getting rid of Assad was no longer a top priority for the US. This also sounds good. But does this mean that once the current top priority, destroying ISIS, is completed, Washington may return to its active measures to unseat the Syrian president? Neocons in Washington still insist that the rise of ISIS in Syria was due to President Assad, but in fact ISIS did not appear in Syria until the US began trying to overthrow Assad. They haven’t given up on their desire to overthrow the Syrian government and they do have influence in this Administration.If the Trump Administration is serious about letting the people of Syria decide their fate he needs to take concrete steps. Rather than sending in more troops to fight an ISIS already on its last legs, he must bring US troops home and prohibit the CIA from further destabilizing the country.

 Donald Trump blames Barack Obama for Syria 'chemical weapons' attack-- Donald Trump has called a suspected chemical attack in Syria the result of the "weakness" of the Obama administration. The White House blamed the strike on Idlib province - which killed dozens and injured hundreds - directly on the government of President Bashar al-Assad. In a statement Mr Trump said the incident was “reprehensible and cannot be ignored by the civilised world". However, he also made clear that his administration believed the attack occurred thanks to the actions of the President's predecessor, Barack Obama.“These heinous actions by the Bashar al-Assad regime are a consequence of the past administration's weakness and irresolution,” Mr Trump said. “President Obama said in 2012 that he would establish a 'red line' against the use of chemical weapons and then did nothing.” White House Press Secretary Sean Spicer earlier declined to say what the Trump administration would do about the attack but added that the President had spoken on Tuesday with his national security team about the issue. The head of the health authority in rebel-held Idlib said more than 50 people had been killed and 300 wounded. The Union of Medical Care Organisations, a coalition of international aid agencies that funds hospitals in Syria, said at least 100 people had died.

"Assad Crossed Many, Many Lines": Trump Signals Imminent Change In Syria Policy - Just one week after Rex Tillerson signaled of a historic U-Turn in US policy regarding Syria,when he said that “the longer term status of President Assad will be decided by the Syrian people” suggesting the US is no longer intent on removing the Syrian president, this afternoon Trump signaled that the White House is about to U-turn once again, likely emerging in the same place where the Obama administration was when it nearly invaded Syria in 2013. Speaking at a press conference with Jordan's King Abdullah, II, President Trump on Wednesday called the suspected chemical weapons attack on civilians in Syria “a terrible affront to humanity” and hinted briefly that a change in U.S. policy on Syria may be coming as a result. Trump said that he was moved by reports of a deadly gas attack in Syria, saying that the Syrian leader - who has denied being behind the attack - had “crossed a lot of lines.” “It crossed a lot of lines for me,” Trump said at a press conference with Jordanian King Abdullah II at the White House. “When you kill innocent children, innocent babies, little babies with a chemical gas that is so lethal that people were shocked to hear what gas it was, that crosses many lines beyond the red line. Many, many lines.” While painfully reminiscent of a similar chemical attack conducted in 2013, which was subsequently revealed to be a false flag, U.S. officials said they believe the attack was carried out by the regime of Syrian President Bashar al-Assad. Which, again, does not make much sense since just days before the chemical attack, Trump administration officials said the U.S. would no longer prioritize regime change in Syria and that they expect Mr. Assad to remain in power. Perhaps the mere suggestion that someone - i.e., US-backed Syrian rebels or ISIS jihadists in the area of Idlib - could engage in a false flag attack is considered too much "tin foil" conspiracy theory.

Tulsi Gabbard: Assad should be 'executed' if proven behind Syria chemical attack --  Democratic Rep. Tulsi Gabbard on Thursday demanded that Syrian President Bashar Assad be "executed" if it is confirmed he ordered the deadly chemical attack earlier this week that killed dozens of Syrian civilians, according to a report. The Hawaiian lawmaker, who met with Assad earlier this year, made that statement on the same day President Trump authorized a missile strike against the airbase from which the chemical attack is believed to have originated, according to Hawaii News Now. After the stike, Gabbard put out another statement condeming the administration for acting "recklessly without care or consideration of the dire consequences of the United States attack on Syria without waiting for the collection of evidence from the scene of the chemical poisoning." Trump, in his address to the nation following the U.S. military operation, unequivocally pinned the blame on Assad for the chemical weapons attack, which killed about 80 people, including children. The Syrian government denies it was involved in the attack, though the Pentagon said Thursday it detected Syrian fixed-wing aircraft drop bombs on the Syrian town the chemical attack took place.Gabbard, a member of the Armed Services and Foreign Affairs Committees, also expressed her opposition to an escalation of U.S. involvement in Syria, which she said would mean "more dead civilians, more refugees, the strengthening of terrorists, and a possible nuclear war between the United States and Russia."

Russia Blames Syria Gassing on Leak From Rebel Chemical Cache - Russia on Wednesday blamed the poisonous gas contamination that activists say killed about 100 people — including 25 children — on a leak from a chemical weapons cache hit by Syrian government air strikes.  The alleged gas attack in Syria's Idlib province, documented in horrific images that NBC News has not verified, would mark one of the worst incidents of its kind in Syria's six-year civil war. Relief agency UOSSM said at least 400 were injured.  The U.S. called it a "chemical weapons attack" and said President Bashar al-Assad was responsible. Secretary of State Rex Tillerson said the Syrian ruler had acted with "brutal, unabashed barbarism."   However, Russian defense ministry spokesman Igor Konoshenkov said the deadly leak came from a rebel workshop used to make chemical weapons.   "Syrian aviation made a strike on a large terrorist ammunition depot and a concentration of military hardware in the eastern outskirts of Khan Sheikhoun," he said in a video statement, referring to the rebel-held town in northern Syria where the deaths occurred Tuesday.   He said "chemical-laden weapons" made by rebels at the site had previously been used by militants in Iraq — an apparent reference to a report last month from the International Committee of the Red Cross that toxic agents had been used in fighting near Mosul.  “These types of weapons are banned by international law because they represent an intolerable barbarism” Local activist Yaman Khatib, who recorded the moment of the alleged attack on video posted to social media, said two planes were involved in the strike — one Syrian and one Russian.  Dr. Shajul Islam, a London surgeon who was volunteering in a hospital just outside Idlib, told NBC News he believed the victims had been exposed to a nerve gas.  He said they had "very shrunk pupils as well as salivating from the mouth and reduced heart rates," adding: "There is no doubt to us that it was a nerve agent. We were able to positively identify the agent and were able to treat it successfully."  NBC News was not able to verify either account from the ground, although Islam's views were echoed by the World Health Organization.

Trump On Collision Course With Putin After Moscow Denies Syria Behind Chemical Attack --For the first time since his election, president Trump is set for a direct collision course with Vladimir Putin after Russia said on Wednesday it stands by Syrian President Bashar al-Assad despite widespread popular outrage over a chemical weapons attack which the media was quick to pin on the Syrian president, in a carbon-copy of events from 2013 which nearly launched a US invasion of the middle-eastern nation, when a YouTube clip - subsequently shown to be a hoax - served as proof that Assad had used sarin gas on rebels in a Damascus neighborhood.As reported yesterday, Western countries including the US accused Assad's armed forces for the chemical attack, which choked scores of people to death in the town of Khan Sheikhoun in a rebel-held area of northern Syria hit by government air strikes. While Washington said it believed the deaths were caused by sarin nerve gas dropped by Syrian aircraft, Moscow offered an alternative explanation, claiming the poison gas had leaked from a rebel chemical weapons depot struck by Syrian bombs.The strike, which was launched midday Tuesday, targeted a major rebel ammunition depot east of the town of Khan Sheikhoun, Russian Defense Ministry spokesman Major-General Igor Konashenkov said in a statement. The warehouse was used to both produce and store shells containing toxic gas, Konashenkov said. The shells were delivered to Iraq and repeatedly used there, he added, pointing out that both Iraq and international organizations have confirmed the use of such weapons by militants.The same chemical munitions were used by militants in Aleppo, where Russian military experts took samples in late 2016, Konashenkov said. The Defense Ministry has confirmed this information as “fully objective and verified,” Konashenkov added.According to the statement, Khan Sheikhoun civilians, who recently suffered a chemical attack, displayed identical symptoms to those of Aleppo chemical attack victims.Naturally, Syrian rebels disagreed: Hasan Haj Ali, rebel commander of the Free Idlib Army rebel group, and quoted by Reuters called the Russian statement a "lie".

The Syrian Gas Attack Persuasion --Scott Adams - According to the mainstream media – that has been wrong about almost everything for a solid 18 months in a row – the Syrian government allegedly bombed its own people with a nerve agent.  The reason the Assad government would bomb its own people with a nerve agent right now is obvious. Syrian President Assad – who has been fighting for his life for several years, and is only lately feeling safer – suddenly decided to commit suicide-by-Trump. Because the best way to make that happen is to commit a war crime against your own people in exactly the way that would force President Trump to respond or else suffer humiliation at the hands of the mainstream media. And how about those pictures coming in about the tragedy. Lots of visual imagery. Dead babies. It is almost as if someone designed this “tragedy” to be camera-ready for President Trump’s consumption. It pushed every one of his buttons. Hard. And right when things in Syria were heading in a positive direction.

• Interesting timing.
• Super-powerful visual persuasion designed for Trump in particular.
• Suspiciously well-documented event for a place with no real press.
• No motive for Assad to use gas to kill a few dozen people at the cost of his entire regime. It wouldn’t be a popular move with Putin either.
• The type of attack no U.S. president can ignore and come away intact.
• A setup that looks suspiciously similar to the false WMD stories that sparked the Iraq war.

I’m going to call bullshit on the gas attack. It’s too “on-the-nose,” as Hollywood script-writers sometimes say, meaning a little too perfect to be natural. This has the look of a manufactured event.

Ron Paul: "Zero Chance" Assad Behind Chemical Weapons Attack In Syria; Likely A False Flag -- According to former Congressman Ron Paul, the chemical weapons attack in Khan Sheikhoun that killed 30 children and has led to calls for the Trump administration to intervene in Syria could have been a false flag attack.As Paul Joseph Watson details, pointing out that the prospect of peace in Syria was moving closer before the attack, with ISIS and Al-Qaeda on the run, Paul said the attack made no sense.“It looks like maybe somebody didn’t like that so there had to be an episode,” said Paul, asking, “who benefits?”“It doesn’t make any sense for Assad under these conditions to all of a sudden use poison gases – I think there’s zero chance he would have done this deliberately,” said Paul. The former Congressman went on to explain how the incident was clearly being exploited by neo-cons and the deep state to enlist support for war. “It’s the neo-conservatives who are benefiting tremendously from this because it’s derailed the progress that has already been made moving toward a more peaceful settlement in Syria,” said Paul. Many have questioned why Assad would be so strategically stupid as to order a chemical weapons attack and incite the wrath of the world given that he is closer than ever to winning the war against ISIS and jihadist rebels. Just five days before the attack, U.S. Secretary of State Rex Tillerson said, “The longer-term status of President Assad will be decided by the Syrian people,” implying a definite shift in U.S. foreign policy away from regime change in Syria.

Pentagon Briefs Trump On Syria Military Options: Cruise Missiles, No Fly Zone, Surgical Strikes -- The Pentagon has briefed President Trump on various military options the US can conduct in response to the poison gas attack in Syria that killed scores of civilians, and which Washington has blamed on the Syrian government, a U.S. official told Reuters.Options include things like implementing a "no fly zone" or grounding aircraft used by Syrian President Bashar al-Assad's forces, an official quoted by Reuters said. Another option also includes the use of cruise missiles - which allow the United States to strike targets without putting piloted aircraft in the skies above Syria. The official did not comment on how likely military action might be which, if any, options might be recommended by the Pentagon.Among the valid military targets in Syria would be Syrian military airfields, air defenses and other types of Syrian military installations. The official played down the idea that Russian military infrastructure might be a target.The official also said that Secretary of Defense James Mattis and National Security Adviser H.R. McMaster have been discussing the matter: Mattis is due to meet with Trump later in the day at the president’s Mar-a-Lago retreat, where a summit meeting with Chinese President Xi Jinping is underway. Speaking with reporters aboard Air Force One, Trump said that “something should happen” with Assad after the chemical attack, calling what happened in Syria “a disgrace to humanity.” “There is no doubt in our minds, and the information we have supports, that the Syrian regime under the leadership of Bashar al-Assad are responsible for this attack,” Secretary of State Rex Tillerson told reporters in Florida on Thursday, adding that “there is no role for Assad” in Syria after this.

 U.S. Said to Weigh Military Responses to Chemical Release of Rebels' Stockpile in Syria | 06 April 2017 | Senior Defense Department officials are developing options for a military strike in response to the Syrian government's chemical weapons attack strike on an al-Qaeda (aka Sen. John McCain's 'rebels') warehouse which stockpiled chemical weapons that killed dozens of civilians on Tuesday, officials said Thursday.  Dozens of Tomahawk missiles were fired at an air base in Syria, military officials said. At the same time, the nation’s top diplomat, Secretary of State Rex W. Tillerson [fooled by an obvious false flag], said the devastating chemical weapons attack in Syria this week made it clear that there was "no role" for Bashar al-Assad to continue governing his country, and he promised a "serious response" from the United States. The top-level consultations about military options involve Defense Secretary Jim Mattis and Gen. Joseph F. Dunford Jr., the chairman of the Joint Chiefs of Staff, as well as military officers at the United States Central Command.

Hillary Clinton: US should ‘take out’ Assad’s air fields -- Hillary Clinton called on the United States to take out Syrian leader Bashar al-Assad's Air Force on Thursday, days after a chemical attack killed more than 70 people in the war-torn country. "Assad has an air force, and that air force is the cause of most of these civilian deaths as we have seen over the years and as we saw again in the last few days," Clinton said in a speech at the "Women in the World" summit in New York City. "And I really believe that we should have and still should take out his air fields and prevent him from being able to use them to bomb innocent people and drop sarin gas on them." The former secretary of state and Democratic presidential nominee against Trump in 2016 reiterated her support for a no-fly zone over Syria and more direct support for protesters. "I still believe we should have done a no-fly zone," she said, in a slight knock against former President Barack Obama, whose Cabinet she served in. "We should have been more willing to confront Assad." US officials said Assad perpetrated the chemical attack this week that killed more than 70 people. Trump said Thursday that "something should happen" with regard to Assad, after referring to the deadly attack as a "heinous" and "horrific" act against innocent people the previous day. Meanwhile, Secretary of State Rex Tillerson said it appears that Assad should have "no role" in governing the Syrian people, and that "steps are under way" for the United States - along with an international coalition -- to remove the dictator. Clinton, even as secretary of state, was a proponent of more direct action in Syria at the time, despite Obama's apprehension about military action in the country. "I wish, obviously I wish that the international community writ large had been able to rein this in," Clinton said, while acknowledging that the decision was not an easy one.

US Launches Air Strike On Syria: Over 50 Tomahawk Missiles Hit Syria - As previewed earlier tonight, the US has launched air strikes against Syria, with NBC reporting that under instructions from President Trump, US ships have launched over 50 Tomahawk missiles, striking Syria. NBC adds that only tomahawks missiles fired, no fixed wing aircraft involved, for now. According to CBS, the U.S. launched about 60 Tomahawk missiles against a Syrian airfield, targeting hangars and planes, a U.S. official says.  Two Navy destroyers launched Raytheon missiles against Syria two days after Bashar al-Assad’s regime used poison gas to kill scores of civilians The decision to strike in Syria marks a stark reversal for President Trump, who during his presidential campaign faulted past U.S. leaders for getting embroiled in conflicts in the Middle East.  MORE: U.S launches cruise missiles from ships in Mediterranean, targeting single airfield in Syria, @CBSDavidMartin reports. pic.twitter.com/kAdM1DCEPL — CBS News (@CBSNews) April 7, 2017  Developing.

US Launches Airstrikes Against Syria - Yves Smith - So the military/surveillance state got its war against Russia after all. My, that was fast. Merely implementing a no-fly zone was widely seen as tantamount to instigating a war with Russia, and this move is far more provocative.  Perhaps the US thinks it can engage in a show of muscle and stop there.  From ITV:The US has fired dozens of cruise missiles at an airfield in Syria in retaliation for Tuesday’s alleged chemical weapons attack, US officials have confirmed.Around 60 tomahawk missiles were launched from US Navy destroyers, targeting an airfield near Homs, in the most dramatic military order of Donald Trump’s presidency so far.  Ryan Grim of the Huffington Post points out via an e-mailed alert that: Donald Trump does not have the legal authority to launch airstrikes against Syria, yet he has done so tonight, multiple news outlets are reporting, and confirmed by an intelligence community source… Update 10:15 PM. From the Wall Street Journal: The U.S. military launched a series of strikes against a Syrian air base Friday, a response to mounting calls for a display of force in the wake of this week’s suspected chemical weapons attack in Syria. The strikes represented the first time a U.S. military operation deliberately targeted the regime of President Bashar al-Assad and came a day after President Donald Trump said the chemical attack in Idlib province earlier this week, blamed on Syrian forces, had changed his thinking on Mr. Assad….. U.S. lawmakers had urged Mr. Trump to strike the Assad regime. There is a growing consensus that the regime used banned chemical weapons in the attack, which killed at least 85 people, including 27 children, and injured about 550. CNN reports that Trump will address the nation shortly.

Trump Statement On Syria Air Strikes --Shortly after he concluded his dinner with Xi Jinping at Mar-A-Lago, Trump authorized the airstrike against Syria in which at least 60 cruise missiles were launched, and delivered the following brief statement: “My fellow Americans, on Tuesday Syrian dictator Bashar al Assad launched a horrible chemical weapons attack on innocent civilians. using a deadly nerve agent, Assad choked out the lives of helpless men, women and children.It was a slow and brutal death for so many, even beautiful babies were cruelly murdered in this very barbaric attack. No child of God should ever suffer such horror.Tonight I ordered a targeted military strike on the airfield in Syria from where the chemical attack was launched. It is in this vital national security interest of the United States to prevent and deter the spread and use of deadly chemical weapons.There can be no dispute that Syria used banned chemical weapons violated its obligations under the chemical weapons convention and ignored the urging of the UN Security Council.Years of previous attempts at changing Assad's behavior have all failed and failed very dramatically. As a result the refugee crisis continues to deepen and the region continues to destabilize threatening the United States and its allies.Tonight I call on all civilized nations to join us in seeking to end the slaughter and bloodshed in Syria. And also to end terrorism of all kinds and all types. We ask for God's wisdom as we face the challenge of our very troubled world. We pray for the lives of the wounded and for the souls of those who have passed and we hope that as long as american stands for justice then peace and harmony will in the end prevail. Goodnight and God bless America and the entire world. Thank you.”

Russia condemns U.S. missile strike on Syria, suspends key air agreement — Russia on Friday condemned the U.S. missile strike against Syrian government forces as an attack against its ally, and said it was pulling out of an agreement to minimize the risk of in-flight incidents between U.S. and Russian aircraft operating over Syria.Even as Russian officials expressed hope that the U.S. strike against Syrian President Bashad al-Assad’s government would not lead to an irreversible breakdown in relations with Moscow, the Kremlin’s decision to suspend the 2015 memorandum of understanding on the air operations immediately raised tensions in the skies over Syria.President Vladi­mir Putin’s spokesman said the risk of confrontation between aerial assets of the U.S.-led coalition and Russia has “significantly increased” after President Trump ordered the launch 59 Tomahawk cruise missiles at a Syrian military air base in retaliation for a chemical attack that killed scores of civilians. The now-scrapped pact traded information about flights by a U.S.-led coalition targeting the Islamic State and Russian planes operating in Syria backing the Assad government.The Russian spokesman, Dmitry Peskov, further claimed that the Syrian government had no chemical weapons, and dismissed the Trump administration’s explanation as an excuse to enter the conflict.  “President Putin considers the American strikes against Syria an aggression against a sovereign government in violations of the norms of international law, and under a far-fetched pretext,” Peskov told reporters. “This step by Washington is causing significant damage to Russian-American relations, which are already in a deplorable state.”

Pentagon: Russia alerted in advance of Syria strike - The Pentagon announced Thursday night that Russia, one of Syrian President Bashar al-Assad's allies, was notified before the U.S. launched nearly 60 Tomahawk missiles against an airfield near Homs, Syria. Capt. Jeff Davis, a spokesman for the Pentagon, said Russia was alerted via the established deconfliction line, and "U.S. military planners took precautions to minimize risk to Russian or Syrian personnel located at the airfield." The strike was a "proportionate response" to the chemical weapons attack on Tuesday in Idlib, Syria, which killed dozens of people and injured hundreds more, Davis said; the Syrian government has denied being responsible for the assault. U.S. intelligence has concluded that the airfield was the base where the planes that carried out the attack took off from, he added, and is also where Assad's chemical weapons are stored. Davis said early indications are that the strike "severely damaged or destroyed Syrian aircraft and support infrastructure and equipment" at the airfield, "reducing the Syrian government's ability to deliver chemical weapons. The use of chemical weapons against innocent people will not be tolerated."

Trump, Syria, and Chemical Weapons: What We Know, What We Don’t, and the Dangers Ahead – by Phyllis Bennis, Director of the New Internationalism Project at the Institute for Policy Studies in Washington D.C. -Let’s start with what we don’t know. Experts remain uncertain what chemical(s) were involved in the horrific chemical attack, almost certainly from the air, on the village of Khan Sheikhun in Idlib province in Syria. The nerve agent sarin, chlorine, and unknown combinations of chemicals have all been identified as possible, but in the first 48 hours nothing has been confirmed. We don’t know for sure yet what it was that killed more than 75 people, many of them children, and injured many more. Crucially, we also don’t know who was responsible. Western governments, led by the United States, and much of the western press have asserted that the Syrian regime is responsible, but there is still no clear evidence. Certainly Damascus has an air force, has been known to use chemical, particularly chlorine, weapons in 2014 and 2015. “A US military escalation against Syria (because we must not forget that US Special Forces and US bombers are already fighting there) will not help the victims of this heinous chemical attack, it will not bring the devastating war in Syria to a quicker end, it will not bring back the dead children.” The Syrian military denies using chemical weapons. Their international backer, Russia, claims that the Syrian military did drop bombs in the affected area but that the chemical effect was not in the bombs dropped but rather from the explosion of an alleged chemical warehouse under the control of unnamed rebel forces.  Much is different now from 2013. The state of the Syrian civil war is far different – in 2013, the war was still new and uncertain; today it is recognized as the world’s most devastating conflict. And this is a president, a cabinet, a White House with no military or diplomatic experience, with no understanding of the complications of the roiling Middle East conflicts or the consequences of war, and with a personal eagerness to demonstrate power. This is not a president accountable to a political party, to Congress and its constitutional role in military decision-making, and certainly less accountable to international law.  Trump’’s incoherent reaction on Wednesday showed the lack of any strategic understanding in his foreign policy. He blames former President Obama for the crisis in Syria, while Trump of course had urged Obama not to attack Syria after the chemical bombing of 2013, tweeting in all caps “DO NOT ATTACK SYRIA — IF YOU DO MANY VERY BAD THINGS WILL HAPPEN.”

Elites Are Giddy Over Trump’s Airstrike in Syria, and That’s Terrifying -- Trump's approval ratings are historically low, his adviser Steve Bannon is struggling to hold onto power, and the administration's major legislative achievements are nil.  But the pathetic plaudits Trump received Thursday night for the airstrike he ordered against Bashar al-Assad's regime in Syria should serve as a reminder of how capable Trump remains of regaining the narrative of his faltering presidency—and why a relatively “normal” Trump administration may be even scarier than the cartoonishly villainous one we’ve seen up until now..  As we saw following Trump’s first address to Congress, the president is so nightmarish that some of us who observe him are desperate to forget who precisely America elected and are forever hoping he can change. This can manifest itself consciously or unconsciously. It began Thursday, before the strike, when Hillary Clinton said she believed the United States should take out Assad's airfields. That would have been a more plausible suggestion in a different universe than the one we live in—a universe in which a bigoted, Muslim-hating, and incompetent man wasn't the commander in chief of the United States armed forces. It continued throughout the afternoon and evening as the missile strike launched and Trump received heavy praise on cable news. Fareed Zakaria said on CNN that this airstrike was the moment Trump had "[become] president." Not only was this nonsense a near-repeat of what Van Jones had said on CNN following Trump's speech to Congress, but it ignored January’s botched Yemen raid, a military action that Trump ordered. (For what it's worth, the United States is already engaged in combat in Iraq and Syria with some of the groups fighting Assad.)

Tulsi Gabbard 'skeptical' Assad regime behind gas attack | TheHill: Rep. Tulsi Gabbard (D-Hawaii) said Friday she was "skeptical" that Syrian leader Bashar Assad's regime was behind this week's chemical weapons attack in northern Syria. "There are a number of theories that are out there," Gabbard said during an interview on CNN's "The Situation" when addressing who was behind the attack. Pressed to specify if Assad was responsible for civilian deaths in Syria, as the U.S. and Western leaders have maintained, Gabbard said that responsibility "goes around." "There is responsibility that goes around ... again, my interest is in bringing about peace. Standing here and pointing fingers does not accomplish peace for the Syrian people," she said. Asked if she would change her mind if the Pentagon would present her with hard evidence that Assad was behind the chemical attack, the lawmaker replied "no." Gabbard has been a lightning rod for criticism over her position on Syria, with her decision to meet with Assad in January drawing disgust from members of both parties. The Iraq War veteran, who serves as a prominent member of both the House Armed Services and Foreign Affairs committees, argued the meeting was part of her push to expedite a peaceful resolution to Syria's years-old conflict. Gabbard argued Friday that President Trump's decision to launch a missile strike against Syrian government forces the previous day in response to the gas attack was "reckless." "It made me sad and it made me angry to see that President Trump took this reckless action without really considering, frankly, the dire consequences," she said. Gabbard pointed to false intelligence reports about weapons of mass destruction used to justify the Iraq War under President George W. Bush as an example of how the intelligence assessments can produce inaccurate information.

Trump's Syria strikes divide Congress — but not along partisan lines - POLITICO: President Donald Trump’s missile attacks against the Syrian government on Thursday night split Congress into several camps, winning bipartisan backing from some senior lawmakers while also sparking a coalition of those on the left and right who raised constitutional concerns. Congressional leaders in both parties largely signaled their support. House Speaker Paul Ryan (R-Wis.) called Trump’s strikes “appropriate and just" and said he looks "forward to the administration further engaging Congress in this effort." Story Continued Below Top Democrats, like House Minority Leader Nancy Pelosi (D-Calif.) and Senate Democratic Whip Dick Durbin (D-Ill.) also offered their support, but both made clear they believed any escalation would require the approval of Congress. “Tonight’s strike in Syria appears to be a proportional response to the regime’s use of chemical weapons," Pelosi said, but added, “The crisis in Syria will not be resolved by one night of airstrikes." Durbin said “any further action will require close scrutiny by Congress, and any escalation beyond airstrikes or missile strikes will require engaging the American people in that decision."Senate Minority Leader Chuck Schumer said, “Making sure Assad knows that when he commits such despicable atrocities he will pay a price is the right thing to do.” The New York Democrat added, though, that “it is incumbent on the Trump administration to come up with a strategy and consult with Congress before implementing it.” Meanwhile, libertarian-minded Republicans like Sens. Mike Lee of Utah and Rand Paul of Kentucky blasted Trump's decision to launch strikes without first getting approval by Congress. “The President needs congressional authorization for military action as required by the Constitution,” Paul said in a Tweet. They were joined by liberal Democrats, including Sen. Brian Schatz of Hawaii and Rep. Ted Lieu of California, who also argued the use of force requires congressional approval under the Constitution. Rep. Barbara Lee (D-Calif.), who was the lone member of Congress to vote against the 2001 war authorization against Al Qaeda, called the strikes an “act of war” and said Congress needs to come back into session and debate the matter. Sen. Tim Kaine (D-Va.) called Trump's failure to seek congressional authorization "unlawful."

Congress is finally united: It wants a Syria plan from Trump | McClatchy - Congressional lawmakers, bitterly divided this week by Supreme Court battles and budgetary issues, are united in calling for President Donald Trump to have a comprehensive Syria policy beyond Thursday’s targeted retaliatory airstrike against Bashar Assad’s regime. Democrats and Republicans in the House of Representatives and the Senate on Friday praised Trump’s decision to launch more than 50 Tomahawk missiles on a Syrian air base in response to the chemical weapon attack earlier in the week that killed scores of Syrian citizens – an action U.S. officials say was conducted by Assad’s government. But Trump appears to be on a short leash. Several congressional lawmakers in both parties say he needs to come to them to seek war powers in Syria if he intends further U.S. military action in that civil-war-torn country. House Minority Leader Nancy Pelosi, D-Calif., sent a letter to House Speaker Paul Ryan, R-Wis., urging him to call the House back into session to debate and vote on an authorization for the use of military force in Syria.“As heartbreaking as Assad’s chemical weapons attacks on his own people was, the crisis in Syria will not be resolved by one night of airstrikes,” Pelosi said in the letter. “The killing will not stop without a comprehensive political solution to end the violence. The American people are owed a comprehensive strategy with clear objectives to keep our brave men and women in uniform safe and avoid collateral damage to innocent civilians in Syria.” Ryan’s office rebuffed Pelosi’s call to recall House lawmakers. AshLee Strong, a Ryan spokeswoman, said Thursday’s missile launch “was fully within the president’s authority.”

This Isn’t the Foreign Policy Trump Campaigned On - The American Conservative -- Donald Trump is looking more and more like a phony. He’s also looking like a weakling. And a political ingrate. All this is coming into stark relief with accelerating events involving Syria. The United States launched dozens of missiles against Syrian military installations to retaliate for the chemical attack on rebel-held territory. Thus did Trump demonstrate that, to the extent that his foreign policy differs from that of his predecessor, it is more aggressive and adventuresome than Obama’s. That’s the opposite of how he campaigned. So let’s start with the crucial civic adhesive of political gratitude. This is the virtue that impels politicians to give special consideration to the people who put them in office. That can generate anger and frustration on the part of people on the other side of the major issues in play, but those people have to accept that they were on the losing side. The winning side sets the agenda, based on the political conversation of the last campaign. That’s how democratic politics works. Thinking back to the political conversation of the last campaign, we recall that Trump attacked the Iraq War as a mindless foreign adventure with bitter and ongoing consequences, including ongoing Mideast chaos. He said he certainly wouldn’t make the same mistake in Syria and that joining the struggle against Syrian President Bashar al-Assad would put the United States on the side of the Islamic State and other terrorist organizations in the region. He said that, if Assad were deposed, the country likely would fall to unsavory elements that hate the West—in other words, some of our worst enemies. He touted his oft-expressed desire to develop better relations with Russia, an Assad ally, and said he would work with Russia toward an end to the horrendous Syrian bloodshed.  Out in the country, many Americans interpreted that campaign rhetoric as signifying that this was one politician who would buck the conventional  wisdom of the elites, that he would resist the call to flex American muscle wherever tragedy stalked the globe. We know that most Americans agreed with Trump’s harsh judgment on George W. Bush’s Iraq War, though some may have been uncomfortable with the billionaire’s characteristic allegation that our national leaders actually lied to the American people in taking America to war (as opposed to having been tragically mistaken about whether Iraqi leader Saddam Hussein had weapons of mass destruction and was consorting with anti-Western terrorist organizations).

Tillerson to visit Moscow as US, Russia face fresh tensions: (AP) — A proxy battle with Russia in Syria and multiple Russia-related investigations in the U.S. will follow Secretary of State Rex Tillerson to Moscow next week on a trip designed to test the Trump administration's hopes for closer ties to the former Cold War foe. Tillerson will make the first visit to Russia by a Trump administration official just days after the U.S. launched cruise missiles against an air base in Syria, where Russia's military is on the ground propping up its ally, President Bashar Assad. Until Thursday, the U.S. had avoided striking Assad's forces, largely out of concern about being pulled into a military conflict with Russia. Tillerson, speaking just after the strikes were announced, said Russia had "failed in its responsibility" to deliver on a 2013 deal it helped broker to destroy Syria's chemical weapons arsenal. "So either Russia has been complicit, or Russia has been simply incompetent on its ability to deliver," Tillerson said. Growing disagreements about Syria are just the latest obstacle to any plans President Donald Trump had to closer align the U.S. and Russia on the world stage. Trump and his associates are embroiled in mushrooming investigations into potential collusion between his presidential campaign and Russian President Vladimir Putin's government, accused by America's spy agencies of interfering in the election to help elect Trump. Despite Trump's much-hyped campaign talk about a Russia reset, there's no appetite for that from either political party in the U.S. Skepticism about Russia's intentions was only compounded by its defense of Assad after a deadly chemical attack that the U.S. says was no doubt carried out by Assad's forces.

Putin Responds: Syria Strikes "Cripple US-Russia Relations"; Deploys Cruise Missile Frigate To Syria -- Responding to Trump's unexpected military attack on Syria in which 59 cruise missiles were launched (of which only 23 allegedly hit their target), Russian President Vladimir Putin"regards the strikes as aggression against a sovereign nation,” his spokesman Dmitry Peskov said, noting that the president believes the strikes were carried out “in violation of international law, and also under an invented pretext.” The Kremlin spokesman insisted that “the Syrian army doesn’t have chemical weapons,” saying this had been “observed and confirmed by the Organization for the Prohibition of Chemical Weapons, a special UN unit.”The Russian president said he sees the US missile strikes as an attempt to distract attention from civilian casualties in Iraq, Peskov added.“This step deals significant damage to US-Russian ties, which are already in a deplorable state,” Peskov said and added that the US has been ignoring the use of chemical weapons by terrorists and this is dramatically aggravating the situation, in Putin’s opinion.“The main thing, Putin believes, is that this move [by the U.S.] doesn’t draw us nearer to the end goal in the fight with international terrorism and on the contrary, deals a serious setback to the creation of an international coalition in the fight with it,” Peskov said.Other Russians took the opportunity to opine as well, led by Russian foreign minister Sergey Lavrov who said the US missile attack on a Syrian airbase is an act of aggression under a far-fetched pretext and is reminiscent of the 2003 invasion of Iraq. Quoted by Tass, the top Russian diplomat said "It is an act of aggression under a completely far-fetched pretext. This is reminiscent of the situation in 2003, when the US and the UK, along with some of their allies, invaded Iraq without the consent of the UN Security Council and in violation of international law."

The Impending Clash Between the U.S. and Russia - President Donald Trump’s missile attack on the Shayrat Airfield in Western Syria was a poorly planned display of imperial muscle-flexing that had the exact opposite effect of what was intended. While the attack undoubtedly lifted the morale of the jihadists who have been rampaging across the country for the last six years, it had no military or strategic value at all. The damage to the airfield was very slight and there is no reason to believe it will impact the Syrian Army’s progress on the ground.The attack did however kill four Syrian servicemen which means the US troops in Syria can no longer be considered part of an international coalition fighting terrorism. The US is now a hostile force that represents an existential threat to the sovereign government. Is that the change that Trump wanted? As of Friday, Russia has frozen all military cooperation with the United States.  According to the New York Times:“In addition to suspending the pact to coordinate air operations over Syria, an accord that was meant to prevent accidental encounters between the two militaries, Russia also said it would bolster Syria’s air defense systems and reportedly planned to send a frigate into the Mediterranean Sea to visit the logistics base at the Syrian port of Tartus….Dmitri S. Peskov, a spokesman for President Vladimir V. Putin of Russia, said that the cruise missile strikes on Friday represented a “significant blow” to American-Russian ties, and that Mr. Putin considered the attack a breach of international law that had been made under a false pretext. “The Syrian Army has no chemical weapons at its disposal,” Mr. Peskov said.”  The missile attack has ended all talk of “normalizing” relations with Russia. For whatever the reason, Trump has decided that identifying himself and the United States as an enemy of Moscow and Damascus is the way he wants to conduct business. That, of course, is the President’s prerogative, but it would be foolish not to think there will be consequences.

Turkey’s Erdogan Would Support U.S. Military Action in Syria: Hurriyet - (Reuters) - Turkey would welcome U.S. military action in Syria following a chemical attack that killed scores in Idlib province, and would be ready to assist if needed, President Tayyip Erdogan was quoted as saying on Thursday. Ankara has been a steadfast opponent of Syrian President Bashar al-Assad and repeatedly called for his ouster. But Turkey's military action in the country has so far focused on sweeping Islamic State militants from its southern border and checking the advance of Syrian Kurdish fighters. Western states as well as Turkey have accused the Syrian government of carrying out the gas attack on Tuesday that killed at least 70 people including at least 20 children. "If a (U.S.) action will really be put forward, we are ready to do our part," the Daily Hurriyet newspaper quoted Erdogan as saying, citing an interview with broadcaster Kanal 7. A U.S. official said on Thursday the Pentagon and White House were in detailed discussions on military options in response to the attack. Russia, which backs the Syrian government, has said the deaths were caused by a gas leak from a depot where rebel groups were storing chemical weapons, after a Syrian air strike.

China warns of deterioration in Syria with Xi in US - China on Friday warned against "further deterioration" of the situation in Syria, just hours after a US air strike on a Syrian airbase in response to a suspected chemical attack. The warning came as Xi Jinping met with US President Donald Trump at his Florida resort in Mar-a-Lago, where the Chinese leader had just hours earlier extended an invitation to the billionaire politician to pay a state visit to China later this year, according to the official Xinhua news agency. China was "concerned" by the recent events in Syria, foreign ministry spokeswoman Hua Chunying told reporters at a regular press briefing, adding: "What is urgent now is to avoid further deterioration of the situation. "We oppose use of chemical weapons by any country, organisation or individual in any circumstance, for any purpose," she said. The massive strike -- the first direct US action against President Bashar al-Assad's government and Trump's biggest military decision since taking office -- marked a dramatic escalation in American involvement in Syria's six-year civil war. Six people were killed and serious damage caused, according to the Syrian army. News of the air strike overshadowed a two-day tete-a-tete between the Chinese president and his US counterpart, which concludes Friday. The meeting is the first face-to-face encounter between the leaders of the world's two largest economic and military powers since a US election that featured frequent barbs at China's "rape" of the American economy.

Bombs Away! -  Kunstler --Close your eyes, click your heels three times, and tell me if you actually know what the fuck is happening in Syria. There’s an awful lot about the poison gas attack that doesn’t add up for the casual observer. It was only a week ago that the US enunciated a new policy that we would be content for Bashar al Assad to remain in power presiding over the Syrian government — after years of grousing and threats against him. Apparently Trump Central had concluded that Assad was a better alternative than another failed state in the Middle East with no government at all. That policy change was a yuge benefit for Assad since it removed any pretext for US subterfuge or “black box” mischief against him. He was rather busy fighting a civil war, after all. Against whom? A mash-up of Jihadi forces ranging from Isis (so-called), to al Qaeda and Jabhat al Nusra, its spinoff gang dedicated specifically against Assad personally. Assad’s relations with Isis were ambiguous and complex. Isis had used Syria as a staging area for its operations next door in Iraq. It was rumored that Assad purchased oil from Isis. Yet Isis had participated in actions against Assad. In any case, all of the Jihadis were Sunni, in opposition to Assad’s Iran-leaning regime. Assad himself belongs to the Alawite sect of Islam, a twig on the Shia branch. Syria as a whole is a majority Sunni population, so Assad and his father Hafez before him (President 1971 – 2000) have represented a minority (12 percent) in an era of inflamed Sunni-Shia passions.  Trusting that your are not additionally confused by all this, why would Assad choose this moment — only days after the US granted him a pass on remaining in power — to do the one thing guaranteed to bring the wrath of the US down him, namely, kill a lot of civilians, including women and children, with poison gas? Either Assad is inconceivably stupid or possibly the gas attack is not exactly what happened. Russia has claimed that Assad’s air force attempted to bomb a “rebel” (al Qaeda? Al Nusra? Isis?) ammunition depot that apparently contained supplies of Sarin nerve gas. Neither the US government or the American media has presented any arguments to counter that hypothesis. The New York Times banged the war drum as loudly as possible in the days after the incident. And now, of course, Trump Central has fired $60 million worth of cruise missiles at Assad’s main air force base. Assad’s spokesmen denied responsibility for the attack and the Russians are still asking for conclusive evidence via the UN Security Council. The outstanding question remains: what might have possibly motivated Bashar al Assad to turn upside down a situation of great advantage to himself mere days after he achieved it? It will be interesting to see if a credible response emerges from the hall of mirrors that US policy has become.

Donald Trump Is An International Law Breaker  - Donald Trump's decision to launch cruise missile strikes on a Syrian Air Force Base was based on a lie.  In the coming days the American people will learn that the Intelligence Community knew that Syria did not drop a military chemical weapon on innocent civilians in Idlib. Here is what happened:

1. The Russians briefed the United States on the proposed target. This is a process that started more than two months ago. There is a dedicated phone line that is being used to coordinate and deconflict (i.e., prevent US and Russian air assets from shooting at each other) the upcoming operation.
2. The United States was fully briefed on the fact that there was a target in Idlib that the Russians believes was a weapons/explosives depot for Islamic rebels.
3. The Syrian Air Force hit the target with conventional weapons. All involved expected to see a massive secondary explosion. That did not happen. Instead, smoke, chemical smoke, began billowing from the site. It turns out that the Islamic rebels used that site to store chemicals, not sarin, that were deadly. The chemicals included organic phosphates and chlorine and they followed the wind and killed civilians.
4. There was a strong wind blowing that day and the cloud was driven to a nearby village and caused casualties.
5. We know it was not sarin. How? Very simple. The so-called "first responders" handled the victims without gloves. If this had been sarin they would have died. Sarin on the skin will kill you. How do I know? I went through "Live Agent" training at Fort McClellan in Alabama.

There are members of the U.S. military who were aware this strike would occur and it was recorded. There is a film record. At least the Defense Intelligence Agency knows that this was not a chemical weapon attack. In fact, Syrian military chemical weapons were destroyed with the help of Russia.

Syrian jets carry out attacks from base hours after US missile strike: report | TheHill: Syrian warplanes carried out attacks from a central Syrian air base several hours after it was hit by a U.S. missile strike, the Daily Star reported on Friday. The Syrian Observatory for Human Rights said that two warplanes "took off from inside the Shayrat base, which is partially back in service, and struck targets near Palmyra," according to the report. The Agence France-Presse news agency also reported the news on Twitter. #BREAKING Jets carry out strikes from Syria base hit by US: monitor — AFP news agency (@AFP) April 7, 2017  President Trump on Thursday authorized a launch of 59 Tomahawk cruise missiles at the base in retaliation for a chemical attack that U.S. and other Western officials have blamed on the government of Syrian President Bashar Assad. The U.S. missile strike, which killed at least seven people, targeted the airfield that purportedly served as the base for the nerve gas attack.

 Have Goldman Sachs & The Deep State Taken Over The Trump Administration? --  From yesterday’s post: The Imperial War Machine Marches Forward Under Donald Trump: The writing is on the wall and the message is not good. Trump will likely expand the war in Syria and increase tensions with Russia. The American empire is likely to implode under Trump’s watch, as he once again betrays many of the people who voted for him. Hillary or Trump, we’d be getting the same thing. We had no real choice, and empires don’t reform. Prepare for impact. The takeover of the Trump administration by Goldman Sachs has been obvious for months now. The takeover by the deep state has taken a bit longer, hence the non-stop Russia hysteria, which was clearly intended to back him into a corner. If Trump takes military action against Syria, we’ll know for certain the deep state coup is complete.Fortunately, some Trump supporters are starting to wake up, with former lead investigative reporter for Breitbart, Lee Stranahan, being one of them. Lee recently recorded an extremely important video message, and I ask all of you to listen to it in full and share. He knocks the ball out of the park, and while I was never a Trump supporter since I felt he would act precisely like he’s acting, I applaud Trump voters willing to admit betrayal.The line that really stuck with me was when he states, “Goldman Sachs is globalism.” This is 100% right, and anyone who tells you otherwise is lying or doesn’t know what they’re talking about. Moving along, let’s take a closer look at some of the folks Lee focused on in his video report.

Nearly 300 died in Mosul airstrike, making it one of the deadliest attacks on civilians in recent memory -Iraqi officials said Wednesday that they had removed nearly 300 bodies from the site of an apparent airstrike in west Mosul, the largest civilian death toll since the battle against Islamic State began more than two years ago and among the deadliest incidents in decades of modern warfare.More bodies were being removed Wednesday as the U.S.-led coalition investigated whether it was responsible, Iraqi officials blamed Islamic State, and the injured continued to suffer. The attack came after government officials urged residents at the start of the Oct. 17 offensive to stay in their homes. Responsibility for the deaths has been disputed, as has the number killed. Lt. Gen. Stephen Townsend, the top U.S. general commanding the fight against Islamic State in Iraq and Syria, has said that there was “at least a fair chance” that the U.S.-led coalition was responsible for the strike, but if so, it was “an unintentional accident of war, and we will transparently report it to you.” The coalition has not released an estimated death toll. It is still investigating, with results expected by month’s end, said U.S. Army Col. Joe Scrocca, a Baghdad-based spokesman for the coalition. The Pentagon has acknowledged 229 civilian deaths from coalition airstrikes in Iraq and Syria since the U.S. campaign against Islamic State began. . Independent monitoring groups such as the London-based nonprofit Airwars put the casualty figures much higher, at about 2,700 civilians killed in airstrikes in both countries during that time.Iraqi civil defense officials called to the scene of the apparent airstrike on March 17, in the Jadidah neighborhood, initially said more than 200 people had been killed. At least 50 bodies were visible in the area they were excavating a week after the attack. As of Wednesday, they had removed 278 bodies, many of them children, and it was unclear how many more were buried beneath the rubble, said Civil Defense Lt. Col. Taha Ali.

 ISIS group releases 'kill list' with the names and addresses of over 8,000 Americans including President Trump for lone wolf gunman to target in attacks -- A group of hackers with ties to the Islamic State has released a list of Americans they want to see killed by lone wolf gunman. The Pro-ISIS United Cyber Caliphate posted a video over the weekend in which they threatened both the United States and President Donald Trump while also revealing their new 'kill list.' The list included both the names and addresses of 8,786 Americans.'Kill them wherever you find them,' said the UCC in their message according to SITE Intelligence Group.'We have a message to the people of the US and most importantly your President Trump,' states the group at the start of the message'Know that we continue to wage war against you. Know that your counter attacks only make us stronger. The UCC will start a new step in this war against you. So expect us soon Insha Allah!' This is not the first time that UCC has released a kill list, with this now becoming a common practice for the group. In April of last year 43 Americans with ties to government in the State Department, Department of Homeland Security and departments of defense, energy, and commerce were also named by the group. That list included only phone numbers and zip codes however and not specific addresses like the most recent one released over the weekend.'USA, You are our primary goal,' wrote UCC on Telegram.  ‘'Your system failed to tackle our attacks. Now we will Crush you again.'

US Military Should Get Out of the Middle East - Jeff Sachs - It’s time to end US military engagements in the Middle East. Drones, special operations, CIA arms supplies, military advisers, aerial bombings — the whole nine yards. Over and done with. That might seem impossible in the face of ISIS, terrorism, Iranian ballistic missiles, and other US security interests, but a military withdrawal from the Middle East is by far the safest path for the United States and the region. That approach has instructive historical precedents. America has been no different from other imperial powers in finding itself ensnared repeatedly in costly, bloody, and eventually futile overseas wars. From the Roman empire till today, the issue is not whether an imperial army can defeat a local one. It usually can, just as the United States did quickly in Afghanistan in 2001 and Iraq in 2003. The issue is whether it gains anything by doing so. Following such a “victory,” the imperial power faces unending heavy costs in terms of policing, political instability, guerilla war, and terrorist blowback. Terrorism is a frequent consequence of imperial wars and imperial rule. Local populations are unable to defeat the imperial powers, so they impose high costs through terror instead. Consider the terrorism used by Jewish settlers against the British Empire and local Palestinians in their fight for Israel’s independence and territory; or Serbian terrorism deployed against the Hapsburg Empire; or Vietnamese terrorism used against the French and United States in Vietnam’s long war for independence; or American terrorism, for that matter, that independence fighters used against the British in America’s war of independence. This is of course not to condone terrorism. Indeed, my point is to condemn imperial rule, and to argue for political solutions rather than imperial oppression, war, and the terror that comes in its wake.

F-35 Continues to Stumble - The F-35 still has a long way to go before it will be ready for combat. That was the parting message of Dr. Michael Gilmore, the now-retired Director of Operational Test and Evaluation, in his last annual report. The Joint Strike Fighter Program has already consumed more than $100 billion and nearly 25 years. Just to finish the basic development phase will require at least an extra $1 billion and two more years. Even with this massive investment of time and money, Dr. Gilmore told Congress, the Pentagon, and the public, “the operational suitability of all variants continues to be less than desired by the Services." Dr. Gilmore detailed a range of remaining and sometimes worsening problems with the program, including hundreds of critical performance deficiencies and maintenance problems. He also raised serious questions about whether the Air Force’s F-35A can succeed in either air-to-air or air-to-ground missions, whether the Marine Corps’ F-35B can conduct even rudimentary close air support, and whether the Navy’s F-35C is suitable to operate from aircraft carriers.He found, in fact, that “if used in combat, the F-35 aircraft will need support to locate and avoid modern threat ground radars, acquire targets, and engage formations of enemy fighter aircraft due to unresolved performance deficiencies and limited weapons carriage availability.” In a public statement, the F-35 Joint Program Office attempted to dismiss the Gilmore report by asserting, “All of the issues are well-known to the JPO, the U.S. services, our international partners, and our industry.” JPO’s acknowledgement of the numerous issues are fine as far as it goes, but there’s no indication that the Office has any plan—including cost and schedule re-estimates—to fix those currently known problems without cutting corners. Nor, apparently, do they have a plan to cope with and fund the fixes for the myriad unknown problems that will be uncovered during the upcoming, much more rigorous, developmental and operational tests of the next four years. Such a plan is essential, and should be driven by the pace at which problems are actually solved rather than by unrealistic pre-existing schedules.

Boeing Wins $3 Billion Iran Sale in Potential Test for Trump - Boeing Co. landed its second jetliner sale to an Iranian airline since the 1970s, a $3 billion deal that sets up a test of the planemaker’s ties with President Donald Trump. The pact with Iran Aseman Airlines to purchase 30 of Boeing’s 737 Max planes adds to a separate $16.6 billion agreement with Iran Air, which the Chicago-based manufacturer is still finalizing. If completed, the transactions would be the first U.S. aircraft exports to Iran since the Shah era. The latest jet transaction puts Trump’s policy of promoting U.S. manufacturing jobs into conflict with the administration’s vow to take a tougher stance on the Islamic Republic. If the White House thwarts Boeing’s dealmaking, it also risks tilting the playing field in favor of Europe’s Airbus Group SE just as global jet sales are slowing, said aerospace consultant Richard Aboulafia. Boeing may be “setting themselves up for conflict with the Trump administration or Republicans in general,” said Aboulafia, vice president at Teal Group. “To a certain extent they are imposing a level of conflict on Republicans because they are going to have to balance manufacturing jobs to export markets with getting tough on Iran. It’s tough to thread that needle.” Airbus and Boeing have been making inroads in Iran since the Obama administration and other world powers agreed to lift sanctions on commercial-jet sales in reward for a nuclear agreement. Whether the U.S. manufacturer closes the transactions is far from certain, given the hostility by hard-liners in Iran and some Republicans in Congress to measures that would restore trade. “It’s concerning,” Senator Marco Rubio told reporters in the Capitol when asked about the deal. Asked if he could or would do anything to block it, the Florida Republican said, “Maybe.” Financing the multibillion-dollar purchases also will be a challenge given the restrictions still in place on lenders doing business with Iranian companies, Aboulafia said. Aircraft lessors may be hesitant to provide financing if the threat of renewed sanctions raises a risk they couldn’t reclaim the planes if Iranian carriers defaulted.

China Learns How to Get Trump’s Ear: Through Jared Kushner - NYT  — When President Trump welcomes President Xi Jinping of China to his palm-fringed Florida club for two days of meetings on Thursday, the studied informality of the gathering will bear the handiwork of two people: China’s ambassador to Washington and Mr. Trump’s son-in-law, Jared Kushner. The Chinese ambassador, Cui Tiankai, has established a busy back channel to Mr. Kushner, according to several officials briefed on the relationship. The two men agreed on the club, Mar-a-Lago, as the site for the meeting, and the ambassador even sent Mr. Kushner drafts of a joint statement that China and the United States could issue afterward. Mr. Kushner’s central role reflects not only the peculiar nature of this first meeting between Mr. Trump and Mr. Xi, but also of the broader relationship between the United States and China in the early days of the Trump administration. It is at once highly personal and bluntly transactional — a strategy that carries significant risks, experts said, given the economic and security issues that already divide the countries. While Chinese officials have found Mr. Trump a bewildering figure with a penchant for inflammatory statements, they have come to at least one clear judgment: In Mr. Trump’s Washington, his son-in-law is the man to know. Mr. Kushner first made his influence felt in early February when he and Mr. Cui orchestrated a fence-mending phone call between Mr. Trump and Mr. Xi. During that exchange, Mr. Trump pledged to abide by the four-decade-old “One China” policy on Taiwan, despite his earlier suggestion that it was up for negotiation. Now Mr. Trump wants something in return: He plans to press Mr. Xi to intensify economic sanctions against North Korea to pressure the country to shut down its nuclear weapons and ballistic missile programs. He has also vowed to protest the chronic trade imbalance between the United States and China, which he railed against during his presidential campaign.

What’s Really Driving the Trade Deficit With China - Pettis - U.S. President Donald Trump has warned that discussions with his Chinese counterpart Xi Jinping in Florida this week will be "very difficult," in large part because of disagreements over trade. But before Trump can shrink America’s lopsided trade deficits -- with China or anyone else -- he first must recognize what’s driving them. Unlike in the past, most deficits today have little to do with currency manipulation or unfair tariffs. In the 19th century, import tariffs were the main instrument of trade intervention, increasingly supplemented during the 1920s and 1930s by currency machinations. This continued well into the 20th century. Even as international agreements -- usually championed by the U.S. -- began to restrict the use of tariffs in the post-Bretton-Woods era, Europe and Japan, taking advantage of Cold War exigencies, protected domestic industries for decades by keeping their currencies undervalued relative to the dollar.During this time trade imbalances were mostly determined by direct differences in the cost of traded goods, while capital flowed from one country to another mainly to balance trade flows. Today, however, conditions have changed dramatically. Capital flows dwarf trade flows, and investment decisions by fund managers determine their direction and size.This has profound implications for trade. Large, persistent trade surpluses such as the one China runs with the U.S. are no longer the consequence of explicitly mercantilist measures. Instead, they’re driven by policies that distort domestic savings rates by subsidizing production at the expense of households. Take Germany, for example. After a decade of trade deficits and high unemployment, worried leaders in Berlin implemented labor reforms in 2003-05 whose main effect was to weaken wage growth. As unemployment dropped and business profits surged, the reforms also shrunk the share of national income allocated to ordinary households, driving down the consumption share as well.

 U.S. business seeks action, not trade war, in Xi-Trump summit | Reuters: Although worried about the prospect of a trade war, American businesses operating in China nonetheless want President Donald Trump to wring some concessions on market access from China's leader Xi Jingping when the two meet this week. Trump warned in a tweet last week the meetings at his Mar-a-Lago resort on Thursday and Friday will be "very difficult" and "American companies must be prepared to look at other alternatives." Trump has said he wants U.S. companies to stop investing in China and instead create jobs at home. He has also accused China of manipulating its currency to boost exports. Critics within U.S. industry have accused China of unfair government subsidies to its companies, and of flooding the U.S. market with cheap products from steel to solar panels, while restricting foreign investment over vast swathes of the world's second-biggest economy. But they also worry Trump's policies on China are not entirely clear, with his trade team still not in place, and may be subject to a 'grand bargain' involving other issues such as North Korea. Trump is set to enter the meeting without several key advisors, including his pick for trade negotiator, Robert Lighthizer who has yet to be confirmed by Congress. His nominee as ambassador to China, Iowa Governor Terry Branstad, has also yet to be confirmed, while several posts in the U.S. State Department that formulate Asia policy remain unfilled. "With this in mind, it is hard to imagine that there will be much in the way of concrete accomplishments at this summit, or even that there has been any significant interagency discussion on strategy leading up to it," said Randal Phillips, Mintz Group's Beijing-based managing partner for Asia and the former chief CIA representative in China.

Trump warns Xi that US prepared to act alone on North Korea --President Donald Trump asked Xi Jinping for ideas to tackle the threat from North Korea at their summit, but told the Chinese president he was prepared to act alone if China did not do more to convince Pyongyang to abandon its nuclear programme.Rex Tillerson, US secretary of state, told reporters after the meeting between the two leaders that Mr Trump had warned Mr Xi that the US was prepared to act alone.“President Trump indicated to President Xi that . . . we would be happy to work with them, but we understand it creates unique problems for them and challenges and that we would, and are, prepared to chart our own course if this is something China is just unable to co-ordinate with us,” Mr Tillerson said.The message mirrored comments that Mr Trump made to the Financial Times in an interview ahead of his first meeting with the Chinese leader. “If China is not going to solve North Korea, we will. That is all I am telling you,” Mr Trump said last week.Mr Tillerson on Friday said that Mr Xi had “shared the view that this has reached a very serious stage in terms of the advancement of North Korea’s nuclear capabilities. “They discussed the challenges that introduces for both countries, but there’s a real commitment that we work together to see if this cannot be resolved in a peaceful way,” said Mr Tillerson. “But in order for that to happen, North Korea’s posture has to change before there’s any basis for dialogue or discussions.”

U.S. Strikes on Syria Put Xi in Tough Position for Trump Meeting — The missiles were being prepared even before the two men finished dinner, disrupting the carefully choreographed proceedings. The American attack on Syria on Thursday unraveled China’s well laid plans for a summit meeting that would present President Xi Jinping as a global leader on par with President Trump, at once stealing the spotlight from Mr. Xi and putting him in a difficult position: choosing between condoning the kind of unilateral military action that China has long opposed, or rebuking his host.Mr. Xi’s dilemma was also acute because China has generally sided with Russia in defending Syria’s president, Bashar al-Assad, and because it worries that Mr. Trump might be prepared to order a similar strike on North Korea, Chinese and Western analysts said. “Xi can’t fail to be impressed by Trump’s resolve,” said Alan Dupont, an Australian military analyst who worked for that country’s Defense Department. “Xi will have to reassess what the Trump presidency means for Chinese interests in East Asia, particularly North Korea and the South China Sea.” nThe American strikes on Syria would quite likely make Mr. Xi be more amenable about the White House’s demand that China squeeze North Korea’s economy, analysts said. “I suspect Xi will treat Trump’s threat against North Korea as more serious than before this, provided the behind-the-scenes-body language does not counteract it,” said Douglas H. Paal, vice president for studies at the Carnegie Endowment for International Peace. Beijing has long been fairly confident that the United States would not risk an attack on North Korea, a much more dangerous target than Syria because of its nuclear arsenal and its capacity to hit Japan and South Korea, two American allies, Chinese analysts said. But China’s leaders are still trying to figure out Mr. Trump, and his quick decision to strike Syria may cause them to reconsider that assumption.  At the same time, analysts said, China is unlikely to abandon North Korea as an ally and a strategic asset because it does not want to see a unified Korean Peninsula dominated by American troops.

At U.S.-China summit, Trump presses Xi on trade, North Korea; progress cited | Reuters: President Donald Trump pressed Chinese President Xi Jinping to do more to curb North Korea’s nuclear program and help reduce the gaping U.S. trade deficit with Beijing in talks on Friday, even as he toned down the strident anti-China rhetoric of his election campaign. Trump spoke publicly of progress on a range of issues in his first U.S.-China summit – as did several of his top aides – but they provided few concrete specifics other than China's agreement to work together to narrow disagreements and find common ground for cooperation. As the two leaders wrapped up a Florida summit overshadowed by U.S. missile strikes in Syria overnight, Xi joined Trump in stressing the positive mood of the meetings while papering over deep differences that have caused friction between the world’s two biggest economies. Trump’s aides insisted he had made good on his pledge to raise concerns about China’s trade practices and said there was some headway, with Xi agreeing to a 100-day plan for trade talks aimed at boosting U.S. exports and reducing China’s trade surplus with the United States. Speaking after the two-day summit at Trump’s Mar-a-Lago resort in Florida, U.S. Secretary of State Rex Tillerson also said that Xi had agreed to increased cooperation in reining in North Korea’s missile and nuclear programs – though he did not offer any new formula for cracking Pyongyang’s defiant attitude. The Republican president tweeted last week that the United States could no longer tolerate massive trade deficits and job losses and that his meeting with Xi "will be a very difficult one." On Friday, the unpredictable Trump not only set a different tone but also avoided any public lapses in protocol that Chinese officials had feared could embarrass their leader. "We have made tremendous progress in our relationship with China," Trump told reporters as the two delegations met around tables flanked by large U.S. and Chinese flags. "We will be making additional progress. The relationship developed by President Xi and myself I think is outstanding. “And I believe lots of very potentially bad problems will be going away," he added, without providing details.

Trump touts progress but no breakthrough after meeting with China’s Xi  — President Trump said goodbye to his Chinese counterpart after two days of meetings Friday, declaring that they "made tremendous progress" but without any breakthroughs to announce. Instead, the two sides agreed on a 100-day plan to address their differences on economic issues, which the Trump administration touted as an accomplishment in itself. Commerce Secretary Wilbur Ross called it "a very big sea change in the pace of discussions."Ross said the Chinese delegation expressed an interest in reducing the trade deficit, which has provided the communist nation with trillions of dollars of hard currency but which has also restricted domestic consumption and fueled inflation. Trump has made reducing that deficit a priority for his own reasons, having campaigned on an platform of economic nationalism that blamed China for stealing American jobs. Trump had also come into the talks hoping to use the trade issue as leverage to get China to pressure North Korea to give up its nuclear weapons program. That didn't happen. "There was no kind of a package arrangement discussed to resolve this," said Secretary of State Rex Tillerson. But he said Xi acknowledged that the North Korean situation had reached "a very serious stage." Trump himself often measures the success of his diplomatic efforts by the personal relationship he's able to forge, and his first face-to-face meeting with Xi was no different. "I just want to say that President Xi and all of his representatives have been really interesting to be with," Trump said. "I believe lots of very potentially bad problems will be going away." The two leaders had a working lunch and went for a short walk on a breezy, sunny, 72-degree spring day on Florida's Atlantic coast. Xi described the meeting as "unique," and praised Trump for his "excellent preparations."   Xi also invited Trump to visit China later this year, and Trump accepted the invitation, he said.

China’s press has been relatively mute on the Trump-Xi summit—here’s why - While American TV networks blast footage of the summit in Mar-a-Lago between President Donald Trump and Chinese President Xi Jinping, the Chinese media have been cautious. Normally when Xi travels, especially on an overseas trip, there is a full-court press. For a trip to the U.S. to meet the leader of the free world, greater coverage would seem to be warranted. However, when the two presidents met in Florida during the early hours in China, there was almost no reporting at all. No photos of Xi. Discussions about the event appeared to be blocked and censored. Only in the late afternoon hours Friday did the state media start to report more detail of the summit — though the articles have largely included only basic information. For example: Trump's acceptance of Xi's invitation to China. Zhang Ming, a political science professor at Renmin University, told CNBC the reason for the near radio silence is because the Chinese government is still nervous about what will come out of the Florida summit and how it could affect Xi's image back home. Chinese government officials are meticulous at planning events and tend to shy away from anything impromptu. "Chinese people associate a leader's image with the ability to rule. If he doesn't have a good image, there will be trouble," Zhang explained. "Trump is very hard to predict, so there is a lot of uncertainty in this meeting." There has been talk in China about how the U.S. airstrike on Syria could influence the Trump-Xi meeting and what it signals to the Chinese about North Korea. Trump has indicated he plans to push his Chinese counterpart to get tougher on Pyongyang, Beijing's longtime ally. North Korea, for its part, test-fired a ballistic missile ahead of the Trump-Xi meeting. Zhang Lifan, a Chinese historian, speculated that another reason authorities overseeing the local media were so cautious Friday was because Xi could be potentially embarrassed if Trump gets tough with him on North Korea.

Montana Mines to Test Trump Team’s Appetite for China Deals - Even as President Donald Trump and President Xi Jinping of China met for the first time to try to sort out their complex relationship, Trump’s administration is reviewing attempts by China to buy sensitive U.S. companies and in one case is actively trying to thwart a deal. The Trump administration is scrambling to make sure Westinghouse Electric Co.’s nuclear business doesn’t fall into Chinese hands. It also has national security concerns about several other deals in the pipeline that involve Chinese investors.  Bids for Lattice Semiconductor Corp. and money-transfer company MoneyGram International Inc. are potentially problematic because they could give China access to sensitive U.S. technology and financial infrastructure. The U.S., which is reviewing both deals, can block foreign acquisitions of American companies on national security grounds.  The most pressing government review, however, is of a deal for Stillwater Mining Co., which operates mines in Montana. Stillwater is the sole U.S. source of platinum and palladium, materials that have strategic importance and military applications. Its proposed acquirer, Sibanye Gold Ltd., is a South African gold miner whose biggest shareholder is a consortium with ties to China’s government. At least one analyst said this week that those three deals weren’t as thorny as a possible sale of Westinghouse and said he was cautiously optimistic that they would win approval. Height Securities analyst Nils Tracy went on to say that the Sibanye deal had the fewest complications because palladium has a “low military priority.”Stillwater sells most of its output to a European refiner, which in turn sells to various companies, including U.S. manufacturers.But some lawyers who work on foreign acquisitions are less sanguine about the prospects for those deals. The multi-agency panel reviewing them -- called the Committee on Foreign Investment in the U.S., or CFIUS -- has a backlog of takeovers to review and is adrift as senior posts at key member agencies have yet to be filled by the president. Backlogs mean that many of the reviews won’t be completed on schedule. The panel’s deadline for the Stillwater takeover is approaching, on April 14, and may have to be extended. Even if the panel isn’t inclined to recommend blocking deals, repeated delays can upend them.

U.S. backs out of Latam development fund in sign of policy shift | Reuters: The United States, historically a major backer of multilateral lending institutions, will not renew its contribution to a Inter-American Development Bank fund that supports pilot development projects, the head of the Washington-based organization said on Sunday. In a news conference at the IDB's annual board of governors meeting in Paraguay's capital, Asuncion, President Luis Alberto Moreno linked the U.S. decision to a policy shift since Republican President Donald Trump took office in January. "On this occasion, the United States, for various domestic reasons, did not want to participate," Moreno said. He added that the U.S. delegation had indicated at an October 2016 meeting that it was willing to contribute, "but that it all depended on the result of the election." "Once President Trump's government began, they informed us -at the beginning of February - that the United States would not be making any contribution." The IDB provides loans to governments and businesses to finance projects ranging from large-scale infrastructure to small businesses. Founded in 1959, it says it is the leading source of development financing for Latin America, lending $11.3 billion and $13.8 billion in 2015 and 2014, respectively. The Multilateral Investment Fund, or MIF, created in 1993, was instrumental in the development of microfinance and provides technical assistance to small projects aimed at providing economic opportunity to the poor. It was a brainchild of former U.S. President George H.W. Bush, and the United States has historically been its largest donor, the IDB said in a statement.

Trump administration trade policy review misses the big picture -- The Trump administration announced last week that it would sign two executive actions to launch a review of U.S. trade policy. A review of trade policy and its potential to harm U.S. workers is welcome and long overdue. However, the specifics of the review offered by President Trump mean that it is likely to fail to provide any help to American workers, in part because it asks the wrong questions.The president’s first order requires Secretary of Commerce Wilbur Ross and White House Trade Council to “identify every form of trade abuse and every nonreciprocal practice that contributes to the U.S. trade deficit,” according to the commerce secretary. . The report is to be completed within 90 days, with an analysis of the detailed cause of the deficit “by country and major product.” But the trade deficit is not a “product by product” or a “country by country” problem. We know what it is caused by and what should be done about it.  The trade deficit is not a bilateral problem between the United States and individual countries. The U.S. trade deficit is a result of global trade imbalances. There are ten to twenty countries that have developed large, persistent, structural trade surpluses that are distorting trade flows worldwide. The top ten surplus countries are shown in Figure 1 below. In 2015, these countries, led by China, Germany, Japan, Korea, and Taiwan, had a collective trade surplus of approximately $1.5 trillion. (The figures reported are current account balances, the broadest measure of trade in goods, services and income.)[1] The United States’ current account deficit of $463 billion in 2015 accounted for less than one third of the total surplus accumulated by the big surplus traders. Other countries have also suffered from persistent, structural trade deficits, job losses, and downward pressure on wages, including Great Britain, Brazil, Australia, and Mexico. Attacking the root causes of global trade imbalances will benefit all deficit countries, and not just the United States.

Draft NAFTA Renegotiation Plan in Official Fast Track Notice Letter Would Not Fulfill Trump’s Pledge to Make NAFTA ‘Much Better’ for Working People or Enjoy a Congressional Majority -  Lori Wallach, Public Citizen - pdf - For those who trusted Trump’s pledge to make NAFTA “much better” for working people, it’s a punch in the face because the proposal could have come from any past pro-NAFTA administration and describes the Trans-Pacific Partnership (TPP) or any other same-old trade deal. If this is Trump’s plan for renegotiating NAFTA – expanding the investor protections that promote job offshoring plus maintaining the ban on Buy American and the foreign tribunals that can attack U.S. laws – he will have broken his campaign promises to make NAFTA better for working Americans and will have a deal that cannot get a majority in Congress. This is the sort of corporations-first, not-better-for-working-Americans agenda that results from Trump’s decision to keep the same closed-door process and the 500 corporate advisers that got us into the original NAFTA and TPP debacles. Already, the corporate trade advisers have been consulted on the NAFTA agenda in a meeting two weeks ago, while the few labor advisers included in the system were shut out. But for this leaked document, the public and Congress are being left in the dark about negotiating plans and goals.

Trump Is Wimping Out on Trade, by Paul Krugman --  During the campaign, Donald Trump talked loudly and often about how he was going to renegotiate America’s “horrible trade deals,” bringing back millions of good jobs. So far, however, nothing has happened...So on Friday the White House scheduled a ceremony in which Mr. Trump would sign two new executive orders on trade. The goal, presumably, was to counteract the growing impression that his bombast on trade was sound and fury signifying nothing.Unfortunately, the executive orders in question were, to use the technical term, nothingburgers. One called for a report on the causes of the trade deficit; wait, they’re just starting to study the issue? The other addressed some minor issues of tariff collection, and its content apparently duplicated an act President Obama already signed last year. ...Oh, and last week a draft proposal for revising the North American Free Trade Agreement circulated around Congress; instead of sweeping changes in what candidate Trump called the “worst trade deal” ever signed, the administration appears to be seeking only modest tweaks.This surely isn’t what working-class Trump supporters thought they were voting for. So why can Trumpist trade policy be summarized — to quote The Times’s Binyamin Appelbaum — as “talk loudly and carry a small stick”? Let me give two reasons. First, back when Mr. Trump was railing against trade deals, he had no idea what he was talking about. (I know, you’re shocked to hear that.) ...Which brings me to Trumptrade’s second big obstacle: Whatever you think of past trade agreements, trade is now deeply embedded in the economy.

“Sound and Fury Signifying Nothing? The President’s Trade Policies So Far” -- Menzie Chinn --A central campaign theme of Candidate Trump was the promise to shrink America’s trade deficit.  The promised policies to achieve this goal included quitting free trade agreements, unilaterally imposing tariffs, and putting in place other protectionist measures, such as declaring China a currency manipulator on “day one” of his administration.  More recently, the administration published a trade agenda on March 1 which states “It is time for a more aggressive approach. The Trump Administration will use all possible leverage to encourage other countries to give U.S. producers fair, reciprocal access to their markets.” and President Trump signed two executive orders on Friday, March 31 related to trade.    But China has not been declared a currency manipulator and the measures announced so far have been limited relative to the promises made.  On the other hand, in late March, Treasury Secretary Mnuchin refused to join the G-20 commitment to resist trade protectionism.   The Facts:

• One of the Executive Orders signed on March 31 calls for a government study of the origins of the trade deficit, but these studies already exist. The proposed study will focus on countries with which the US runs substantial trade deficits, including China, Japan, Germany, Ireland, Vietnam, Italy, South Korea, Malaysia, India, Thailand, France, Switzerland, Taiwan, Indonesia, and Canada.  But this study will be redundant.  There is already a wealth of analyses regarding the causes of trade deficits, including growth differentials, the value of currencies, the savings and investment behavior of households and firms, and government spending and tax policies,  well as trade, health and labor standards policies. 
• The other Executive Order signed on March 31 calls for enhanced collection of tariff duties, but this applies only to a small portion of trade. The Executive Order relates to anti-dumping duties (AD) and countervailing (CV) duties.   Dumping is selling products in the United States at a price lower than that in the exporter’s market, and anti-dumping duties are intended to offset this. Countervailing duties offset foreign government subsidies.  National Trade Council director Peter Navarro stated that uncollected duties amounted to $2.8 billion over the 2001-2016 period.  But to put this in context, in a single year, fiscal year 2016, the US collected $34.8 billion in customs duties and fees.  In addition, the Executive Order appears duplicative of provisions in existing legislation.
• Anti-Dumping measures may become an important protectionist tool of the Administration, especially with respect to trade with China.   President Trump promised a unilateral imposition of high and broad tariffs but this move would invite retaliation under World Trade Organization rules.  Aggressive use of Anti-Dumping measures would be less likely to spur retaliation.  In this context, the continuation of China’s designation as a non-market economy (NME) becomes important.  Anti-Dumping duties are easier to apply to a NME since the calculation of the extent of dumping is based on prices from surrogate economies rather than industry prices in a NME because the latter are considered unreliable indicators of the extent of government support. This typically results in levying substantially higher anti-dumping rates than is the case for firms in market economies.

Shutdown Crisis Looms for GOP: If you could be a fly on the wall eaves­drop­ping on a meet­ing these days, only one would be more in­ter­est­ing than the brain­storm­ing ses­sions that Sen­ate Ma­jor­ity Lead­er Mitch Mc­Con­nell and House Speak­er Paul Ry­an are hav­ing with their re­spect­ive lead­er­ship teams. It would be the meet­ing at which White House Chief of Staff Re­ince Priebus and his le­gis­lat­ive-af­fairs team ex­plain to Pres­id­ent Trump the mech­an­ics and con­sequences of a loom­ing April 29 gov­ern­ment shut­down, which would co­in­cid­ent­ally fall on Trump’s 100th day in of­fice. The timeline is tight: Con­gress leaves this Fri­day for the East­er-Pas­sov­er re­cess, the Sen­ate re­turns on April 24, the House re­turns on April 25, and the cur­rent con­tinu­ing res­ol­u­tion ex­pires at mid­night on April 28. Threats of a pos­sible gov­ern­ment shut­down oc­cur from time to time. The last one oc­curred from Sept. 30 to Oct. 17, 2013, dur­ing Pres­id­ent Obama’s second term. What would set this one apart is that Re­pub­lic­ans hold the White House as well as ma­jor­it­ies in the House and Sen­ate. It would be the first same-party shut­down in 37 years. So why is a shut­down very pos­sible with Re­pub­lic­ans in charge of all three levers in the budget pro­cess? Maybe it’s be­cause they are not all mem­bers of the same Re­pub­lic­an Party. One Re­pub­lic­an Party would be adam­antly op­posed to fund­ing for Planned Par­ent­hood. An­oth­er Re­pub­lic­an Party is dom­in­ated by the Free­dom Caucus, whose mem­bers are boil­ing over the pot­shots they took from Trump after “re­peal and re­place” failed in the House. A mish­mash of Re­pub­lic­ans are am­bi­val­ent about a pro­pos­al to hike de­fense spend­ing by 10 per­cent. None of these Re­pub­lic­an fac­tions can ex­pect help from Demo­crats, who op­pose the big hike in mil­it­ary out­lays, ri­dicule fund­ing for a bor­der wall, and—un­der the Sen­ate dome—re­main liv­id over Obama Su­preme Court nom­in­ee Mer­rick Gar­land’s treat­ment by Re­pub­lic­ans and hanker for pay­back against Trump’s pick, Neil Gor­such. A shut­down would af­fect vir­tu­ally the en­tire fed­er­al gov­ern­ment. Last year, only one of the 12 ap­pro­pri­ations bills, for vet­er­ans and mil­it­ary con­struc­tion, was fun­ded bey­ond April 28. In re­cent years, Con­gress has be­come heav­ily de­pend­ent on passing om­ni­bus ap­pro­pri­ations bills, with vir­tu­ally everything tossed in­to the mix.

Trump nominates free-market economist Kevin Hassett as economics adviser-- President Trump announced Friday afternoon that he would nominate conservative economist Kevin Hassett to run his Council of Economic Advisers. The nomination of Hassett, currently a scholar at the American Enterprise Institute, had been expected for weeks. Hassett is a free-market economist who has espoused ideas that run counter to some of Trump's more populist campaign planks. In particular, Hassett has advocated lowering trade barriers and reforming entitlements. He also has advised some of the establishment Republicans that Trump antagonized en route to the presidency, including George W. Bush and John McCain. Under Trump, the chairman of the Council of Economic Advisers is no longer a Cabinet-level position. Nevertheless, Hassett would face a Senate confirmation process. There, he would be sure to face questions about Trump's repeated questioning of the unemployment rate published by the Census Bureau. One of the roles of the CEA chairman is to analyze and report on economic statistics for the president. Unlike the National Economic Council director, the Council of Economic Advisers chairman is not supposed to coordinate economic policy between agencies, but rather to provide more general economic advice, with analysis, to the president and to prepare the annual economic report of the president. The council comprises three economists, generally from academic backgrounds. Hassett has a PhD in economics from the University of Pennsylvania. Trump has yet to select the other members.

Trump to nominate pro-immigration free-trading globalist as CEA chair --

• Shot: America Needs more workers .… With lackluster GDP growth threatening to become our new normal, allowing more immigrants to enter for the sake of employment is one of the few policies that might restore our old normal. If the U.S. doubled its total immigration and prioritized bringing in new workers, it could add more than half a percentage point a year to expected GDP growth.
• Chaser:  Understanding the role of the United States in the global economy: Liberalized trade — in broadly multilateral, regional, or bilateral agreements — is a key ingredient in the recipe for prosperity. … An absolute prerequisite for long-term economic growth is full participation in the global economy and trading system.
• Maybe one more shot, it’s Friday:  Analysis of the economic effects of immigration reform  … This paper explores the economic consequences of expanded immigration on the U.S. economy. It begins by reviewing the immigration practices of our OECD trading partners, and documenting that immigration, as a share of the work force, is well below international norms. The literature identifying the economic impact of immigration is reviewed, suggesting that economic growth could expand significantly if immigration in the U.S. were expanded.

These passages are by Kevin Hassett, the economist who will be nominated by Donald Trump to be the next chair of the Council of Economic Advisors. The latest reports of internal White House drama suggest that Gary Cohn is amassing power and that Steven Bannon is struggling. With the selection of Hassett as CEA chair, it would seem that nationalist forces have lost some ground when it comes to the economic advice reaching the president — at least for now. As for Hassett’s stances on domestic economic policy, he is solidly a low-tax, low-spending convervative — but a thoughtful one open to boundary-crossing ideas such as a carbon tax and direct government hiring in a downturn. Hassett wrote in late 2008 that the recovery would be faster without bailouts (which is dubious, to say the least) and in 2009 he argued that President Obama was governing just as a “Manchurian candidate” bent on destroying the economy would govern (which was just odd). Then there was the whole Dow 36,000 thing. But he is very much respected by many economists who disagree with him on economic policy and, Senate confirmation pending, will arrive into his new job with an endorsement from his predecessor:

The Overseas Cash Grab -- NYT Dealbook points to a how the 2 trillion dollar overseas money can come “home” and how money is spent.  2005 comes to mind the last time repatriation of “overseas money” comes to mind.  See Linda Beale: Repatriation holiday lobbying – Money Speaks and More on repatriation.  Taxprof blog here and Senate report here. The Overseas Cash Grab (from Dealbook): Corporate chiefs in the United States have bemoaned for years the taxes that they would face if they brought home more than $2 trillion in cash kept overseas.They may soon stop complaining. President Trump and the Republican-controlled Congress are widely believed to be open to lowering taxes on funds that companies bring back.For lawmakers, the idea of a tide of funds coming home creates visions of infrastructure investment and job creation. But on Wall Street, it has set off hopes for another spending priority: mergers and acquisitions. And deals often lead to job losses.The differing visions come amid a broader debate about whether cutting taxes spurs investment or leads to higher incomes and more jobs.Among other things, there are questions about the ways people respond to lower taxes. If your tax is lowered, would you strive to be more productive at work? Or would you take advantage of a higher income that came at no extra effort? Either way, the more pressing issue may be at whether a tax overhaul can happen at all.

House Republican tax chief to huddle with Democrats | Reuters: The Texas Republican spearheading tax reform efforts in the U.S. House of Representatives will meet with Democrats to discuss policy ideas, as Republicans try to secure a victory for President Donald Trump after his healthcare bill's failure. House Ways and Means Committee Chair Kevin Brady said the meeting with his panel's 16 Democratic members will focus on ways to simplify the U.S. tax code for individuals and stop U.S. companies from moving production and research facilities overseas - both key House Republican tax reform objectives. "At the end of the day, I don't want to make a prediction as to where that goes. But I think this engagement's important," Brady told reporters on Monday. "I'd love to have them bring their ideas on how we leapfrog America back into the lead as the most competitive place on earth for that new business." The meeting is expected to take place on Wednesday, according to House aides. A spokesman for Ways and Means Democrats had no immediate comment.

 White House disavows two controversial tax ideas hours after officials say they’re under consideration - The White House on Tuesday disavowed two controversial options for their planned overhaul of the tax code, after two Trump administration officials earlier in the day said the president's team was exploring a value-added tax to raise government revenue. One of those administration officials also earlier Tuesday said the White House was considering the creation of a carbon tax, but a Trump administration spokesperson later said that idea was also no longer under consideration. "As we have said many times, the President's team is hearing input from experts on all sides of the tax reform debate as we formulate what will ultimately be the President's plan to enact the first significant tax reform since 1986. As of now, neither a carbon tax nor a VAT are under consideration," deputy press secretary Lindsay Walters said in a statement. The rapid reversal illustrates a Trump administration still in the initial stages of a plan to rework the tax code, particularly as it looks to build support while also sticking close to conservative ideas. Administration officials have long been aware of how politically divisive these ideas are, but they had searched for ways find new revenue sources to offset the steep cuts in individual and corporate tax rates that President Trump promised during last year’s campaign. White House officials have said they will be much more involved in proposing and negotiating elements of their tax overhaul plan than they were during their initial failed effort to repeal the Affordable Care Act. But both of the taxes discussed Thursday would face significant opposition -- including from Trump's fellow Republicans. The value-added tax, which is popular in many other countries, would serve as a kind of national sales tax, one that consumers would pay when they make purchases and that businesses would pay for supplies, services and raw materials. But many economists view a VAT as a tax that disproportionately hurts lower-income workers, who typically benefit from a progressive income-tax system. A carbon tax would target the emissions of carbon dioxide and other greenhouses gases in the burning of gasoline, coal and other fossil fuels. Many Democrats support the creation of a carbon tax as a way to address climate change, but they couldn’t even reach an agreement on the issue when they had control of Congress and the White House during the early years of the Obama administration.

The Myth That the Estate Tax Threatens Small Farms: Ahead of tomorrow’s House Agriculture Committee hearing on tax reform, a group of agricultural trade associations have called for repealing the estate tax on inherited wealth, arguing that “all too often at the time of death, farming and ranching families are forced to sell off land, farm equipment, parts of the operation or take out loans” due to the tax. Their arguments miss the mark.  Only 50 small farm and small business estates in the entire country will pay any estate tax in 2017 (see chart), and they’ll owe less than 6 percent of their value in tax, on average, the Tax Policy Center estimates.  ...Moreover, most farmers and business owners with estates large enough to owe the tax have sufficient liquid assets ... to pay the tax without having to touch other assets or liquidate their farm and business, a 2005 Congressional Budget Office (CBO) study found. Today’s estate tax rules are even more generous than those CBO assumed. ... While doing next to nothing for family farms, repeal would provide a windfall to the wealthiest 0.2 percent of estates — the only ones large enough to pay the tax.  A repeal proposal recently reintroduced in the Senate would provide the 0.2 percent of wealthiest estates with an average tax cut of more than $3 million in 2017.  Roughly 330 estates worth more than $50 million would get more than $20 million apiece in tax cuts, the Joint Committee on Taxation estimates.  The proposal would also cost $269 billion over the decade, expanding deficits and adding to pressure for cuts in federal programs.

Sen. Schumer Says It’s Unlikely Gorsuch Will Reach 60 Votes — As the Senate gears up to consider President Donald Trump's Supreme Court nominee, Neil Gorsuch, Senate Democratic leader Chuck Schumer predicted Sunday that "it looks like Gorsuch will not reach the 60-vote margin" needed to overcome a filibuster.If the 60 votes aren't there, Schumer argued during an appearance on "Meet The Press," Trump should gather with Senate Democrats and Republicans to "try to come up with a mainstream nominee." "Look, when a nominee doesn't get 60 votes, you shouldn't change the rules, you should change the nominee," said Schumer, D-New York.In 2013, then-Majority Leader Harry Reid, D-Nevada, made an unprecedented change in Senate rules to use the "nuclear option" and set a 51-vote threshold for Cabinet appointees and most judicial nominees, rather than 60 votes.Meanwhile, the current Senate majority leader, Mitch McConnell, R-Kentucky, projected that it was possible this week that the Senate could take that one step further and force the rule changes to include Supreme Court nominees. Asked on "Meet The Press" whether he has enough votes to change the rules for a filibuster, McConnell said: "What I can tell you is that Neil Gorsuch will be confirmed this week. How that happens really depends on our Democratic friends. How many of them are willing to oppose cloture on a partisan basis to kill a Supreme Court nominee?"

 Dems force Senate 'nuclear' showdown | TheHill: The Senate is on the brink of a historic meltdown over President Trump’s nominee to the Supreme Court that would pave the way for his confirmation and move the body a step closer to completely doing away with the ­filibuster. Democrats on Monday showed they have more than the 41 votes they need to sustain a filibuster against Neil Gorsuch, Trump’s pick for the court. Republicans say this will lead them to follow through on their promise to go “nuclear,” which would change Senate rules, end the filibuster and allow Gorsuch to be confirmed with a simple majority vote.  The final showdown will take place Thursday, when the Senate holds a vote to end debate on Gorsuch’s nomination. Democrats revealed their hand at a Senate Judiciary Committee meeting where the panel approved Gorsuch in an 11-9 party-line vote. After it was over, Republicans decried the Democrats’ tactics, which many blamed on pressure from left-wing interest groups. “It now seems apparent that this well-qualified and widely respected judge will be subject to the first successful partisan filibuster [of a Supreme Court nominee] in the history of the Senate,” Majority Leader Mitch McConnell (R-Ky.) said on the Senate floor.McConnell and other veteran GOP senators for weeks have warned that if Democrats block Gorsuch, they will change the body’s rules to force his nomination through.

Democrats Choose Path on Gorsuch That Could Change Washington - Senate Democrats set the stage for a confrontation this week that likely will change how Washington works, as they assembled more than enough votes to block President Donald Trump’s first Supreme Court nominee under the current rules. Chris Coons of Delaware and Maryland’s Ben Cardin on Monday became the 41st and 42nd Democrats to say they would vote against advancing the nomination of Judge Neil Gorsuch. Shortly afterward, Republican John McCain said he was giving up his effort to forge a compromise. Majority Leader Mitch McConnell has made clear Gorsuch will be confirmed one way or the other -- even if that means further eroding decades of Senate traditions that have forced the majority to compromise. To deliver on his promise, McConnell is likely to invoke what’s known as the “nuclear option” -- changing Senate rules to eliminate the 60-vote threshold and end filibusters on high court nominees. McCain said he will vote for the rule change. “I guarantee you, just as the Democrats regretted what Harry Reid did, we will regret doing this,” McCain of Arizona told reporters. He was referring to then-Democratic leader Harry Reid’s decision in 2013 to end the filibuster for lower-court and executive-branch nominees. Asked why he would support a rule change he finds so objectionable, McCain said, “I have no choice. I have no choice. Because we need to confirm Gorsuch.”

Senate Republican leader starts clock ticking to Gorsuch showdown | Reuters: The U.S. Senate moved on Tuesday toward ramming through approval of President Donald Trump's Supreme Court nominee this week, as its top Republican said he has the votes to wipe away Democratic roadblocks but vowed to preserve the minority party's ability to hold up legislation. Majority Leader Mitch McConnell plans to change the Senate's long-standing rules in order to eliminate the ability to use a procedural hurdle called a filibuster against Supreme Court nominees like Trump's pick Neil Gorsuch, if a Democratic filibuster succeeds as expected in blocking a confirmation vote. Senate confirmation of Gorsuch, 49, to the lifetime post would restore the court's conservative majority and enable Trump to leave a lasting imprint on America's highest judicial body even as he regularly criticizes the federal judiciary. McConnell said he had the necessary votes to approve the rule change with a simple majority vote, expected on Thursday. Republicans control the Senate 52-48. The rule change has been dubbed the "nuclear option," and Trump has encouraged McConnell to "go nuclear." Such a step would threaten to further erode trust between the parties in Congress. "There's a reason they call it the nuclear option, and that is because there's fallout. And this fallout will be dangerously and perhaps disastrously radioactive for the Senate for years to come," Democratic Senator Richard Blumenthal told reporters. Republicans were so confident they can use their muscle to pass the rule change that Senate Judiciary Committee Chairman Chuck Grassley said flatly that Gorsuch "will be on the Supreme Court Friday night."

  Senate goes 'nuclear' to advance Trump Supreme Court pick | TheHill: The Senate voted Thursday to move forward with Neil Gorsuch’s Supreme Court nomination after Republicans took a historic step that lowers the vote threshold for high court nominees to a simple majority. Senators voted 55-45 to end debate on Gorsuch’s nomination, setting up a final confirmation vote for Friday. Thanks to a procedural move that changed Senate rules earlier Thursday, a simple majority was needed to move forward. Democrats had successfully blocked Gorsuch’s nomination from getting 60 votes earlier, prompting Republicans to employ the "nuclear option," which effectively ends filibusters for all Supreme Court nominees. Democrats tried to delay the rule change vote by offering motions to postpone a vote and to adjourn the chamber, but both fell short as Republicans stayed unified. Democratic Sens. Joe Manchin (W.Va.), Heidi Heitkamp (N.D.) and Joe Donnelly (Ind.) voted with Republicans to allow President Trump’s pick to move forward.Republicans defended the party-line vote on the nuclear option, saying Democrats were to blame for blocking Gorsuch, who they believe is eminently qualified to sit on the Supreme Court.

Gorsuch vote finally gives GOP Congress a win --  The Senate is on track Friday to give the new Republican-led government its first big victory when it confirms Judge Neil Gorsuch to the Supreme Court. After spending weeks on an ill-fated effort to pass a long-promised healthcare bill, Congress will at last able to check off a critical promise made during the campaign by Republicans and President Trump: putting a solid conservative on the bench to replace the late Antonin Scalia. Gorsuch's confirmation was all but assured on Thursday after the Senate Majority Leader Mitch McConnell, R-Ky., invoked the so-called nuclear option to block Democrats from filibustering the nominee. He then ended debate on Gorsuch, which set up a vote Friday evening at the latest, although senators from both parties agreed to finish up the vote around noontime. "Today, Senate Republicans took a necessary step today to secure the first big win of Donald Trump's presidency," Adam Brandon, president of the conservative advocacy group FreedomWorks, said in a statement provided to the Washington Examiner on Thursday. Republican senators, who were poised to vote on the doomed House health care proposal last month and were instead left with a near-empty agenda, were happy their chamber scored the first big victory. "I can't think of better points on the board than a Supreme Court nomination," Senate Majority Whip John Cornyn, R-Texas, told the Washington Examiner. Nearly four months into the start of the new GOP-led government, Republicans and Trump have had little to tout when it comes to making significant progress on big agenda items as they leave town for a two-week recess.

Neil Gorsuch Confirmed by Senate as Supreme Court Justice — Judge Neil M. Gorsuch was confirmed by the Senate on Friday to become the 113th justice of the Supreme Court, capping a political brawl that lasted for more than a year and tested constitutional norms inside the Capitol’s fraying upper chamber. The development was a triumph for President Trump, whose campaign appeal to reluctant Republicans last year rested in large part on his pledge to appoint another committed conservative to succeed Justice Antonin Scalia, who died in February 2016. However rocky the first months of his administration may have been, Mr. Trump now has a lasting legacy: Judge Gorsuch, 49, could serve on the court for 30 years or more. “As a deep believer in the rule of law, Judge Gorsuch will serve the American people with distinction as he continues to faithfully and vigorously defend our Constitution,” the president said. Vice President Mike Pence presided over the final vote on Friday, a show of force for the White House on a day when his tiebreaking vote as president of the Senate was not necessary. The final tally was 54-45 in favor of confirmation. The confirmation was also a vindication of the bare-knuckled strategy of Senate Republicans, who refused even to consider President Barack Obama’s Supreme Court pick, Judge Merrick B. Garland, saying the choice of the next justice should belong to the next president. Yet the bruising confrontation has left the Senate a changed place. Friday’s vote was only possible after the Senate discarded longstanding rules meant to ensure mature deliberation and bipartisan cooperation in considering Supreme Court nominees. On Thursday, after Democrats waged a filibuster against Judge Gorsuch, denying him the 60 votes required to advance to a final vote, Republicans invoked the so-called nuclear option: lowering the threshold on Supreme Court nominations to a simple majority vote. The confirmation saga did not help the reputation of the Supreme Court, either. The justices say politics plays no role in their work, but the public heard an unrelentingly different story over the last year, with politicians, pundits and well-financed outside groups insisting that a Democratic nominee would rule differently from a Republican one.

Bipartisan pitch to save filibuster gets 61 senators’ endorsement -  Sixty-one senators urged their party leaders to preserve the filibuster for legislation on Friday, backing the procedural tool after Republicans scrapped the minority’s power to block Supreme Court nominees. But 37 senators declined to endorse the effort, including senior members of both parties as well as firebrands on the left and right. Maine GOP Sen. Susan Collins and Delaware Democratic Sen. Chris Coons organized Friday's bipartisan letter to Majority Leader Mitch McConnell (R-Ky.) and Minority Leader Chuck Schumer (D-N.Y.) as a way to move past the bitter partisan debate on Supreme Court nominee Neil Gorsuch, who was confirmed earlier Friday. Collins and Coons were among the moderate senators who had hoped, in vain, for a deal to allow Gorsuch's confirmation without Republicans detonating the “nuclear option,” which unilaterally ended the 60-vote threshold for high court nominees but not for legislation. “After the contentious and polarized debate of the past few weeks, I am hopeful that this letter indicates a new determination by a bipartisan group of more than 60 senators to move forward to solve the pressing problems facing our nation," Collins said in a statement. But 37 senators did not sign the missive. Among those declining to sign were some of the Senate's most liberal and conservative members, including Democrat Elizabeth Warren of Massachusetts, Independent Bernie Sanders of Vermont, and Republicans Ted Cruz of Texas and Rand Paul of Kentucky. Among senior members of the Senate leadership teams, Democrat Debbie Stabenow of Michigan, and Republicans Roy Blunt of Missouri and John Thune of South Dakota signed the letter. Majority Whip John Cornyn (R-Texas), Minority Whip Dick Durbin (D-Ill.), and third-ranked Senate Democratic leader Patty Murray of Washington did not sign it.

'Extreme vetting' would require visitors to US to share contacts and passwords - Tourists from Britain and other countries visiting the US could be forced to reveal mobile phone contacts, social media passwords and financial data under “extreme vetting” practices being considered by the Trump administration, according to the Wall Street Journal. Travellers who want to enter the US could also face questioning over their ideology, as Washington moves away from a default position of allowing people in to a more sceptical approach to visitors. Trump made the “extreme vetting” of foreign nationals to combat terrorism a major theme of his presidential election campaign. But his executive order imposing a travel ban on several Muslim-majority countries has twice been blocked in court. Media reports suggest it has already hurt the tourism industry. Gene Hamilton, senior counselor to homeland security secretary John Kelly, told the Journal on Tuesday: “If there is any doubt about a person’s intentions coming to the United States, they should have to overcome – really and truly prove to our satisfaction – that they are coming for legitimate reasons.”The changes might include visitors from the 38 countries – the UK, France, Australia and Japan among them – that participate in the visa waiver programme, which requires adherence to strict US standards in data sharing, passport control and other factors, one senior official told the Journal.This could require people to hand over their phones so officials can study their stored contacts and possibly other information. The aim is to “figure out who you are communicating with”, a senior Department of Homeland Security official was quoted as saying. “What you can get on the average person’s phone can be invaluable.”A second change would ask applicants for their social media handles and passwords, so that officials could see information posted privately in addition to public posts, the Journal said. Kelly told a House homeland security committee hearing in February: “We want to say for instance, ‘What sites do you visit? And give us your passwords,’ so that we can see what they do on the internet. If they don’t want to give us that information then they don’t come.”

'Sanctuary' Crackdown Begins: Homeland Identifies 3 Maryland Counties Harboring Illegal Immigrants -A month ago, Maryland Attorney General Brian E. Frosh wrote to federal authorities asking that they declare the state's courts, schools and hospitals off limits to immigration agents. Frosh, a Democrat, wrote that he was sending the letter in response to new immigration guidelines issued by the Trump administration that greatly expand the number of people considered a priority for removal from the country."I am concerned that the Administration's aggressive new policies will discourage the most vulnerable immigrants from seeking judicial protection and medical care, which will cause avoidable injuries and potentially even deaths," Frosh wrote."I ask that you take action to remove this immediate threat to the health and safety of immigrants in Maryland by declaring our courts and hospitals to be safe locations, where U.S. Immigration and Customs Enforcement and Customs & Border Protection authorities will not be allowed to identify and seize potential deportees."Frosh's request mirrored efforts by jurisdictions led by Democrats in Maryland and around the country to declare themselves sanctuaries, meaning they won't use local resources to aid efforts to seize immigrants.However, all that was before AG Sessions surprise press conference last week in which he detailed the administration was stepping up its push back against cities that break the law by not enforcing actions against illegal immigrants."Today, I'm urging states and local jurisdictions to comply with these federal laws.  Moreover, the Department of Justice will require that jurisdictions seeking or applying for DOJ grants to certify compliance with 1373 as a condition for receiving those awards.""This policy is entirely consistent with the DOJ's Office of Justice Programs guidance that was issued just last summer under the previous administration.""This guidance requires jurisdictions to comply and certify compliance with Section 1373 in order to be eligible for OJP grants.  It also made clear that failure to remedy violations could result in withholding grants, termination of grants and disbarment or ineligibility for future grants.""The DOJ will also take all lawful steps to claw back any fines awarded to a jurisdiction that willfully violates Section 1373."

Following AG Sessions' Threat, NYC No Longer A Sanctuary City - In the wake of an announcement by U.S. Attorney General Jeff Sessions that he would cut off funding if so-called sanctuary cities did not begin cooperating with the federal government regarding illegal aliens, it has been reported that the New York City Police Department [NYPD] alerts Immigration and Customs Enforcement [ICE] agents if immigrants facing deportation are due to appear in Criminal Court, thereby making it easier for them to be detained by the federal government.Although many cities loudly proclaimed that they would not yield to these threats and yield even one inch on their sanctuary status, some observers, including public interest law professor John Banzhaf, predicted that Sessions’ threat, even if arguably unconstitutional, would successfully pressure at least some jurisdictions.  He noted that Florida’s largest county, Miami-Dade, long known for welcoming immigrants, has already ordered jails there to “fully cooperate” with Trump’s order regarding sanctuary cities, and others appear to be considering it.  Other states are also moving to pressure localities to begin cooperating with federal immigration enforcement.  These include, Iowa, Kansas, Kentucky, North Carolina, Pennsylvania, Texas, Virginia, and Wisconsin.  Banzhaf has publicly suggested that Trump’s order may unconstitutionally violate both states’ rights and Congress’ rights, and the sanctuary behavior about which he complained may not even violate the statute he cited.  Nevertheless, in part because cities may have difficulty obtaining a prompt judicial ruling on the constitutionality of the threat or even of a proposed cutoff, and because of the huge risks and legal costs of challenging governmental action, many more – despite their defiant claims – are likely to cave in. Indeed, if New York City begins cooperating even in a small way with ICE, this might help persuade many other jurisdictions – which lack NYC’s resources to fight the federal government in court – to likewise bend, suggests Banzhaf.

California Senate Votes to Nullify Federal Immigration Law - Yesterday, the California State Senate voted to prohibit agents from assisting federal immigration officers. As currently amended, the bill's summary reads:  This bill would, among other things and subject to exceptions, prohibit state and local law enforcement agencies, including school police and security departments, from using resources to investigate, interrogate, detain, detect, or arrest persons for immigration enforcement purposes, as specified. One of the few exceptions is a provision allowing California agents to work with federal agents to deport violent felons.  If it passed into law, this will greatly limit the reach of federal agencies — this is not simply a symbolic gesture. When efforts to counteract federal law requires only that local agents do nothing, it tends to work: When nullification enjoys either the indifference or support of a sizable portion of the local population, and is based on encouraging government inaction, it tends to work. In the case of marijuana-law and immigration-law nullification, local governments have refused to enforce federal law, and the same was true with anti-slavery nullification. In fact, the slave owners, who were a very powerful interest group at the national level, and who had both the Constitution and the federal courts on their side, were at a lopsided disadvantage with individual states because the slave owners needed more government action and enforcement of pro-slavery laws on the part of state governments. Even worse (from the pro-slavery perspective), enforcement was expensive. The anti-slavery activists, on the other hand, merely needed their state governments to look the other way...And this, apparently, is what the California Senate understands. They know that the feds can only do so much to enforce federal law on their own, without help from local government. Yes, the feds have their own federal agents, but federal police forces are actually quite small compared to state and local police forces (unless, of c ourse, the feds call in the military.) But big, federal enforcement operations tend to be PR disasters, as in the case of the Bundy Ranch standoff. It’s always better to get help from the locals, and when they refuse, it’s hard to force their hand.

Massachusetts challenges immigration detention in state court | Reuters: The state of Massachusetts on Tuesday asked its top court to find that state authorities lack the authority to detain illegal immigrants who come in contact with the legal system to buy time for federal authorities to take them into custody. The hearing amounted to a challenge to requests by the federal Immigration and Customs Enforcement (ICE) agency for courts and law enforcement agencies to keep illegal immigrants facing civil deportation orders in custody for up to 48 hours after their cases are resolved, a practice expected to step up under the administration of President Donald Trump. The state argued that keeping someone in custody after his or her case is resolved amounted to a fresh arrest of the person without sufficient legal justification. "Probable cause for civil removability is simply not a basis for arrest under Massachusetts law," Jessica Barnett, an assistant state attorney general told the court. She noted that state law does not specifically give law enforcement agencies the power to arrest people facing civil deportation proceedings. The U.S. Justice Department argued the detainer requests reflect basic practices of cooperation between various law enforcement agencies. "From our perspective, all states have an inherent authority to police their sovereignty," said Joshua Press, the lawyer representing the Justice Department.

Visa Applications Pour In by Truckload Before Door Slams Shut -- On Monday, the starting gun went off on application season for skilled-worker visas, known as H-1B visas, which allow employers, primarily technology companies, to bring in foreign workers for three years at a time. For the last few years, the federal government has been so overwhelmed by applications that it has stopped accepting them within a week of opening day, hence the line of trucks trying to deliver applications before the doors close on the program for another year. And this year, the rush has escalated to an all-out scramble because the future of the H-1B program is unclear. Hailed by proponents as vital to American innovation, the program has also been criticized as a scheme to displace United States workers with cheaper foreign labor. President Trump has vowed to overhaul it, and lawmakers from both parties have drafted bills to alter it. At campaign rallies, Mr. Trump introduced laid-off Americans who had been asked to train their foreign successors at companies that included Disney. “We won’t let this happen anymore,” he thundered in one stump speech about the practice, which he has called “outrageous” and “demeaning.” This past weekend, United States Citizenship and Immigration Services announced a technical change that could make it harder for entry-level programmers to receive the visas, and on Monday, the Justice Department warned that it would investigate companies that it believed had overlooked qualified American workers. “The Justice Department will not tolerate employers’ misusing the H-1B visa process to discriminate against U.S. workers,” Thomas Wheeler, the head of the department’s civil rights division, said in a statement. Each year, 65,000 H-1B visas are made available to workers with bachelor’s degrees, and 20,000 more are earmarked for those with master’s degrees or higher.

Trump officials clamp down on worker visas | TheHill: The Trump administration is beginning to impose restrictions on visas for foreign workers, creating new uncertainty for the tech industry. The White House appeared poised to enact sweeping new restrictions on worker visas earlier this year, when Vox obtained a draft executive order with a slew of policy changes under consideration. The draft said the policies were aimed at prioritizing “the interests of American workers and — to the maximum degree possible — the jobs, wages, and well-being of those workers.” That executive order was never issued, but it appears that some of the ideas it contained are now winding their way into the Trump administration. Without fanfare, the Department of Homeland Security’s U.S. Citizenship and Immigration Services on Friday issued a policy memo that would make it harder for companies to fill computer programmer positions with workers on H-1B visas. The memo stated that being a computer programmer is no longer sufficient to qualify as a “specialty occupation.” The agency followed up Monday by announcing that it would begin to crack down on H-1B visa abuses by conducting targeted site visits to companies with a high proportion of high-skilled visas in their workforce. “The H-1B visa program should help U.S. companies recruit highly-skilled foreign nationals when there is a shortage of qualified workers in the country,” the agency said. “Yet, too many American workers who are as qualified, willing, and deserving to work in these fields have been ignored or unfairly disadvantaged.”

Trump Cracks Down on Visa Program That Staffs Silicon Valley -- The U.S. administration began to deliver on President Donald Trump’s campaign promise to crack down on a work visa program that channels thousands of skilled overseas workers to companies across the technology industry. Fed up with a program it says favors foreign workers at the expense of Americans, the Trump administration rolled out a trio of policy shifts. The U.S. Citizenship and Immigration Services agency on Friday made it harder for companies to bring overseas tech workers to the U.S. using the H-1B work visa. On Monday, the agency issued a memo laying out new measures to combat what it called "fraud and abuse" in the program. The Justice Department also warned employers applying for the visas not to discriminate against U.S. workers. Trump campaigned on a promise to overhaul the immigration system, calling for companies to hire more Americans instead of outsourcing jobs to countries with cheaper labor or bringing in lower-paid foreign workers. Silicon Valley’s biggest tech companies, many of which were founded or run by immigrants, depend on H-1Bs and say efforts to thwart immigration threaten innovation, recruitment and startup formation. Trump’s executive orders restricting travel from a handful of Muslim-majority nations led to unprecedented opposition from the industry. But there’s also broad recognition that reform is needed, given several high-profile examples where American employees have been replaced by lower-paid foreign workers through the program. Advocates for immigrants’ rights also argue H-1B workers are easily exploited because their legal status is tied to a particular employer. The Economic Policy Institute estimated there were about 460,000 people working on H-1B visas in 2013.

Trump Admin Cracks Down On Visas For Coders --As Nasdaq reaches ever record highs, it seems the ability to create a "Hello World" app is no longer enough to warrant an H1-B visa according to new guidelines from the Trump administration. As The Hill reports, the new policy guidance that would make it harder for companies to use the H-1B visa program to bring foreign computer programmers into the U.S. A policy memo from the U.S. Citizenship and Immigration Services changes the way the agency will process visa applications for computer programming positions, making companies jump through extra hoops to fill those jobs with foreign workers...The memorandum also does not properly explain or distinguish an entry-level position from one that is, for example, more senior, complex, specialized, or unique.Furthermore, the memorandum also did not accurately portray essential information from the Handbook that recognized that some computer programmers qualify for these jobs with only “2-year degrees.” While the memorandum did mention beneficiaries with “2-year” degrees, it incorrectly described them as “strictly involving the entering or review of code for an employer whose business is not computer related.”...Based on the current version of the Handbook, the fact that a person may be employed as a computer programmer and may use information technology skills and knowledge to help an enterprise achieve its goals in the course of his or her job is not sufficient to establish the position as a specialty occupation. Thus, a petitioner may not rely solely on the Handbook to meet its burden when seeking to sponsor a beneficiary for a computer programmer position. Instead, a petitioner must provide other evidence to establish that the particular position is one in a specialty occupation...Companies use the H-1B program to import workers for highly skilled positions that are difficult to fill. The Trump administration, however, has alleged that tech companies and IT outsourcing firms have abused the program to the detriment of American workers. The lottery for companies to apply for 2018 visas opened on Monday. Interestngly, as livemint reports, a feature film about the difficulties facing an Indian temporary work-visa holder waiting for permanent residency will be screened in 25 US cinemas on Friday, with backing from Silicon Valley investors, fuelling an already heated immigration debate.

Trump just made it harder for companies to hire foreign workers in the tech industry - US Citizenship and Immigration Services issued guidance late last week making it more difficult for companies to use the H-1B visa program to hire foreign workers to fill "computer related positions." "The fact that a person may be employed as a computer programmer and may use information technology skills and knowledge to help an enterprise achieve its goals in the course of his or her job is not sufficient to establish the position as a specialty occupation," the memo, dated Friday, read.  The memo cited varying educational requirements for different positions in the overall "computer programming occupation" and mandated that applicants "must provide other evidence to establish that the particular position is one in a specialty occupation." During the 2016 primary, Trump railed against "rampant, widespread H-1B abuse." "I will end forever the use of the H-1B as a cheap labor program, and institute an absolute requirement to hire American workers first for every visa and immigration program," he said in a statement in March 2016. "No exceptions."  You can read the entire memo here »

H-1B Visa Overhaul Could Actually Benefit Big Tech Companies - The new way foreign worker visas are doled out in the U.S. is poised to benefit some of the biggest technology companies, like Alphabet Inc., Microsoft Corp. and Facebook Inc., while punishing outsourcing firms that developed a disproportionate dependence on the program.The administration is increasing scrutiny on H-1B visa applications for low-level computer programmers, focusing enforcement on the heaviest users of the program, and warning applicants not to discriminate against American workers. The size and scope of the program remains unchanged for now. There are 85,000 H-1B visas distributed through a random lottery each year, and applicants rush to file by the start of the process, this year on April 3. Outsourcing firms often recruit lower-skilled workers through the program, so they may not get as many visas under the new rules. That means more for everyone else, including U.S. tech giants. What some see as a crackdown may actually be a boon for these companies, according to Rod Bourgeois, head of research at DeepDive Equity Research. "If Indian firms have a harder time getting basic programming jobs approved for the visa process, then the firms truly hiring people with high skills and specialized knowledge will benefit,” he said.  Alphabet Inc.'s Google told some of its workers on Monday not to worry about the changes, saying its software engineering roles don't fall into the job categories included in the administration's new guidance. Other big U.S. technology companies didn't say anything publicly. That's tantamount to a round of applause compared with the industry's reaction to Trump's executive orders restricting immigration from a handful of Muslim-majority countries. Dozens of companies supported lawsuits against the orders. When the first one was issued in late January, Google told some staff to return to the U.S. in case they couldn't get back in later, and thousands of employees protested.

Trump Administration Stands Up for U.S. STEM Workers -- Two key parts of the Trump administration have now announced something of a get-tough policy on H-1B employers. Today USCIS released a memo announcing the policy, and DOJ released a similar statement. To my knowledge, this is the first time that American STEM workers have been given a voice. On the surface, the USCIS document is the less powerful of the two, as it says that it will focus on the H-1B-dependent employers. But its language is quite general: U.S. Citizenship and Immigration Services (USCIS) today announced multiple measures to further deter and detect H-1B visa fraud and abuse. The H-1B visa program should help U.S. companies recruit highly-skilled foreign nationals when there is a shortage of qualified workers in the country. Yet, too many American workers who are as qualified, willing, and deserving to work in these fields have been ignored or unfairly disadvantaged. Protecting American workers by combating fraud in our employment-based immigration programs is a priority for USCIS… Employers who abuse the H-1B visa program negatively affect U.S. workers, decreasing wages and job opportunities as they import more foreign workers. To further deter and detect abuse, USCIS has established an email address which will allow individuals (including both American workers and H-1B workers who suspect they or others may be the victim of H-1B fraud or abuse) to submit tips, alleged violations and other relevant information about potential H-1B fraud or abuse… Additionally, individuals can report allegations of employer fraud or abuse by submitting Form WH-4 to the Department of Labor’s (DOL) Wage and Hour Division or by completing ICE’s HSI Tip Form. The agency seems to be saying that it is interested in any form of abuse of the program. This is potentially quite powerful when coupled with the DOJ memo, which promises to investigate claims of discrimination against Americans in favor of foreign workers.The reference to the H-1B-dependent employers (which by the way now includes Facebook) may allude to the old Intels Good, Infosyses bad argument. But the Intels discriminate plenty against Americans, because they love the immobility of foreign workers they are sponsoring for green cards. Given two applicants of equal quality, there is huge incentive for the employer to choose the foreigner.

The H-1B visa cap tells you very little about how many H-1B visas there are - On April 1, the US government began accepting this year’s applications for H-1B visas—the coveted permits that let companies bring in highly skilled foreign workers. The number of applications has almost certainly already exceeded the annual 85,000 cap on new visas. Last year it took just a week (paywall) for the government to receive 236,000 applications and stop accepting new ones.President Donald Trump’s administration has made the H-1B a target of its ire, warning on April 3 that it would crack down on employers that it believes hire foreign workers over equally capable Americans. It might seem odd to make a fuss about a visa capped at 85,000 a year—a drop in the ocean of the American workforce. But a closer look at the numbers gives a slightly clearer sense of why America’s foreign-worker programs have sparked voter resentment.The H-1B cap has remained constant since 2004. Since 2007, the government has several times had to use a lottery system to allocate the 85,000 visas among a much larger number of applications. Yet for the past few years, the number of visas issued has been steadily growing. And since H-1Bs are valid for three years, that means the number of valid visa holders in any given year has been growing even faster—it’s currently over half a million:  How can there be more visas issued than the official cap? For one thing, the cap doesn’t apply to visa renewals (an H-1B can be renewed for a second three-year stretch, and in some cases more), nor to visas for work at higher-education institutions, government research organizations, and certain nonprofits. So if more visas are being issued each year, either more people are renewing their H-1Bs, cap-exempt organizations are applying for more visas, or a mix of both is happening. Which is it? The State Department’s statistics don’t answer the question—they only list the total H-1B visas granted. The US Citizenship and Immigration Services (Uscis), however, do provide detailed breakdowns of H-1B petitions granted in their annual reports to Congress. (This is not the same as the number of visas, because a person can have more than one petition filed on her behalf; in 2015, for example, Uscis granted 275,317 H1-B petitions, but the State Department issued only 172,748 H-1B visas.) These show whether petitions granted for “continuing employment”—i.e., renewals—are going up as a share of the total. Answer: not in recent years.

What Trump's Border Wall May Look Like: Here Are The Proposed Designs --While Trump's push to build a wall along the Mexican border has quietly moved to the backburner in recent weeks, especially with the expiration of the Continuing Resolution looming on April 28, the U.S. Customs and Border Protection has continued to receive proposals from numerous companies for what Trump's wall could look like. As we discussed previously, CBP has called for two designs, one made of concrete and one of alternative material, for a wall to be built across the nearly 2,000-mile border.Among the requirements: the wall should stand at least 18 feet high, be able to withstand significant physical force, prevent climbing and tunneling, be aesthetically appealing (on the U.S. side at least), allow for surface drainage and so forth.In the current phase of the contracting process, companies are required to submit their qualifications and concepts for the wall, but not detailed renderings. However, as the WSJ observes, some companies have them and have provided them to The Wall Street Journal, although the proposals shown below do not have to include cost estimates.For the next round, the government will select at many as 20 finalists, who will then be asked to provide more detailed plans. Potential bidders had until Tuesday to submit preliminary plans.Here are some of the proposed wall designs as seen by the WSJ:

 Sweeping Federal Review Could Affect Consent Decrees Nationwide — Attorney General Jeff Sessions has ordered a sweeping review of federal agreements with dozens of law enforcement agencies, an examination that reflects President Trump’s emphasis on law and order and could lead to a retreat on consent decrees with troubled police departments nationwide. In a memorandum dated March 31 and made public Monday, the attorney general directed his staff to look at whether law enforcement programs adhere to principles put forth by the Trump administration, including one declaring that “the individual misdeeds of bad actors should not impugn” the work police officers perform “in keeping American communities safe.” As part of its shift in emphasis, the Justice Department went to court on Monday to seek a 90-day delay in a consent decree to overhaul Baltimore’s embattled Police Department. That request came just days before a hearing, scheduled for Thursday in the United States District Court in Baltimore, to solicit public comment on the agreement, which was reached in principle by the city and the Justice Department in the waning days of the Obama administration. Mayor Catherine E. Pugh said late Monday that the city would “strongly oppose any delay in moving forward.” Supporters of police reform called on Judge James K. Bredar, who is overseeing the negotiations between Baltimore and the Justice Department, to deny the request, arguing that Mr. Sessions was interfering with the will of the city. “This has all been negotiated by the affected parties,” said Ray Kelly, the president of the No Boundaries Coalition, a citizen advocacy group. Referring to Mr. Sessions, he said, “Now we have an outside entity telling us what’s best for our citizens and our community when he has no experience, no knowledge.” Baltimore is one of nearly two dozen cities — including Ferguson, Mo.; Cleveland; and Seattle — that were the subject of aggressive efforts by the Obama administration to improve relations between the police and the communities they serve. That effort produced so-called consent decrees with 14 departments.

Trump signs repeal of U.S. broadband privacy rules | Reuters: U.S. President Donald Trump on Monday signed a repeal of Obama-era broadband privacy rules, the White House said, a victory for internet service providers and a blow to privacy advocates. Republicans in Congress last week narrowly passed the repeal of the privacy rules with no Democratic support and over the strong objections of privacy advocates. The signing, disclosed in White House statement late on Monday, follows strong criticism of the bill, which is a win for AT&T Inc, Comcast Corp and Verizon Communications Inc. The bill repeals regulations adopted in October by the Federal Communications Commission under the Obama administration requiring internet service providers to do more to protect customers' privacy than websites like Alphabet Inc's Google or Facebook Inc. The rules had not yet taken effect but would have required internet providers to obtain consumer consent before using precise geolocation, financial information, health information, children's information and web browsing history for advertising and marketing. FCC Chairman Ajit Pai praised the repeal in a statement late on Monday for having “appropriately invalidated one part of the Obama-era plan for regulating the internet." Those flawed privacy rules, which never went into effect, were designed to benefit one group of favored companies, not online consumers." Pai said the FCC would work with the Federal Trade Commission, which oversees websites, to restore the "FTC’s authority to police internet service providers’privacy practices." Republican FCC commissioners have said the Obama rules would unfairly give websites the ability to harvest more data than internet service providers.

Fight breaks out over internet privacy repeal at hearing | TheHill: House members clashed during a hearing on Wednesday over the recent repeal of Obama-era internet privacy regulations. A House Energy and Commerce technology subcommittee hearing focusing on the wireless spectrum economy took a detour when the panel’s ranking Democrat, Rep. Mike Doyle (Pa.), used his opening statement to lash out at the repeal, passed by Republicans and signed by President Trump on Monday. “Congress didn’t act with much deliberation,” Doyle said. “We didn’t hold hearings or mark up any bills. We ran through legislation under the Congressional Review Act [CRA] — a blunt, draconian instrument — to smash these rules, the only real legal protections that prevented internet service providers from using and abusing our data.” The bill eliminated a set of Obama-era Federal Communications Commission regulations that required internet service providers to get their customers’ permission before using their data for advertising. It used the CRA, which allows lawmakers to repeal regulations and prohibit agencies from replacing them with similar ones.EMENTDoyle singled out one of the hearing’s witnesses, Scott Bergmann, a vice president of the telecom lobbying group CTIA — formerly known as the Cellular Telecommunications and Internet Association — for leading the push to pass the bill. “I’m extremely disappointed that an organization representing the wireless industry, which this committee has worked hard to support and foster, would act in such a selfish and irresponsible way,” Doyle said. “I expect more from you and your members, and the American people expect more from you and your members. It’s not lost on me or members of this subcommittee that your association’s support for this CRA means that no federal agency can stop your members from selling people’s information.” Rep. Greg Walden (R-Ore.), chairman of the full committee, shot back, admonishing Democrats for overlooking the fact that the rules did not cover web companies like Google, which account for much of the internet’s advertising market.

Most Americans unwilling to give up privacy to thwart attacks: Reuters/Ipsos poll | Reuters: A majority of Americans are unwilling to share their personal emails, text messages, phone calls and records of online activity with U.S. counter-terrorism investigators - even to help foil terror plots, according to a Reuters/Ipsos opinion poll released on Tuesday. The poll showed Americans were more reluctant to share personal information than when the poll last asked the question four years ago. For instance, 75 percent of adults said they would not let investigators tap into their Internet activity to help the U.S. combat domestic terrorism. That's up from 67 percent who answered the same way in June 2013. But Americans were more evenly divided when asked whether the government is conducting too much surveillance, showing that while they are deeply concerned about their own privacy there remains a pool of support for U.S. spying programs that can sweep up personal information. Congress is due to address questions about surveillance later this year when it opens debate over whether to limit the government's ability to conduct warrantless searches of American data. According to the March 11-20 survey, 32 percent said intelligence agencies such as the FBI and National Security Agency are conducting "as much surveillance as is necessary" and 7 percent said they wanted more surveillance. Another 37 percent of adults said agencies are "conducting too much surveillance on American citizens." The remaining 24 percent said they did not know.

White House, conservatives mull deal to revive Obamacare repeal - POLITICO: House conservatives and the White House are mulling a potential agreement to revive the GOP Obamacare replacement bill that was pulled from the House floor just over a week ago, POLITICO has learned. Leaders of the House Freedom Caucus, the group of three-dozen conservatives that helped bring down the bill, have been in talks with Trump administration officials about changes to the legislation that might get them to “yes.” One option seriously being considered by the White House, multiple GOP sources said, includes allowing governors to opt out of some Obamacare regulations on the insurance industry. Story Continued Below The developments could mean that Speaker Paul Ryan’s bill might not be dead after all — or at least indicate that continued discussions are going on behind the scenes. Sources stressed that the details are still being finalized, and it's far from certain that such a change would act as a silver bullet to salvage the much-maligned bill, and whether it would win over enough conservatives while also keeping centrist Republicans on board. Indeed, Vice President Mike Pence, White House chief of staff Reince Priebus and budget director Mick Mulvaney huddled with the Freedom Caucus Monday night to layout some broad details and gauge whether they would be acceptable to members of the group. Caucus Chairman Mark Meadows (R-N.C.) emerged from the meeting saying nothing had been agreed to and there was no legislative text. He said lawmakers expected to see text sometime "within 24 hours." “No one made any definitive changes in terms of moving from ‘no’ to ‘yes,’ primarily because there’s not enough detail to do that, but I can tell you that all the ‘nos’ — every one of the ‘nos’ — expressed a willingness to look at this in a very detailed manner,” he said.

Trump White House Pushes New Health-Care Deal, Lawmakers Say - House lawmakers hope Tuesday to release a new Trump administration-backed version of the health-care bill they had to abandon last month in an embarrassing setback to their pledge to repeal Obamacare. But GOP leaders sought to downplay expectations for a quick vote. “We’re at that conceptual stage right now,” House Speaker Paul Ryan told reporters Tuesday morning. “We don’t have bill text or an agreement yet.” GOP leaders barely mentioned health care in the private conference meeting Tuesday morning and offered few details of the plan being devised by the White House. Representative Mark Walker, chairman of the conservative Republican Study Committee, said Tuesday that the Energy and Commerce Committee is "putting it together and language should be ready this evening." Late Monday, Vice President Mike Pence and White House chief of staff Reince Priebus met with House conservatives to lay out the details of the plan. One lawmaker said it could allow states to charge higher rates to sick people. President Donald Trump’s budget director, Mick Mulvaney, was also in the meeting. "The president would like to see this done," White House spokesman Sean Spicer said Tuesday. He said he wasn’t seeking to raise expectations about a possible deal but added, "We feel very optimistic about the tone" of the discussions. Several lawmakers, including a close ally of Trump’s, said they think a vote could still occur this week, though Ryan said he didn’t know whether that would happen. "The administration is saying it would like it this week," Republican Representative Chris Collins of New York said Tuesday morning. Collins and several Republican moderates went to the White House Monday to discuss the plan.

 Paul Ryan Quashes Hope For Quick Second Try At Healthcare Bill -- Earlier this morning, we reported that "In An Aggressive Push, Trump Seeks Friday Passage Of Revised Healthcare Bill", and has instructed Mike Pence to rattle the cages of both conservative and moderate Republicans, to see what the bid/ask difference is. Among the things the White House was willing to concede on: i) granting a waver to States from some, if not all, Obamacare insurance rules including the minimum benefits; and ii) a $115 billion "stability fund" for the states would be narrowed to be spent specifically on high-risk pools, as a form of coverage for those with pre-existing conditions. Some expressed optimism that Trump's renewed interest to pass Trump/Ryancare could take place as soon as this Friday, with Rep. Chris Collins adding "this could move fairly quickly."Freedom Caucus leaders said they’re open to the idea but want to see the legislative text, meanwhile White House officials were hoping to send the text to Capitol Hill as early as Tuesday night.Or maybe not, because as Reuters reports, House Speaker Paul Ryan on Tuesday poured cold water on expectations that after last month's Republican failure to pass their own Healthcare bill, a quick deal to repeal and replace ObamaCare would not happen and declined to say whether the House would hold a vote by the end of the week. As The Hill adds, his remarks followed a flurry of meetings between Vice President Mike Pence, other top White House officials, the Tuesday Group of centrists and the ultraconservative House Freedom Caucus.“These are ongoing talks. We want our members to talk with each other about how we can improve the bill to get consensus. Those productive talks are happening. We’re at the concept stages right now," Ryan told reporters after a closed-door meeting with Republicans earlier. “So right now, we’re just at that conceptual stage about how to move forward in a way we can get everybody to 216 [votes]. … It’s premature to say where we are or what we’re on because we’re at that conceptual stage.”“We don’t have a bill text or an agreement, but these are the kinds of conversations we want — all the various caucus members, the administration, those productive kinds of conversations are happening right now,” Ryan said. “It’s all about getting the premiums down.”

Centrists push back on new ObamaCare repeal plan | TheHill: A new proposal from the White House and GOP leaders to revive ­ObamaCare repeal is facing pushback from centrist Republicans who were already wary of the legislation. Seeking to win over conservative holdouts, Republicans have talked about redesigning their healthcare bill so that states can apply for waivers on two central ­ObamaCare rules. The first regulation, known as essential health benefits, requires insurance plans to cover services such as mental healthcare and prescription drugs. The second, known as community rating, prevents insurers from charging higher premiums to people with pre-existing conditions. Conservatives have long argued that the two regulations drive up premiums, and some of them have reacted favorably to the waiver proposal. But the attempt to move the bill further to the right threatens to erode support among moderate members who were turned off by the previous version of the American Health Care Act. “While we haven’t picked up any votes yet, this concept is already showing signs of losing a ton of them,” a senior Republican source said. Centrist Rep. Leonard Lance (R-N.J.) indicated he is still a no on the healthcare bill and warned against allowing sick people to be charged more. He said the provision would effectively result in a return to the days before ­ObamaCare, when people with pre-existing conditions were routinely denied coverage.

Freedom Caucus Says It Would Approve TrumpCare With These Three Changes -- After a brief twitter war between Trump and the House Freedom Caucus last week over the failed healthcare legislation, new rumblings seem to suggest that all hope is not yet lost for a repeal of Obamacare.  As The Hill notes this morning, Freedom Caucus chairman Mark Meadows says that his group would be willing to support TrumpCare to the extent it made changes on the following 3 issues:

• Essential Health Benefits - Mandate what services insurers must cover;
• Community Rating - Says insurers can't charge sick people more for insurance;
• Guaranteed Issue - Says insurers must cover people with pre-existing conditions.

The intent of the changes, of course, would be to lower premiums for young, healthy insurance buyers who have basically been shut out of the market after Obamacare essentially imposed egregious penalties on them to help cover the costs of older, sicker patients. Referencing the three changes above, Meadows said that "the majority of the Freedom Caucus would be favorably inclined to vote for that."And while it's still unknown when/if a new iteration of TrumpCare will come back to the House for a vote, there seems to be growing pressure from the Trump administration to push through last-minute amendments to the latest bill before Congress leaves for its two-week recess.  The House Rules Committee is reportedly organizing a meeting late Thursday to weigh a new change to the bill that would create a fund for “high risk” patients. This amendment is intended to show that momentum for the new GOP healthcare bill is building, a House leadership aide told Bloomberg.  The news outlet reports that the move to quickly push a new amendment, leaving senators with a limited time to decide whether they support the change, is unusual. While the bill may not go to the House for votes immediately, Bloomberg reports, the developments show the White House is still pushing for a repeal of ObamaCare in the wake of last month's failure to get GOP repeal and replace plan to a vote. Of course, these latest develops follow a very public feud between Trump and various members of the House Freedom caucus that erupted last week...

 Knoxville, TN Could Be Ground Zero For The Obamacare Explosion - For the 40,000 people living in and around Knoxville, TN, Humana was the only insurance company providing healthcare coverage for the 2017 plan year.  That said, even with their monopoly in the market, Humana still couldn't figure out a way to make money on the Obamacare exchanges in the 16 Tennessee counties where it was the sole insurer.  As such, the company has decided to cancel its coverage in 2018 potentially leaving Knoxville's 40,000 residents with no healthcare options at all.  Per the map below from the Milwaukee Journal Sentinel, while most of Tennessee is covered by Blue Cross and Cigna, the 16 counties surrounding Knoxville in the eastern portion of the state will have to find a new insurer to fill in for Humana by July 1st or residents there simply won't have access to healthcare for the 2018 plan year.  And while Blue Cross and Cigna could theoretically expand their coverage map in Tennessee to pick up Humana's former markets, Insurance Commissioner Julie McPeak said she's "not optimistic" that would happen absent "some changes to the regulatory system, either by Congress or the administration."  Which, of course, sets up Knoxville as 'ground zero' for the 'Obamacare explosion' predicted by Trump.   Tennessee Insurance Commissioner Julie McPeak said she has had many "challenging conversations" with the state's two remaining insurers -- BlueCross BlueShield of Tennessee and Cigna -- about covering the Knoxville market next year. The carriers, however, want more flexibility to limit their exposure to sick, costly enrollees, she said. For instance, they are concerned that Obamacare eliminated their ability to cap their lifetime payouts to their policyholders. "I'm not optimistic that one of our existing insurers would like to expand their coverage area without some changes to the regulatory system, either by Congress or the administration," said McPeak, who has criticized Obamacare. "The current uncertainty makes it difficult to assess what our product offerings for 2018 might be," said Roy Vaughn, a senior vice president at the insurer, which has lost more than $400 million on the exchange over the past three years. "All options are on the table for 2018."

The Push for Single-Payer Healthcare Is On. Democrats Should Get on Board or Get Out of the Way - The failure of Trumpcare to pass the House on Friday was a devastating defeat for both the nascent administration and the GOP. For seven years, Republicans railed against Obamacare, promising to “repeal and replace” the law as soon as they could. Trump himself pledged to do so repeatedly on the campaign trail and from the Oval Office.Yet despite controlling both houses of Congress and the presidency, Republicans could not get a bill through their own caucus in the House. Speaker Paul Ryan, one of the bill’s architects, admitted, “This was a disappointing day for us.”  Democrats understandably responded with glee. However, besides Bernie Sanders, their side of the aisle offered little in the way of a counter proposal for how to address the very real problems with Obamacare.Trump and Ryan correctly predict that the issues with the current healthcare system—from rising premiums to insurers pulling out of exchanges—are only going to get worse over the coming months and years.Part of the reason is that Republicans will do everything in their power to make sure these problems intensify. Health Secretary Tom Price, a longtime opponent of Obamacare, has considerable leverage to disrupt the already fragile system set up by the Affordable Care Act. But the fundamental failures of Obamacare stem from the law's reliance on the private market. Why are insurance companies such as Humana and Aetna fleeing the exchanges? Why are premiums spiking for many middle-class Americans? Because private companies are responding to the logic of capital: Maximize profits while reducing costs. This trend is sure to continue if nothing is done to fix the system, and the only fix that will work is to expand the risk pool and include everyone. With such a system of universal coverage, costs would be spread out evenly and illness would no longer be seen as a liability in determining the costs and benefits of care.

  Suddenly, Both Obamacare Repeal And Trump Tax Reform Are Dead -- It was a one-two knockout punch for anyone still holding out hope that Trump's domestic economic policies will take place in the near, or not even so near, future.First, Rep. Patrick McHenry, a member of House Republican leadership, said on Wednesday afternoon that conservatives' proposals to reach a compromise on healthcare are a "bridge too far" to win support from colleagues.  McHenry, the chief deputy whip, told reporters that calls from the conservative House Freedom Caucus to allow states to apply for waivers to repeal ObamaCare protections for people with pre-existing conditions are a "bridge too far for our members" and can't get enough votes to pass.The comments come after a late-night meeting among House GOP groups on Tuesday fell flat, and lawmakers appear to be heading home at the end of the week for a recess without any tangible progress toward a deal to revive their healthcare bill.McHenry said lawmakers need a "cooling off period" over the two-week break. "We need people to stop, take a deep breath, and think through the way to yes," he said.In other words, Obamacare repeal is dead for the foreseeable future. And then it was Ryan's turn: the House Speaker, also on Wednesday afternoon, said that tax reform will take longer to accomplish than repealing and replacing Obamacare would, saying Congress and the White House were initially closer to agreement on healthcare legislation than on tax policy."The House has a (tax reform) plan but the Senate doesn't quite have one yet. They're working on one. The White House hasn't nailed it down," Ryan told an audience in Washington."So even the three entities aren't on the same page yet on tax reform," he added. Translation: both healthcare and tax reform are now indefinitely dead, which means that a suddenly pivoting Trump, who earlier today said he had "changed his mind" on Syria, may have no choice but to begin war with Assad to distract from everything else that is going on in the US.

GOP leaving town with little to crow about | TheHill: House Republicans are heading back to their districts without much to brag about. At the beginning of six consecutive weeks of work, many GOP lawmakers had anticipated a productive stretch of legislating that would put a shine on President Trump’s first 100 days in office. Instead, they return home having to explain to their constituents why they weren’t able to repeal and replace ObamaCare and how they can possibly unite around the rest of their agenda. The biggest accomplishment Republicans can tout is the expected Senate confirmation on Friday of Trump’s Supreme Court pick, Neil Gorsuch. The Senate on Thursday invoked the “nuclear option,” altering the chamber’s rules to prevent filibusters of Supreme Court nominees. Republicans have also used a little-known law to revoke a number of Obama-era regulations. But some of these actions have provoked unwelcome headlines. In the most high-profile example, Trump signed into law a measure approved by the House and Senate repealing an Obama-era rule that prevented telecom and cable companies from sharing or selling their customers’ personal information for targeted ads without first obtaining permission. The measure was ripped in online forums, and a Huffington Post/YouGov poll found that 83 percent of Americans disapproved of the change. Republicans have no major legislative accomplishment to show for their efforts in the first quarter of 2017.

Donald Trump in his own words - FT. “An edited transcript of the Financial Times interview with the US president ,” not pay-walled.

Trump Aides’ Disclosures Reveal Surge in Lucrative Political Work -- Donald F. McGahn II, now President Trump’s White House counsel, made $2.4 million as a lawyer with a client list loaded with deep-pocketed conservative groups, from Americans for Prosperity, backed by the conservative billionaires Charles G. and David H. Koch, to the Citizens United Foundation. Mr. Trump’s legislative affairs director, Marc Short, earned $78,000 from Freedom Partners, a Koch-linked group where he once served as president, plus nearly $380,000 for consulting work, listing clients such as the Club for Growth and Susan B. Anthony List, both right-leaning activist groups, as well as the presidential campaign of Senator Marco Rubio, Republican of Florida. And Mr. Trump’s chief strategist, Stephen K. Bannon, reported earning more than $1 million in income tied to conservative-oriented work, with at least $500,000 of that from entities linked to the conservative megadonor Robert Mercer and his daughter Rebekah, including the Breitbart News Network and Cambridge Analytica, a data mining firm partly owned by Mr. Mercer that worked for the Trump campaign. Those disclosures, contained in 92 personal financial statements of Trump administration staff members released starting Friday night, offer a hint of how an explosion in spending has expanded the lucrative array of private political work in Washington, enriching even the anti-establishment activists and operatives who sided with Mr. Trump. Much of the new business has come through “super PACs” and political nonprofit groups whose fund-raising has soared since the Supreme Court’s Citizens United decision in 2010. While such groups were once a modest sideline to campaign and lobbying work, the new campaign spending rules have allowed wealthy donors and their entourages to displace campaign managers and party leaders as the leading political power center.  More such business has come from private foundations and ideologically oriented media companies linked to donors like the Mercers, who have invested in websites, documentaries and other endeavors to battle traditional news organizations. They have also formed political advisory operations to steer their giving and promote their influence.

 86 percent of Trump counties make less in a year than 27 Trump staffers are worth -- Financial reports released by the Trump administration indicate that 27 staffers who work for him are worth a combined $2.3 billion thanks to real estate, investments and hefty salaries. How much is $2.3 billion? Here’s one way to look at it. Consider the amount of money earned in any county in the country in a year — the number of households in each county times the average household income in the county. In 80 percent of the counties in America, every household combined earns less than $2.3 billion a year. In counties that voted for Donald Trump, that figure is higher: In 86 percent of Trump counties, the total amount of income earned in a year is less than $2.3 billion. (On average, it’s $2.1 billion, using 2011 to 2015 five-year estimates from the Census Bureau.)Only 8 percent of Trump-voting counties have a cumulative annual income greater than the $3.9 billion Forbes says the president himself is worth. Only 2 percent earn more annually than the $10 billion Trump claims to be worth. This, of course, falls into the same trap that Trump has exploited to inflate his electoral success last year. Most counties don’t have very many people — which is also why, cumulatively, they don’t earn as much in income annually. The counties that tend to beat the $2.3 billion in annual income tend to be counties that include large cities. And, as a result, a map of where incomes beat the Trump staff’s net worth looks like an electoral map: Swaths of counties that earn less each year than those 27 people are worth and a few pockets, mostly on the coasts, that are exceptions.

FBI plans to create special unit to co-ordinate Russia probe - The FBI is planning to create a special section based at its Washington headquarters to co-ordinate its investigation of Russian activities designed to influence the 2016 presidential election, according to a person familiar with the plan. The move, a sign of how seriously the bureau is taking allegations of Russian meddling in American politics, is also aimed at giving FBI director James Comey greater visibility into the investigation’s granular details. “It’s meant to surge resources,” said one FBI agent. Creation of the temporary unit mirrors the bureau’s approach to other sensitive investigations, including the WikiLeaks disclosure of classified US government documents and Hillary Clinton’s use of a private email server while secretary of state. The FBI generally prefers to run investigations from one of its 56 field offices, but the high-profile nature of the sprawling Russia inquiry is seen as requiring a central manager, according to current and former officials. “It’s getting unwieldy,” said one person briefed on the plan. “It’s too big and it’s on the front page of the newspaper every day.” An FBI spokeswoman declined to comment.

Mark Cuban: Trump couldn't have pulled off Russia collusion | TheHill: Billionaire Mark Cuban on Saturday went on a tweetstorm explaining his theory about President Trump's ties to Russia, concluding he doesn't think Trump was behind any collusion during last year's presidential race. "No chance this is a DJT led conspiracy," Cuban wrote in a series of tweets, referring to Trump's initials. He argued that Trump "isn't detail oriented, organized or big picture enough" to pull off any such "conspiracy." Instead, Cuban argued in a series of tweets that Russian President Vladimir Putin "recognized [Trump's] greed and took advantage by back channeling coordinated misinformation in an attempt to influence voters." "Russians have made him a lot of money buying condos and investing in his buildings and hosting his beauty pageant," Cuban wrote of Trump. "That makes them his friends. He ignored their backgrounds. But that's not unusual. Starbucks takes anyone's money and so do most businesses including mine." The Dallas Mavericks owner went on to argue that Trump wasn't thinking about Russian influence when he hired Paul Manafort as a top adviser to his campaign. Trump viewed it as a "win win," Cuban argued, with Manafort either helping Trump win the election or being good for future business deals with Russia if he lost.

Blackwater founder held secret Seychelles meeting to establish Trump-Putin back channel -- The United Arab Emirates arranged a secret meeting in January between Blackwater founder Erik Prince and a Russian close to President Vladi­mir Putin as part of an apparent effort to establish a back-channel line of communication between Moscow and President-elect Donald Trump, according to U.S., European and Arab officials. The meeting took place around Jan. 11 — nine days before Trump’s inauguration — in the Seychelles islands in the Indian Ocean, officials said. Though the full agenda remains unclear, the UAE agreed to broker the meeting in part to explore whether Russia could be persuaded to curtail its relationship with Iran, including in Syria, a Trump administration objective that would be likely to require major concessions to Moscow on U.S. sanctions. Though Prince had no formal role with the Trump campaign or transition team, he presented himself as an unofficial envoy for Trump to high-ranking Emiratis involved in setting up his meeting with the Putin confidant, according to the officials, who did not identify the Russian. Prince was an avid supporter of Trump. After the Republican convention, he contributed $250,000 to Trump’s campaign, the national party and a pro-Trump super PAC led by GOP mega-donor Rebekah Mercer, records show. He has ties to people in Trump’s circle, including Stephen K. Bannon, now serving as the president’s chief strategist and senior counselor. Prince’s sister Betsy DeVos serves as education secretary in the Trump administration. And Prince was seen in the Trump transition offices in New York in December. U.S. officials said the FBI has been scrutinizing the Seychelles meeting as part of a broader probe of Russian interference in the 2016 U.S. election and alleged contacts between associates of Putin and Trump. The FBI declined to comment.  . “We are not aware of any meetings, and Erik Prince had no role in the transition,” said Sean Spicer, the White House press secretary.

Putin Derangement Syndrome Arrives - Matt Taibbi - So Michael Flynn, who was Donald Trump's national security adviser before he got busted talking out of school to Russia's ambassador, has reportedly offered to testify in exchange for immunity. For seemingly the 100th time, social media is exploding. This is it! The big reveal! Perhaps it will come off just the way people are expecting. Perhaps Flynn will get a deal, walk into the House or the Senate surrounded by a phalanx of lawyers, and unspool the whole sordid conspiracy.What if, tomorrow, it all turns out to be true?What if reality does turn out to be a massive connect-the-dots image of St. Basil's Cathedral sitting atop the White House? (This was suddenly legitimate British conspiracist Louise Mensch's construction in The New York Times last week.) What if all the Glenn Beck-style far-out charts with the circles and arrows somehow all make sense?This is one of the tricks that keeps every good conspiracy theory going. Nobody wants to be the one claiming the emperor has no clothes the day His Highness walks out naked. And this Russia thing has spun out of control into just such an exercise of conspiratorial mass hysteria.Even I think there should be a legitimate independent investigation – one that, given Trump's history, might uncover all sorts of things. But almost irrespective of what ends up being uncovered on the Trump side, the public prosecution of this affair has taken on a malevolent life of its own. One way we recognize a mass hysteria movement is that everyone who doesn't believe is accused of being in on the plot. This has been going on virtually unrestrained in both political and media circles in recent weeks.The aforementioned Mensch, a noted loon who thinks Putin murdered Andrew Breitbart but has somehow been put front and center by The Times and HBO's Real Time, has denounced an extraordinary list of Kremlin plants.She's tabbed everyone from Jeff Sessions ("a Russian partisan") to Rudy Giuliani and former Assistant FBI Director James Kallstrom ("agents of influence") to Glenn Greenwald ("Russian shill") to ProPublica and Democracy Now! (also "Russian shills"), to the 15-year-old girl with whom Anthony Weiner sexted (really, she says, a Russian hacker group called "Crackas With Attitudes") to an unnamed number of FBI agents in the New York field office ("moles"). And that's just for starters.

Noam Chomsky Calls Democrats' Obsession With Russia Conspiracy Theories "A Joke" -- During a recent interview with Democracy Now, Noam Chomsky demonstrated what everyone with a clear head and capacity for critical thought should already know. Just because you have a strong dislike for Donald Trump, doesn’t mean you latch on like a lunatic to every nonsensical Russia conspiracy theory because you’re still crying about Hillary’s loss. As Noam Chomsky accurately states:  The United States doesn’t just interfere in elections. It overthrows governments it doesn’t like, institutes military dictatorships. Simply in the case of Russia alone—it’s the least of it—the U.S. government, under Clinton, intervened quite blatantly and openly, then tried to conceal it, to get their man Yeltsin in, in all sorts of ways. So, this, as I say, it’s considered—it’s turning the United States, again, into a laughingstock in the world.So why are the Democrats focusing on this? In fact, why are they focusing so much attention on the one element of Trump’s programs which is fairly reasonable, the one ray of light in this gloom: trying to reduce tensions with Russia? That’s—the tensions on the Russian border are extremely serious. They could escalate to a major terminal war. Efforts to try to reduce them should be welcomed. Just a couple of days ago, the former U.S. ambassador to Russia, Jack Matlock, came out and said he just can’t believe that so much attention is being paid to apparent efforts by the incoming administration to establish connections with Russia. He said, “Sure, that’s just what they ought to be doing.”So, meanwhile, this one topic is the primary locus of concern and critique, while, meanwhile, the policies are proceeding step by step, which are extremely destructive and harmful. So, you know, yeah, maybe the Russians tried to interfere in the election. That’s not a major issue. Maybe the people in the Trump campaign were talking to the Russians. Well, OK, not a major point, certainly less than is being done constantly. And it is a kind of a paradox, I think, that the one issue that seems to inflame the Democratic opposition is the one thing that has some justification and reasonable aspects to it. Watch the clip here.

The Real Russiagate: Obama’s Stasi State -- Michael Hudson and Paul Craig Roberts -- Mike Whitney has written an excellent expose of the “Russiagate” cover story for Obama’s political use of national security to help his party oppose Republicans. http://www.informationclearinghouse.info/46775.htm  Covert surveillance of politicians on Obama’s Nixon-like “Enemies List” has been going on for many years, but is only now being unmasked as a result of the failure of Obama’s cover story–“We weren’t spying on political opponents; only on Russians to protect America.” The presstitute media has passed on the cover story authored by former Obama-administration officials led by CIA director John Brennan, FBI director James Comey, the DNC, and Democratic Rep. Adam Schiff. The loose ends in this cover-up have now been so widely exposed as hearsay and political that only 13% of Republicans believe the fact-free story – but 67% of Democrats cling to it. Whitney reports that Comey began the investigation in July 2016. As of last Friday (March 31, 2017) not a scrap of evidence has turned up. This did not deter Comey from telling Congress that Putin “hated Secretary Clinton so much that the flip side of that coin was that he had a clear preference for the person running against the person he hated so much.” So the Russians allegedly “engaged in a multifaceted campaign to undermine our democracy.” Comey based this conclusion on what has become a hilarious bit of gullibility. The Russians, he said “were unusually loud in their intervention. It’s almost as if they didn’t care that we knew, that they wanted us to see what they were doing.” Alternatively, someone wanted investigators to infer that the Russians were doing the hacking. As Wikeleaks Vault 7 releases prove, the CIA can hack computers and leave anyone else’s signature. Due to poor security, the CIA’s cybertechnology ended up in the Internet domain. “They’ll be back. They’ll be back, in 2020. They may be back in 2018,” warned Mr. Comey. But who is the “they”? “They” seem to be “us,” or at least what numerous former national security officials have suggested: either the NSC, CIA or its “Five Eyes” partner, British MI6.

Intelligence official who 'unmasked' Trump associates is 'very high up,' source says | Fox News: The U.S. intelligence official who “unmasked,” or exposed, the names of multiple private citizens affiliated with the Trump team is someone “very well known, very high up, very senior in the intelligence world,” a source told Fox News on Friday. Intelligence and House sources with direct knowledge of the disclosure of classified names told Fox News that House Intelligence Committee Chairman Devin Nunes, R-Calif., now knows who is responsible -- and that person is not in the FBI. For a private citizen to be “unmasked,” or named, in an intelligence report is extremely rare. Typically, the American is a suspect in a crime, is in danger or has to be named to explain the context of the report. “The main issue in this case, is not only the unmasking of these names of private citizens, but the spreading of these names for political purposes that have nothing to do with national security or an investigation into Russia’s interference in the U.S. election,” a congressional source close to the investigation told Fox News. The unmasking of Americans whose communications apparently were caught up in surveillance under the Obama administration is a key part of an investigation being led by Nunes, who has come under fire from Democrats for focusing on that aspect. Nunes has known about the unmasking controversy since January, when two sources in the intelligence community approached him. The sources told Nunes who was responsible and at least one of the Trump team names that was unmasked. They also gave him serial numbers of reports that documented the activity. This was long before Trump sent out his now-infamous March 4 tweets claiming then-President Barack Obama “wiretapped” Trump Tower during the 2016 election.

Top Obama Adviser Sought Names of Trump Associates in Intel - White House lawyers last month learned that the former national security adviser Susan Rice requested the identities of U.S. persons in raw intelligence reports on dozens of occasions that connect to the Donald Trump transition and campaign, according to U.S. officials familiar with the matter. The pattern of Rice's requests was discovered in a National Security Council review of the government's policy on "unmasking" the identities of individuals in the U.S. who are not targets of electronic eavesdropping, but whose communications are collected incidentally. Normally those names are redacted from summaries of monitored conversations and appear in reports as something like "U.S. Person One."The National Security Council's senior director for intelligence, Ezra Cohen-Watnick, was conducting the review, according to two U.S. officials who spoke with Bloomberg View on the condition of anonymity because they were not authorized to discuss it publicly. In February Cohen-Watnick discovered Rice's multiple requests to unmask U.S. persons in intelligence reports that related to Trump transition activities. He brought this to the attention of the White House General Counsel's office, who reviewed more of Rice's requests and instructed him to end his own research into the unmasking policy. The intelligence reports were summaries of monitored conversations -- primarily between foreign officials discussing the Trump transition, but also in some cases direct contact between members of the Trump team and monitored foreign officials. One U.S. official familiar with the reports said they contained valuable political information on the Trump transition such as whom the Trump team was meeting, the views of Trump associates on foreign policy matters and plans for the incoming administration.  Rice did not respond to an email seeking comment on Monday morning. Her role in requesting the identities of Trump transition officials adds an important element to the dueling investigations surrounding the Trump White House since the president's inauguration.

Susan Rice requested to unmask names of Trump transition officials, sources say | Fox News: Multiple sources tell Fox News that Susan Rice, former national security adviser under then-President Barack Obama, requested to unmask the names of Trump transition officials caught up in surveillance. The unmasked names, of people associated with Donald Trump, were then sent to all those at the National Security Council, some at the Defense Department, then-Director of National Intelligence James Clapper and then-CIA Director John Brennan – essentially, the officials at the top, including former Rice deputy Ben Rhodes. The names were part of incidental electronic surveillance of candidate and President-elect Trump and people close to him, including family members, for up to a year before he took office.White House Press Secretary Sean Spicer, asked about the revelations at Monday’s briefing, declined to comment specifically on what role Rice may have played or officials’ motives. — Donald J. Trump (@realDonaldTrump) April 3, 2017 “I’m not going to comment on this any further until [congressional] committees have come to a conclusion,” he said, while contrasting the media’s alleged “lack” of interest in these revelations with the intense coverage of suspected Trump-Russia links. When names of Americans are incidentally collected, they are supposed to be masked, meaning the name or names are redacted from reports – whether it is international or domestic collection, unless it is an issue of national security, crime or if their security is threatened in any way. There are loopholes and ways to unmask through backchannels, but Americans are supposed to be protected from incidental collection. Sources told Fox News that in this case, they were not.

Paul: Susan Rice should testify under oath about Trump unmasking | TheHill: Sen. Rand Paul (R-Ky.) on Monday said former national security adviser Susan Rice should testify under oath about her reported requests to “unmask” the identities of Americans associated with President Trump in intelligence reports. Paul was referencing a report by Bloomberg View columnist Eli Lake on Monday that said Rice asked for the identities of individuals in intelligence reports associated with Trump’s transition team and campaign, making such requests dozens of times. The Kentucky senator, while acknowledging he has little information about the matter beyond the news report, called the unmasking an “enormous deal” and indicated that it should be illegal. “I don’t think we should discount how big a deal it was that Susan Rice was looking at these, and she needs to be asked, did President Obama ask her to do this? Was this a directive from President Obama?” Paul told reporters.  “I think she ought to testify under oath on this. I think she should be asked under oath, did she reveal it to The Washington Post.” “I think they were illegally basically using an espionage tool to eavesdrop or wiretap — if you want to use the word generally — on the Trump campaign,” Paul said.The report about Rice appears to be connected to House Intelligence Committee Chairman Devin Nunes’s (R-Calif.) claim that information was incidentally collected on members of the Trump transition in foreign surveillance activities and widely disseminated in intelligence community reports.

Rice denies Obama administration inappropriately unmasked Trump team | TheHill: Former national security adviser Susan Rice on Tuesday categorically denied that the Obama administration inappropriately spied on President Trump or members of his transition team. “The allegation is that somehow, Obama administration officials utilized intelligence for political purposes,” Rice told MSNBC’s Andrea Mitchell. “That’s absolutely false.” Rice had requested that at least one Trump transition team member be “unmasked,” Bloomberg View reported Monday, leading to claims that the Obama White House had intended to use that intelligence to damage Trump’s transition. While Rice did not deny making any such requests — declining to comment on specific reports — she denied that her actions went outside the scope of her job. “It was not uncommon, it was necessary at times to make those requests,” she said. “I don’t have a particular recollection of doing that more frequently after the election.”ISEMENT“The notion, which some people are trying to suggest, that by asking for the identity of the American person is the same is leaking it — that’s completely false,” Rice said. “There is no equivalence between so-called unmasking and leaking.” Rice also flatly denied exposing Trump’s own former national security adviser, Michael Flynn, who was forced to resign in February after media reports revealed that he misled Vice President Pence about the contents of his discussions with the Russian ambassador. “I leaked nothing to nobody,” she said.

Susan Rice Ordered "Detailed Spreadsheets Of Intercepted Phone Calls" With Trump Team -- After it was revealed over the weekend by Mike Cernovich that Susan Rice was the mysterious Obama official behind the "unmasking" of Trump associates, the details behind the extreme measures taken by the Obama administration, including what seems to be personal legal liability for Susan Rice and potentially others, continue to grow more and more disturbing. This morning, the Daily Caller has provided new details, courtesy of former U.S. Attorney Joseph diGenova, suggesting that Rice specifically requested that the NSA provide her with  "detailed spreadsheets of intercepted phone calls with unmasked Trump associates."“What was produced by the intelligence community at the request of Ms. Rice were detailed spreadsheets of intercepted phone calls with unmasked Trump associates in perfectly legal conversations with individuals,”diGenova told The Daily Caller News Foundation Investigative Group Monday.“The overheard conversations involved no illegal activity by anybody of the Trump associates, or anyone they were speaking with,” diGenova said. “In short, the only apparent illegal activity was the unmasking of the people in the calls.” Meanwhile, Retired Colonel James Waurishuk, an NSC veteran and former deputy director for intelligence at the U.S. Central Command, said that the level of coordination required to pull off such a massive spying operation is staggering and would have required numerous personnel from the White House, NSA, CIA, National Security Council, etc.    “The surveillance initially is the responsibility of the National Security Agency,” Waurishuk said. “They have to abide by this guidance when one of the other agencies says, ‘we’re looking at this particular person which we would like to unmask.’” “The lawyers and counsel at the NSA surely would be talking to the lawyers and members of counsel at CIA, or at the National Security Council or at the Director of National Intelligence or at the FBI,” he said. “It’s unbelievable of the level and degree of the administration to look for information on Donald Trump and his associates, his campaign team and his transition team.  This is really, really serious stuff.”

House Intel Panel Wants Susan Rice To Testify --  As the WSJ reports, citing two officials familiar with the matter, Rice who served as national security adviser under former President Barack Obama, is on a list of witnesses drawn up by the committee as part of its probe. House Republicans and Democrats have agreed upon a preliminary list of about 30 witnesses that officials say will be expanded as needed. Formal requests to testify haven’t been sent yet by the committee to the witnesses.  Earlier on Tuesday, speaking to MSNBC, Rice said she didn’t use intelligence about Mr. Trump’s associates for political purposes and said she didn’t leak anything regarding her successor, Mike Flynn. In the television interview, she also described requests to unmask the identities of Americans mentioned in intelligence reports as necessary to do her job and entirely different than leaking classified information.  However, she declined to comment on whether she had made such requests with respect to people associated with Trump who may have been mentioned in intelligence reports. She was also not asked why she lied in an interview two weeks ago on PBS in which she said she had no information about any "unmasking." A Republican official familiar with deliberations by GOP lawmakers on the House Intelligence Committee said the names of two U.S. citizens who were part of the Trump transition team have been unmasked in intelligence reports. One is Mr. Flynn and the other hasn’t been identified, said the official, adding that this person appeared in a report that had nothing to do with Russia, unlike the report featuring Mr. Flynn, which documented phone conversations he had in late December with the Russian ambassador to the U.S. Flynn was forced to resign after misleading White House officials and Vice President Mike Pence about the nature of those conversations, which current and former officials said concerned the possible easing of Obama-era sanctions on Russia. The existence of those conversations was leaked to the media in January, almost exclusively to the WaPo and NYT.

WSJ: Susan Rice Was Not Alone In "Unmasking" Team Trump -- As part of its daily wrap of the Susan Rice newsflow, which focused on her first media appearance since she was "outed" as the persona responsible for "unmasking" members of team Trump, the WSJ provides two new pieces of incremental information: i) in addition to Michael Flynn, at least one more member of the Trump transition team was "unmasked" in intelligence reports due to multiple foreign conversations that weren't related to Russia; and ii) Rice wasn't the administration official who instigated Mr. Flynn’s unmasking, confirming there is at least one more high-level official giving "unmasking" orders.   Normally, when government officials receive intelligence reports, the names of American citizens are redacted to protect their privacy. But officials can request that names, listed as “U.S. Person 1,” for example, be unmasked internally in order to give context about the potential value of the intelligence. Unmasking is justified for national security reasons but is governed by strict rules across the U.S. intelligence apparatus that make it illegal to pursue for political reasons or to leak classified information generated by the process. It Perhaps Rice is simply lying as she lied on March 22 when in a PBS interview she said "I know nothing" about unmasking Trump officials. Less than two weeks later, we learn that she did. But perhaps there is more to the story than what we know so far. And this is where the WSJ comes in, with the new info that according to a Republican official familiar with deliberations by GOP lawmakers on the House Intelligence Committee said thatthe names of two U.S. citizens who were part of Mr. Trump’s transition team have been unmasked in intelligence reports. One is Mr. Flynn and the other hasn’t been identified. The report involving Mr. Flynn documented phone conversations he had in late December with the Russian ambassador to the U.S. The WSJ then reports that Rice had requested the unmasking of at least one transition official — not Mr. Flynn — who was part of multiple foreign conversations that weren't related to Russia. And the punchline: "The Republican official and others said Ms. Rice wasn't the administration official who instigated Mr. Flynn’s unmasking."

Trump, Citing No Evidence, Suggests Susan Rice Committed Crime — President Trump said on Wednesday that Susan E. Rice, the former national security adviser, may have committed a crime by seeking to learn the identities of Trump associates swept up in surveillance of foreign officials by United States spy agencies, repeating an assertion his allies in the news media have been making since last week. Mr. Trump gave no evidence to support his claim, and current and former intelligence officials from both Republican and Democratic administrations have said they do not believe Ms. Rice’s actions were unusual or unlawful. The president repeatedly rebuffed attempts by two New York Times reporters to learn more about what led him to the conclusion, saying he would talk more about it “at the right time.” The allegation by a sitting president was a remarkable escalation — and, his critics say, the latest effort to change the story at a time when his nascent administration has been consumed by questions about any role his associates may have played in a Russian campaign to disrupt last year’s presidential election. Since March 4, when Mr. Trump posted on Twitter that President Barack Obama had “wiretapped” him at Trump Tower during the campaign, the president and his allies have repeatedly sought evidence trying to corroborate that claim, despite flat denials from James B. Comey, the director of the F.B.I., and other senior intelligence officials. Wednesday’s interview revealed how Mr. Trump seizes on claims made by the conservative news media, from fringe outlets to Fox News, and gives them a presidential stamp of approval and also increases their reach. Last week, some Republican television commentators asserted that Ms. Rice had improperly leaked the names of Trump associates picked up in surveillance of foreign officials. On Sunday, a conservative writer and conspiracy theorist reported, without identifying his sources, that Ms. Rice had been the one to seek identities of the Trump associates. Other conservative outlets picked up the report, and the Drudge Report website, which has been supportive of Mr. Trump, featured the story prominently. White House officials then accused mainstream news outlets of not giving the story proper coverage.

As The Susan Rice Scandal Explodes, The Russia Election Hacking Story Gets Murkier  - IBD - While the momentum behind the Russia-election-meddling story chugs along, the claim that sparked the entire drama — that Russians hacked the Democratic National Committee — appears to have suffered a big blow. Does anybody care? The Russia connection was first made by a private cybersecurity firm whose work has been treated as unassailable — until last week, when it had to rewrite and retract statements made to support that claim. To understand what happened and why it is significant requires going through a brief timeline of events. Back in June 2016, the DNC hired a private cybersecurity firm called CrowdStrike to determine who had hacked into their servers and absconded with emails — often embarrassing — that later got released to the public by WikiLeaks. CrowdStrike said Russia was behind the hack. In July, intelligence agencies followed up, telling the White House that they had "high confidence" that Russia was behind the hack. However, it turns out that they never had direct access to the DNC's hacked computer servers. The FBI said it repeatedly requested access and the DNC denied it to them, according to The Hill. A source told The Hill that, as a result of this lack of access, "the FBI had no choice but to rely upon a third party for information." The problem is that the evidence provided by CrowdStrike as proof that Russia was behind the hack had some experts scratching their heads, including the fact that the supposedly super-sophisticated hackers left so many clues pointing to Russia.

Devin Nunes recuses himself as House Intel chair during Russia probe | PBS NewsHour: — The Republican chairman is stepping aside from leading a congressional investigation of Russian interference in last year’s U.S. presidential election, citing ethics complaints that he mishandled classified information. The decision by Rep. Devin Nunes of California comes amid partisan turmoil on the House intelligence committee. Democrats have alleged that Nunes, who was on President Donald Trump’s transition team, is too close to the White House and cannot lead an impartial inquiry, and the House ethics committee is investigating whether he improperly disclosed classified information. “Several left-wing activist groups have filed accusations against me with the Office of Congressional Ethics,” Nunes said in a statement. “The charges are entirely false and politically motivated and are being leveled just as the American people are beginning to learn the truth about the improper unmasking of the identities of U.S. citizens and other abuses of power.” Nunes’ move could be seen as a win for Democrats whose cries for an independent panel to investigate Russia’s possible ties with the Trump campaign have grown. They have pointed in particular to two Nunes trips to the White House — one announced, one not — as evidence that his loyalty to Trump outweighs his commitment to leading a bipartisan investigation. By all accounts, the intelligence committee’s growing partisanship has become a distraction from its underlying investigations.

Dubai Police Arrest Hackers Who Broke Into "Highly Confidential" White House Emails  - In a development that could have substantial implications to the ongoing "Russia hacked the US elections" narrative, United Arab Emirates media reports that Dubai police have arrested a group of foreign hackers that targeted five White House officials in an email blackmail scheme.The Arabic-language Al Bayan newspaper and the television channel Dubai One reported the arrests on Monday according to AP. Dubai police did not answer repeated calls for comment.The Al Bayan quoted Maj. Saud al-Khalidi of Dubai police as saying an "African gang", broke into the emails of the five senior officials and "got highly confidential information." He said the U.S. asked Dubai police for assistance. Al-Khalidi said that investigators tracked down the gang to an apartment in the emirate of Ajman and arrested three suspects. Those arrested are between 24 and 26 years of age and had a list of "5 million bank accounts," as well as hacking software and millions of dollars in assets, he said.The major said the three people had entered the UAE on visitor visas a few years ago. The reports did not identify the White House officials targeted. Al-Khalidi reportedly said those suspects would be handed over to the United States for possible criminal trials.The U.S. Embassy in Abu Dhabi did not respond to requests for comment. As we await more official details, the google translated report from Al Bayan report is below:

 Senate Banking panel votes in favor of Clayton's SEC nomination | Reuters: The U.S. Senate Banking Committee voted on Tuesday to advance Jay Clayton's nomination as the next head of the U.S. Securities and Exchange Commission to the full Senate for approval. The committee voted 15 to 8, with some Democrats including Massachusetts Senator Elizabeth Warren and Sherrod Brown of Ohio voting against him amid concerns about his close ties to Wall Street through his career as a deal-making attorney for the law firm Sullivan & Cromwell.

Policy Watch: Amid a busy week, Congress and the president find time to roll back protections for working people --Congress will begin a two-week recess when the Senate concludes its business today. Leading up to today’s adjournment, the Senate spent much of the week focused on Supreme Court nominee Neil Gorsuch’s confirmation. Meanwhile, congressional Republicans found time to hold a legislative hearing on a bill that would provide employers a new right to avoid paying workers for overtime hours when the overtime is worked—letting them hold onto those wages for as long as an entire year. On Tuesday, President Trump’s Department of Labor announced that it will delay implementation of the fiduciary rule until at least June 9, costing retirement savers $181 million this year. And, on Thursday, the administration announced that it would delay enforcement of an Occupational Safety and Health Administration rule limiting workers’ exposure to silica dust, which has been linked to lung cancer. Roughly 2.3 million workers are exposed to silica dust in their workplaces. The rule, which was to be enforced beginning June 23, was projected to provide net benefits of $7.7 billion, annually and would have saved more than 600 lives and prevented more than 900 new cases of silicosis a year. This week also marked the seventh anniversary of an explosion at the Upper Big Branch Mine in West Virginia killed twenty-nine miners. The Mine Safety and Health Administration concluded that the conditions that led to the explosion were the result of a series of basic safety violations that were entirely preventable. While President Trump offered no official statement commemorating the largest coal mine disaster in 40 years, his actions make clear that, for all of his rhetoric about bringing back lost jobs in the coal mining industry, he is not concerned with something he could actually deliver for miners and their families: making mining jobs safe jobs. Last Friday, his administration announced a proposed delay of a rule aimed at improving the health and safety of miners.

Toomey seeks GAO's help in reviewing agency guidance — Sen. Pat Toomey, R-Pa., on Friday sent letters to the Government Accountability Office asking for a ruling on whether two instances of bank regulatory guidance each constitutes a rule for the purposes of the Congressional Review Act. The Congressional Review Act allows Congress to reject rules finalized within the prior 60 legislative days. In the early days of the Trump administration, Republicans in Congress have already used the statute to roll back certain regulations, including environmental rules. It takes only a simple majority of lawmakers to vote to reverse a rule.

Trump planning very major haircut on Dodd-Frank | Reuters.com (video, transcript)  President Trump tells a CEO town hall meeting in Washington, D.C. on Tuesday, that ''the regulators are running the banks. So we're going to do a very major haircut on Dodd-Frank.'' Rough Cut (no reporter narration).

Dimon stands behind Trump on relaxed bank rules - Jamie Dimon has thrown his weight behind Donald Trump’s move to relax financial regulations, saying that the slew of new rules put in place since the crisis has essentially “solved” the problem of banks being “too big to fail”.In his annual letter to shareholders the chairman and chief executive of JPMorgan Chase has argued that the big US banks have “dramatically” boosted capital, liquidity and risk controls in recent years, while taking a series of steps to ensure they could be safely wound down without burdening the taxpayer.As a result, he wrote, it was time to take a good look at ways to alleviate the regulatory burden on the big banks, which have been labouring under a regime which “is unnecessarily complex, costly and sometimes confusing”.Dodd-Frank and other laws should not be thrown out entirely, he wrote, but it was “appropriate to open up the rule book in the light of day” and “rework” parts of it that did not work as well as they could.“Regulations must be flexible enough to allow banks to act as a bulwark against [market panics], rather than forcing financial institutions into a defensive crouch that will only make things worse,” he wrote. The remarks are in tune with the new Republican administration, which has promised to make life a little easier for the big US banks by reviewing the thicket of rules and regulations that were put in place under President Barack Obama. Shares in JPMorgan, the biggest US bank by assets, and its cohort have rallied strongly since Mr Trump won power in November, boosted by talk of higher interest rates and lower taxes, in addition to more relaxed supervision.

Sorry Jamie, Fed economists think bank capital is still too low -  “It is clear that the banks have too much capital.” –Jamie Dimon’s latest letter to JPM shareholders, April 4, 2017 “In all cases the economic benefits of moderate increases in capital levels above current levels exceed the economic costs. “–“An Empirical Economic Assessment of the Costs and Benefits of Bank Capital in the US”, Federal Reserve Board paper March 31, 2017 Financial crises are bad. The present value of the damage from lower incomes, reduced investment, and higher joblessness is worth about a full year’s worth of output. On top of that are the psychic costs that come from losing employment and savings, which in turn may explain the linkage between crises and social strife that risks long-lasting damage to the institutions underpinning economic growth. Preventing crises — and limiting the damage they cause when they do occur — should therefore be one of policymakers’ top priorities. The most straightforward approach would be to eliminate private money creation. For those less inclined to radical change, the answer is raising equity capital ratios.After all, “financial crisis” is just a phrase that means “people dump risky assets so much that it hurts the real economy”. While indiscriminate selling can have many causes, having to repay lots of debt all at once — a bank run — tends to be the most powerful one. Equity is useful because it limits this danger. Lenders who are confident that shareholders will bear a heavy burden of any bank’s losses will be less likely to demand immediate repayment and more likely to continue providing credit to household and businesses. Equity isn’t the only thing that can make the system safer. Rules about the kinds of assets banks can own, rules about the types of debt they can issue, and new legal regimes that make it easier to separate crucial infrastructure from failing institutions should also help lessen the danger of crisis.But equity is still the most important thing, as a new research paper from Simon Firestone, Amy Lorenc, and Ben Ranish at the Federal Reserve Board makes clear. They studied the relationship between the level of equity (the Tier 1 capital ratio under Basel III rules), the risk of crisis, the damage from a crisis, and how all of those things might be affected by the other regulatory changes implemented in the past few years. They concluded the US economy would be better off with more equity in the banking system under all the possible assumptions they tested, with the optimal capital ratio potentially more than double what it is now. Considering this comes from staff economists at America’s most important banking regulator, you should pay attention to their reasoning.

Fed's Kashkari says JPMorgan's Jamie Dimon is dead wrong about banks -  Minneapolis Fed President Neel Kashkari is taking on the financial world's perhaps most well-known and powerful name — JPMorgan Chase CEO Jamie Dimon, whom the central bank official said recently made "demonstrably false" statements about the industry. In his annual letter to investors, Dimon said "too big to fail" fears have been eradicated. The expression stems from the financial crisis, when taxpayers were on the hook for billions in bailouts to the financial industry. Dimon contended that banks are well-capitalized and well-regulated enough to sustain shocks similar to what happened during the crisis. Kashkari disputed both points. He said bank equity won't be near enough to help the industry in the case of another crisis, and believes regulators are still being too easy on banks."Although capital standards are higher than before the last crisis, they are not nearly high enough," Kashkari said in a blog post on Medium.com. "The odds of a bailout in the next century are still nearly 70 percent."A Fed analysis concluded that banks should be able to able to handle a 20 percent loss on assets during a crisis. To get to that level, bank capital standards should be doubled from current levels, Kashkari said.Dimon indicated in his letter that post-crisis regulatory changes will make it easier to convert debt to equity during the next downturn. However, Kashkari argued that governments have long been reluctant to hurt bondholders, who tend to assume they'll be bailed out during a crisis. On the regulatory side, he said bank stress tests are only "hypothetical scenarios" that won't protect against a crisis that no one will see coming. "The most recent crisis showed that even some debt holders who had been explicitly told that they would take losses during a crisis got bailed out," he wrote.

Congress playing chicken with Dodd-Frank reform — A Senate Republican effort to use an obscure legislative process to restructure the Consumer Financial Protection Bureau could derail any bipartisan agreement on targeted changes to the Dodd-Frank Act. While the chances of sweeping financial reform are remote, Senate Banking Committee Chairman Mike Crapo and his Democratic counterpart, Sen. Sherrod Brown of Ohio, have voiced optimism about enacting narrower changes.

Wall Street's outgoing regulatory czar: Leave Dodd-Frank alone - Apr. 4, 2017: The Federal Reserve's regulatory czar departs Wednesday, potentially clearing a path for President Trump to loosen the rules governing Wall Street. But before Daniel Tarullo walks out the door of the U.S. central bank, he has some parting advice for the Trump administration: Leave Dodd-Frank alone. In his final speech at Princeton University on Tuesday, the outgoing Fed governor objected to efforts by the White House and Congress to weaken the rules that regulate the country's banks, making the case that American taxpayers shouldn't bear the risk of fewer safeguards protecting the financial system. For the past eight years, the 64-year old Massachusetts native has spearheaded efforts to impose tighter restrictions on U.S. banks in order to avert a repeat of the 2008 financial crisis. He led the charge in requiring banks to undergo a yearly stress test to ensure firms can continue to lend even at the brink of a meltdown. He's also pressed for the biggest U.S. banks to hold higher amounts of better quality capital. Tarullo said it's "crucial" that banks continue to maintain strong capital, especially the largest banks. "Neither regulators nor legislators should agree to change that would effectively weaken that regime, whether directly or indirectly," said Tarullo in prepared remarks. "It would be tragic if the lessons of the financial crisis were forgotten so quickly." Appointed by President Obama in 2009, Tarullo is the Fed's key voice on bank supervision.

Fed governor Tarullo says Volcker rule is harming banks -- Federal Reserve governor Daniel Tarullo said there is scope to reform the so-called Volcker rule on proprietary trading because it is damaging market-making activities at banks, even as he defended the broad thrust of post-crisis regulation. The Fed’s top bank supervisor leaves on Wednesday following eight years in which he earned a reputation as a tough enforcer and key player in the ramping up of regulatory requirements following the financial crash. In a speech setting out his parting thoughts, Mr Tarullo warned that it would be “tragic” if the lessons of the crash were forgotten so soon as proposals for deregulation swirl around the sector, adding that it was crucial that the “strong capital regime be maintained”. “Given the healthy increases in lending over the last several years and the record levels of commercial bank profits recorded in 2016, it would seem a substantial over-reach to claim that the new regulatory system is broadly hamstringing either the banking system or the economy,” Mr Tarullo said in a speech at Princeton University. Mr Tarullo’s observations came as President Donald Trump renewed his attacks on the Dodd-Frank regime on Tuesday, pledging a “very major haircut” on the rules as part of his efforts to ease the burden of regulation on the financial sector and other parts of the economy. A key question beyond the realm of any legislative change — which many lobbyists see as unlikely in the near future — is the identity of the next regulatory overlord at the Fed. Mr Trump’s administration has been seeking to identify a new vice-chair of supervision at the Fed, filling a position that Mr Tarullo has carried out without the formal title.

 Tarullo Suggests Phasing Out Key Part of Bank Stress Tests -  It may be time to phase out one of Wall Street’s most feared aspects of the annual stress tests conducted by the Federal Reserve, Governor Daniel Tarullo said Tuesday on the eve of his last day on the board. The Fed official who has wielded unprecedented influence over the regulation of big banks said the part of the exams that measures lenders’ ability to weather a major crisis -- known as the qualitative test -- may not be needed much longer. With Wall Street improving its performance in the tests, Tarullo said the qualitative portion could be incorporated into the Fed’s routine supervision of banks. That would remove an important hurdle that lenders must clear to win approval to pay dividends to their shareholders. “It should alleviate the apprehension of banks that they may be subject to objections to their capital plans that are both very public and hard to fully anticipate,” Tarullo said in his final official speech, delivered at Princeton University. Earlier this year, the agency had already exempted regional banks from that same part of the tests, which evaluates how they plan for managing capital and risk under duress. In the 2016 stress tests, the Fed told Morgan Stanley to resubmit its plan after shoring up internal systems. It was the only large U.S. bank to come up short, though U.S. units of Banco Santander SA and Deutsche Bank AG failed their exams. In his farewell remarks, Tarullo pitched other policy ideas for the Fed to consider. They include exempting community banks from the Volcker Rule and reevaluating capital requirements for custodial banks such as Bank of New York Mellon Corp. and State Street Corp. He also said he still expects the Fed to move forward with a change to its tests that could increase capital demands on the largest banks.

One-size-fits-all rulemaking hurts regional banks: M&T’s Wilmers - BankThink --The scope of regulation has, in many respects, reshaped entire sectors of the economy. Consider just a few key industries that have been disproportionately affected by regulation. Energy, health care, housing and finance, which in combination contribute 29% of U.S. economic output, have together faced a total of 7,260 new regulations just since the beginning of 2009. The effects of such regulation are sweeping and often severe—its deployment invariably well intentioned, yet its implications often unappreciated or misunderstood. As just one example, a recent survey suggests that, on average, regulation adds nearly $85,000 to the cost of developing and constructing a new home. Perhaps not coincidentally, fewer new homes were sold in 2016 than in 1973, a time when the U.S. was one-third less populous than today. It is instructive to consider the ways in which regulation has transformed the industry with which we are most familiar—our own.Regulation, more than any economic force in memory, has changed the face of banking. And because the fates of banks and the communities they serve are so intertwined, the regulatory impacts borne by regional banks are inextricably linked to the repercussions experienced by their customers. When oversight efforts made in good faith to alleviate one perceived problem inadvertently create another, the consequences, unintended as they may be, are tangible and far-reaching.In the wake of the financial crisis, legislators and regulators imposed a wide array of new laws and regulations, ostensibly to instill confidence in the U.S. financial system by limiting the amount and type of risks the largest financial institutions could undertake. So cataclysmic was the crisis, lawmakers felt pressured to react swiftly. It was decided, abruptly and arbitrarily, that banks whose assets exceeded a $50 billion threshold would be subjected to the most demanding requirements of the subsequently enacted Dodd-Frank legislation, regardless of an individual bank’s complexity or the nature of its business activities.

The real-world impact of Dodd-Frank, stress tests and other regs - (slideshow) The pain caused by the Great Recession demanded a swift government response, but was it the right response? M&T Bank Chairman and CEO Robert Wilmers says it may have been at the time, but in his annual letter to shareholders he laid out in compelling detail how government policies intended to protect American families have ultimately stymied economic growth. Here’s a by-the-numbers look at the impact he says excessive regulation has had on M&T, the industry at large and the broader economy.

Cohn Backs Wall Street Split of Lending, Investment Banks - In a private meeting with lawmakers, White House economic adviser Gary Cohn said he supports a policy that could radically reshape Wall Street’s biggest firms by separating their consumer-lending businesses from their investment banks, said people with direct knowledge of the matter. Cohn, the ex-Goldman Sachs Group Inc. executive who is now advising President Donald Trump, said he generally favors banking going back to how it was when firms like Goldman focused on trading and underwriting securities, and companies such as Citigroup Inc. primarily issued loans, according to the people, who heard his comments. The remarks surprised some senators and congressional aides who attended the Wednesday meeting, as they didn’t expect a former top Wall Street executive to speak favorably of proposals that would force banks to dramatically rethink how they do business. Yet Cohn’s comments echo what Trump and Republican lawmakers have previously said about wanting to bring back the Glass-Steagall Act, the Depression-era law that kept bricks-and-mortar lending separate from investment banking for more than six decades. In the years after the law’s 1999 repeal, banks such as Citigroup, Bank of America Corp. and JPMorgan Chase & Co. gobbled up rivals and pushed into all sorts of new businesses, becoming one-stop-shopping financial behemoths. Many banking executives believed that the inclusion of former finance executives like Cohn in Trump’s White House would temper major changes such as a Glass-Steagall return. But his Wednesday remarks suggest he could be a wildcard should Congress get serious about reinstating the law.

Is the Trump administration serious about restoring Glass-Steagall? - — Observers are divided whether National Economic Council Director Gary Cohn's support for a modernized Glass-Steagall Act is purely opportunistic or a sincere wish to significantly reshape the financial services industry. Cohn told Senate Banking Committee members at a private meeting this week that he supported the reinstatement of the 1930s-era law separating commercial and investment banking, according to Bloomberg News, backing comments by other Trump administration officials. The news was a surprise since Cohn, a former president of Goldman Sachs, was widely assumed to be opposed to such a move. “Cohn was the most likely obstacle within the Trump White House,”  “With him supporting Glass-Steagall's restoration, there is no one in the inner circle left to fight it.” Yet it remains unclear just how committed the Trump administration is to the idea. Though it has been endorsed by Treasury Secretary Steven Mnuchin and was added to the GOP platform at candidate Donald Trump's request, there is considerable skepticism within the industry that the administration is serious about it. Privately, some industry representatives said Cohn's comments, which reportedly came in response to a question by Sen. Elizabeth Warren, D-Mass., aren't a surprise. If Cohn had objected to the restoration of Glass-Steagall, or even appeared tepid about it, he would have put himself at odds with the public views of the Trump administration. It was politically safer for Cohn to reiterate the administration's view than to suggest there are divisions at the White House, they suggested. Moreover, the Trump administration has nothing to lose by continuing to express support for reinstating Glass-Steagall, which remains popular with populists on the left and right.  "If you can maintain something that is consistently populist, but also doesn’t bind you to anything because there is no path forward, it is a simple calculus,” said a bank consultant who spoke on condition of anonymity.

Trump and Warren Agree? Maybe, on Plan to Shrink Big Banks - President Trump has vowed to roll back financial regulation, saying that it is preventing banks from lending and businesses from growing. Wall Street, it would seem, has found its dream president. There is just one possible complication: His top advisers continue to float an idea that would not only hurt the nation’s largest banks, it would upend them. In a meeting on Wednesday with senators from both parties, Gary D. Cohn, Mr. Trump’s chief economic adviser, said the administration was considering a proposal that would require separating retail banking from investment banking and trading. Mr. Cohn mentioned the idea to members of the Senate Banking Committee as one of several financial regulations on the table. He offered few specifics on how the proposal would work or when it could be carried out, according to people briefed on the matter. It was part of a wide-ranging discussion, reported earlier by Bloomberg, that also touched on the president’s tax policy. The former No. 2 executive at Goldman Sachs, Mr. Cohn is not the first administration official to signal Mr. Trump’s support for restoring some version of the New Deal-era Glass-Steagall Act, which forced the separation of deposit taking from trading and investment banking activities. Treasury Secretary Steven Mnuchin has also expressed support for some new version of the law. The goal of Glass-Steagall was to prevent banks from taking risks with people’s federally insured deposits. Senator Elizabeth Warren, the Massachusetts Democrat who is arguably Wall Street’s harshest critic on Capitol Hill, has said restoring Glass-Steagall would reduce the risks bank pose to the economy by creating a “wall between commercial and investment banking.” “Despite the progress since 2008, the biggest banks continue to threaten our economy,” Ms. Warren said in a statement.On Thursday, she seized on the news of Mr. Cohn’s comments to reintroduce a bill that she sponsored with Senator John McCain, Republican of Arizona, called the 21st-century Glass-Steagall Act. It was a rare moment of harmony between the Trump administration and Ms. Warren. They are even calling their proposals by the same name.

Why regulators should focus on bankers’ incentives - Last autumn, Charles Goodhart gave a special lecture at the Bank. In this guest post he argues that regulators should focus more on the incentives of individual decision makers. The incentive for those in any institution is to justify and extol the virtues of the decisions that they have taken. Criticisms of current regulatory measures are more likely to come from outsiders, perhaps especially from academics, (with tenure), who can play the fool to the regulatory king. I offer some thoughts here from that perspective. I contend that the regulatory failures that led to the crisis and the shortcomings of regulation since are largely derived from a failure to identify the persons responsible for bad decisions. Banks cannot take decisions, exhibit behavior, or have feelings – but individuals can. The solution lies in reforming the governance set-up and realigning incentives faced by banks’ management. ... There are two questions that need reconsideration. The first relates to the scope of responsibility for outcomes in a hierarchical institution; the second relates to the downside that those responsible should face when failure or bad behavior occurs. [...] He concludes with: If a bank CEO knew that his own family’s fortunes would remain at risk throughout his subsequent lifetime for any failure of an employee’s behavior during his period in office, it would do more to improve banking ‘culture’ than any set of sermons and required oaths of good behavior. The root of the problem is the bad behavior of bankers, not of banks, who are incapable of behavior, for good or ill. The regulatory framework should be refocused towards the latter, with a focus on reforming incentives.

Want to ease the regulatory burden? Reform Congress -- I have been laboring in the fields of banking law and regulation for more than 45 years and have made some observations along the way. First and foremost, banking is overregulated. The problem goes way beyond what Congress did with the Dodd-Frank Act. Bankers have complained about the regulatory burden since long before financial crisis. The savings and loan crisis in the '80s and '90s resulted in an avalanche of rules and regulations. Banking regulation today is far more pervasive than it was back then.And yet, the proposed solutions for dealing with the regulatory burden tend to be not much better than the unnecessary laws and rules enacted in the first place. Efforts at regulatory “reform” and regulatory “relief” often ignore the source of what led to the overregulation in the first place: Congress.Congress needs a more deliberative process when enacting legislation that results in new banking policy, perhaps in the form of a Legislative Procedure Act. Right now, lawmakers’ role is more about competing ideologies rather than substantive issues.  To be clear, some of Dodd-Frank’s provisions should be repealed. For example, some of its amendments to the Truth in Lending Act add unnecessarily to the regulatory burden, especially with respect to residential mortgage transactions. The TILA law, as originally enacted made sense and was clear and understandable, but multiple amendments over the years have added needless complexity.  But relying on a Dodd-Frank repeal has immediate problems. First, it is unlikely to happen given the political breakdown of Congress right now, and No. 2, even if Congress were able to repeal the 2010 law, that would still not address the unnecessary regulatory burden that had been disrupting banking before the 2008 crisis.  Meanwhile, the Trump administration has tried to address the regulatory burden independently of any Dodd-Frank repeal efforts with executive orders intended to lean on the regulatory agencies to roll back policies through their implementing authority. But these executive orders overlook the deliberative nature of the regulatory agencies’ rulemaking process. Among the steps that the administration has called for are having the regulatory agencies repeal two existing rules for every new rule issued. But that is simplistic and reveals a lack of understanding of how regulations are normally created and repealed. 

Fed's Lacker abruptly resigns after disclosure of confidential information — Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, suddenly resigned Tuesday after revealing that he inadvertently disclosed confidential information about monetary policy to analysts in 2012. Although Lacker said in January that he intended to retire in October, his admission and immediate departure sent shock waves through the financial policy world. “I apologize to my colleagues and to the public I have been privileged to serve,” he said in a statement. “I have always strived to maintain the appropriate balance between transparency and confidentiality, but I regret that in this instance I crossed the line to confirming information that should have remained confidential.” At issue is a phone call with a Medley Global Advisors analyst in October 2012. During the call, the analyst discussed an “important non-public detail about” a monetary policy option being considered by the Federal Open Market Committee. “Due to the highly confidential and sensitive nature of this information, I should have declined to comment and perhaps have ended the phone call,” Lacker wrote. “Instead, I did not refuse or express my inability to comment and the interview continued.” Lacker said that he did not report to FOMC personnel that the analyst was in possession of confidential information. Medley later published a report by the analyst that revealed the FOMC’s deliberations. The Medley report related to the size and timing of the FOMC’s Treasury buying program and a target unemployment rate favored by then-Fed chairman Ben Bernanke. “I realized my failure to decline comment on the information could have been taken by the analyst … as acknowledgment or confirmation of the information,” Lacker said. “I deeply regret the role I may have played in confirming this confidential information and in its dissemination to Medley’s subscribers.” The publication of sensitive information sparked an investigation into the leak by the FOMC, the Justice Department and the FBI. Lacker said that while he intended to cooperate with the internal investigation, he did not disclose that the analyst possessed confidential information when questioned by the FOMC. He did, however, give his information to the FBI and the Justice Department.

Richmond Fed’s Jeffrey Lacker Departs Due to Leak: Defenestration as Coverup? Yves Smith - The big financial news story tonight is the unexpected resignation of Richmond Fed president Jeffrey Lacker, only six months before his term was due to end. Despite headlines like the one at the Wall Street Journal, Fed’s Lacker Resigns Over Leak, Dealing Blow to Bank’s Credibility, putting the damage to the bank’s reputation front and center, it looks as if the central bank and outside investigators have not come close to getting to the bottom of the matter.  The background is that, Medley Global Advisors, a firm that had been a distressed debt investor but evolved into a pure research firm now owned by the Financial Times, published a research note in 2012 that made no bones about being based on extensive inside information from the Fed. We’ve embedded it at the end of the post. It described what September Fed open market committee meeting minutes said, stating that they were not to be released until the next day, at 2:00 PM. From a trading perspective, the big news was at the top: “The minutes will show…it will be unlikely that the labor market improvement will be substantial enough to stave off new Treasury purchases into 2013.” And in the sixth paragraph it describes how the Fed was likely to vote as early as December to stop the part of its MBS buying designed to counter the bonds being paid off (due to foreclosures, home sales, refis) and buy roughly $45 billion a month of Treasuries instead.  The amount of granular detail was stunning. For instance:  The committee will attach a predictive timetable outlining the duration of these purchases…The monthly MBS purchases of around $40 billion will continue along side the new program…Tomorrow’s minutes will reference a staff paper…The minutes will show the dovish majority was ready….[to make] open ended MBS and Treasury purchases as early as last month.  This is so specific that it comes of as if Medley either got its hands on an advance draft of the FOMC minutes or someone read it to her.  The report also describes, again in depth, how the decision process prior to the September meeting departed from established norms as well as voyeristic tidbits, such as that finalizing the text of the policy recommendations kept staffers up until after midnight.

The sudden resignation of a Federal Reserve president came with a huge hint that there's more to come - There was a leak of market-moving information from the Federal Reserve to individuals in the private sector. It was a huge violation of public trust in the US central bank.  We've known that since 2012.  Five years later, though, we still don't have answers to the question: Who knew what about the leak, and when did they know it? And, despite appearances to the contrary, we also don't know who the actual leaker was.   The Fed would love it if this case — which it tried to settle with an internal investigation before handing it over to the proper authorities — was closed with the abrupt resignation on Tuesday of the Richmond Fed's president, Jeffrey Lacker.  Lacker was set to step down later this year anyway after more than 12 years on the job, so he's a convenient fall guy.  But a second look at Lacker's letter of resignation tells us that he wasn't the only one involved here.  Lacker's language suggests he wasn't the leaker. In fact what Lacker admitted to was unwittingly confirming key information about deliberations on whether and when the Fed should purchase large quantities of government and mortgage bonds to keep long-term interest rates down.  That means "the Analyst" at Medley actually obtained the market-moving details about the Fed's decision-making from someone else. This is what Lacker said: "During that October 2, 2012 discussion, the Analyst introduced into the conversation an important non-public detail about one of the policy options considered by participants prior to the meeting. Due to the highly confidential and sensitive nature of this information, I should have declined to comment and perhaps have ended the phone call. Instead, I did not refuse or express my inability to comment and the interview continued. "When Medley published a report by the Analyst the following day, October 3, 2012, it contained this important detail about one of the policy options and I realized that my failure to decline comment on the information could have been taken by the Analyst, in the context of the conversation, as an acknowledgment or confirmation of the information." What was the important nonpublic detail the Medley analyst introduced? We don't know for sure, but thanks to ProPublica there's a copy of the original Medley report that sheds some light on what this could have been.  And here's the important part: Medley clearly states its information came from the Federal Reserve's board, a claim that is confirmed by the exactness of the policy details — and the way they were, in fact, implemented much as predicted by Medley.

President of Richmond Fed Leaks Insider Information and Gets to Walk Free (video & transcript) Yves here. While this Real News Network interview with Bill Back makes clear how Richmond Fed president Jeffrey Lacker got away with conduct which would have earned mere mortals a big fine and maybe even jail time, I have a quibble with Black’s remarks. He states that regional Fed presidents are chosen by the banks that sit on regional Fed boards. That is no longer true as of Dodd Frank which became effective in 2011. The appointment is subject to the approval of the Board of Governors. More details about the process here.

 Insider Selling Hit Six-Year Highs As Retail Investors Rushed Into Stocks -Earlier we showed that when looking at asset returns in the first quarter, there were hardly any underperformers while positive returns were generous across virtuall all asset classes. What drove this outsized performance, which once again left most hedge funds and asset managers seeking to generate alpha in the dust? The answer: a continuation of the capital reallocation euphoria launched with the Trump election in November, which continued for the second consecutive quarter. And while stocks were by far the biggest beneficiaries of the fund flows, with US equity ETFs alone taking in $62 billion in Q1, as TrimTabs' David Santschi points out, the bond inflow was perhaps the most noteworthy, which saw $34 billion in inflows even as Bond ETFs rose just 1.0% last quarter, yet money kept pouring in all quarter.Here is the summary of how retail investors allocated funds to the market, courtesy of the TrimTabs:All Stock and Bond Funds Get $162 Billion in Q1 2017, Biggest Quarterly Inflow in Four Years. Insider Selling Hits Six- Year High in February and March. Real Wages and Salaries Keep Rising at Brisk Pace, although TrimTabs Macroeconomic Index Levels Off, and Credit Indicators Not Signaling Big Pickup in GrowthAnd the Demand (Fund Flows) detailsFund investors went on a buying spree last quarter, snapping up $162 billion worth of stock and bond funds, the most since the inflow of $193 billion in Q1 2013. U.S. equity ETFs alone took in $62 billion in Q1 2017 following the record inflow of $109 billion in Q4 2016.Our U.S. demand indicators generally improved last week, turning mildly bullish for the short term (one to two weeks) and more firmly bullish for the intermediate term (one to two months). Demand for U.S. equity ETFs decreased in recent weeks, which is encouraging from a contrarian perspective. Inflows into these funds totaled just $2.2 billion (0.1% of assets) in the past week, and the trailing one-month inflow has plunged to a seven-week low of $11.5 billion (0.7% of assets). The TrimTabs U.S. Equity ETF Index (TTEI), which uses ETF flows for short-term market timing, rose to 62.9 on March 30, up from 52.2 a week earlier. Since the TTEI is between 50 and 75, the TTEI Model Portfolio is 75% long the S&P 500.

Almost a Decade Later, U.S. Money Markets Are Yet to Recover - Regulators’ effort to stamp out risk in the $2.6 trillion U.S. money-fund industry is creating unintended ripple effects across financial markets, with far-reaching consequences for companies and investors.Far less cash than anticipated has returned to the higher-yielding slice of the money-fund world, after the overhaul that took effect in October led to a $1 trillion exodus from what are known as prime funds. They’ve been the principal buyers of the commercial paper that companies and both foreign and domestic banks have sold for decades to obtain short-term U.S. dollar-denominated financing.By squelching demand from prime funds, commercial-paper rates relative to other money-market securities have risen, and are now at the highest levels since the financial crisis, causing borrowers to seek new sources of funding like the short-term securities lending market. Investors are also feeling the pinch -- most money funds are stuck with Treasury bills offering paltry rates. What’s more, the massive shift toward funds that can only buy the safest U.S. debt has created the potential for a bottleneck if Congress is unable to resolve long-simmering disputes related to the nation’s debt ceiling. “The biggest losers are financial institutions,” said Anthony Carfang, a Chicago-based managing director at Treasury Strategies, a consultant for corporations and financial-services providers. “U.S. financials and non-financials have also been hurt. There are very few U.S. corporations getting funding from prime funds.”The commercial-paper market is a shadow of its former self, with foreign financial issuance up only about $20 billion since November, as overseas institutions gravitate to high-quality, short-term government assets to secure U.S. dollar funding. Non-U.S. banks lost $555 billion of U.S. dollar funding from prime funds since December 2015, according to the Bank for International Settlements’ Quarterly Review published March 6. The number of AA rated financial commercial-paper issues with maturity longer than 80 days has plummeted. Six issuers tapped the market March 29, compared with as many as 95 a day in March 2016, Federal Reserve data show.

Wells Fargo Has to Pay a Whistleblower $5.4 Million and Give Him His Job Back - The federal government has ordered Wells Fargo to reinstate a former bank manager who lost his job after reporting suspected fraudulent behavior at the bank. The Labor Department’s Occupational Safety and Health Administration (OSHA) announced on Monday that the bank must rehire the employee, as well as pay back wages, compensatory damages and attorneys’ fees totaling $5.4 million. OSHA concluded that the manager was “abruptly” forced to leave a Los Angeles branch of the bank in 2010, after he told superiors he suspected two of his subordinates of bank, mail and wire fraud. The manager also called the bank’s ethics hot line. OSHA determined his whistleblowing was “at least a contributing factor in his termination.” The manager was not named. The bank is planning to request a full hearing on the OSHA decision before the Labor Department’s Office of Administrative Law Judges. Such a step will not halt the initial reinstatement order. According to OSHA, the manager had previously received positive job performance appraisals, but in 2010 he was told he had 90 days to find a new job at the bank after being dismissed as a manager. He was unable to do so and was terminated, and has not found work in banking since. The OSHA decision is unrelated to the bank’s woes surrounding the creation of potentially millions of fake accounts by employees looking to hit sales goals. In that case, the bank has also come under scrutiny over whether it punished whistleblowers that notified superiors of wrongdoing involving Wells Fargo employees.

Feds may order Wells Fargo to rehire a second whistleblower, Claudia Ponce de Leon -- To justify its September 2011 decision to fire Claudia Ponce de Leon, Wells Fargo claimed the Southern California bank manager drank excessively and that she engaged in other inappropriate behavior. Three weeks before her termination, she had called the company ethics line – to report that bankers under her supervision in the city of Pomona were opening fake client accounts to meet sales goals. This was almost exactly five years before regulators fined the bank for opening millions of bogus accounts nationwide for clients without their knowledge.The Department of Labor, in investigating her complaint under whistleblower protection laws, found no evidence to support the bank's allegations against Ponce de Leon. On Dec. 6 of last year, it put Wells on notice that it is likely to order the company to reinstate her to her former job, according to documents obtained by American Banker. If the department issues such an order, Ponce de Leon would become the second Wells Fargo whistleblower that the federal government is known to have told the bank to rehire. On Monday, the department’s Occupational Safety and Health Administration announced the largest individual whistleblower award in its history, when it ordered Wells Fargo to reinstate a former male wealth manager in Los Angeles and to pay him $5.4 million in back wages. His name has not been disclosed. Such reinstatements are unusual, and could signal a more aggressive approach by the government to protecting whistleblowers in the financial services sector.

Financial inclusion rules tougher than CRA in OCC fintech charter -- The Office of the Comptroller of the Currency’s proposal to require fintech charter applicants to draft and comply with a financial inclusion plan appears to have more teeth than similar Community Reinvestment Act requirements for banks. The OCC has made it clear that it is not seeking to institute CRA requirements on nonbanks, in part because the 1970s-era law is widely considered outdated in how it promotes financial inclusion. Instead, the agency has sought to create a new system under which fintechs detail how they plan to promote financial inclusion, and the OCC holds them to those goals.

What Dimon had to say about fintech in his annual letter - This year, JPMorgan Chase plans to allow its retail customers to open an account and complete most transactions on their mobile device and offer them self-directed investment tools, while corporate customers can expect an enhanced digital platform. The updates were mentioned in CEO Jamie Dimon’s annual letter to shareholders, which was published Tuesday. The highly anticipated letter often serves as a bellwether for various topics, ranging from the threat of fintech in previous years to the need for regulatory reform, the dominating topic in this year’s missive. Although Dimon’s comments this year on tech were shorter than last year’s, he made a few noteworthy points. JPMorgan spends heavily on tech "to benefit customers with better, faster and often cheaper products and services, to reduce errors and to make the firm more efficient,” CEO Dimon wrote.   For instance, $600 million of the company’s $9.5 billion tech budget was spent “on emerging fintech solutions.” In one sense, Dimon is using "fintech" as a synonym for digital banking. He mentioned that some of that money went toward building and improving online and mobile services. But he also used "fintech" to refer to partnerships with fintech firms. In the last couple of years, for example, JPMorgan has partnered with the online lender OnDeck for small-business loans, TrueCar for auto lending and Roostify for mortgages. Dimon also highlighted a Developer Services API store — a place where developers can access the company’s application programming interfaces to build new products or services. Such connectivity would be “fully controlled, of course,” Dimon wrote. He also vaguely referred to “bill payment and business services” innovations.

 Bank consortium demos leveraged loan trade via blockchain -- Coordinators of a blockchain project backed by the financial industry say they have successfully demonstrated that the distributed ledger technology can be used to syndicate, trade and make payments on leveraged loans. The 90-minute demonstration was carried out this week by Synaps Loans LLC, Credit Suisse and the financial services consortium R3. Participating instutions included Barclays, BBVA, Danske Bank, Royal Bank of Scotland, Scotiabank, Societe Generale, U.S. Bank and Wells Fargo on the sell side; and firms such as AllianceBernstein, Eaton Vance Management, KKR and Oak Hill Advisors on the buy side. Also participating was the custodial bank State Street Corp. and the Loan Syndications & Trading Association, a trade group for the leveraged loan and collateralized loan obligation industry. There was no actual transaction; rather, the demo was a proof-of-concept involving a simulated end-to-end leveraged loan trade. Proponents say it validated the premise that blockchain can be used to speed up interaction in the secondary loan market, from back-office functions like settlement and documentation to agent-bank duties like managing votes on loan amendments. "Synaps now has the majority of the functionality needed to implement blockchain technology at scale in the syndicated loan market, which enables us to move into the final stages of development,” Emmanuel Aidoo, head of the distributed ledger and blockchain effort at Credit Suisse, said in a press release. Those final stages will be to implement a platform that could carry a loan from “origination to payoff” before the challenging stage of gaining widespread market adoption, he noted. “This was months of work,” involving more than 100 participants from 19 institutions, said Caitlin Long, president and chairman of Symbiont, said in an interview with Asset Securitization Report. “We had a large number of parties involved” in the demonstration, she added, “and we had to turn away some participants because there are only so many you can sit at the table like this.”

Awash in liquidity, banks seek tech solution - Too much cash. It sounds like a good problem to have.  But for banks, it can be costly to have too much cash sitting around doing nothing. Having too little liquidity can run them afoul with regulators, of course. It’s part of a chief financial officer and treasury department’s job to manage this to a reasonable level. A technology solution to the liquidity problem is being created by CIBC, Commerzbank, Credit Suisse, ING and UBS, along with the blockchain consortium R3 and the liquidity management software company HQLA^X. They are building a distributed ledger specifically for banks to trade highly liquid securities amongst each other and thus be able to better manage their liquidity ratios. “My hope for this project is that it helps us frame a discussion with custodians, partner banks and regulators that leads us down a pathway to commercialization and to a real platform that allows for a marketplace for real-time transacting,” said Emmanuel Aidoo, head of blockchain and distributed ledger technology strategy at Credit Suisse. In a recent report, the Bank of International Settlements found that financial institutions hold more highly liquid assets to meet short-term obligations than they need to.   “As a result of Basel III regulation, particularly as it relates to the liquidity coverage ratio, banks have done a good job of sourcing liquidity and in many cases now, banks are in a position where they have excess capacity of liquidity,”  This puts an onus on the CFO and treasury department of each bank to manage their liquidity ratios to a target, he said. “The underlying securities settlement system that we have in place across the globe is quite fragmented, and it’s difficult in this day and age to move securities from one international central securities depository to another,” he said. Stroemer said he believes that rather than physically transfer cash and securities among one another, banks would be better off keeping all the securities in a secure place, and transferring legal title to them amongst each other.  In the plan for the new ledger, a trusted third party, such as a central securities depository, will use R3’s Corda platform to issue and track receipts (formally called digital collateral receipts) for the securities banks want to trade. The ledger will not store the cash or securities — the trusted third parties will take care of that.

Big banks poised to scoop up fintech startups, report finds -- Big banks may have scoffed when a gaggle of financial technology upstarts promised to reinvent their business. Now they want to buy them. Almost 50 percent of financial services firms around the world plan to acquire fintech startups in the three to five years, according to a report Thursday by PricewaterhouseCoopers LLP. And eight out of 10 institutions foresee making strategic partnerships with peer-to-peer lenders, digital money transfer platforms, and myriad other firms that are reshaping the business of money. The findings show that fintech is shifting into a new deal-making phase, said Steve Davies, the head of PwC's fintech practice in Europe, the Middle East and Africa. "Fintech collaboration is not about jumping on the latest bandwagon — it's about finding the best, most efficient way to deliver your business strategy and ultimately better serve your customers," Davies said in a statement. "The financial services industry has embraced fintech." Fear may be motivating finance leaders as much as the desire for innovation. The 20-page report, titled "Redrawing the Lines: FinTech's Growing Influence on Financial Services," found that four of five banking executives worry they will lose revenues to independent fintech firms. PwC polled 1,308 financial services managers worldwide for the study. A groundbreaking deal in France this week may be a sign of things to come. BNP Paribas agreed to buy French digital bank Compte-Nickel for 200 million euros ($213 million). That's the biggest fintech acquisition ever in France, said Maia Thomine Desmazures, a spokeswoman with La French Tech, a government-backed group to promote French startups. "We expect to see bigger deals in 2017 as the sector matures," Desmazures said.

How Hackers Hijacked a Bank’s Entire Online Operation - Wired --The traditional model of hacking a bank isn’t so different from the old-fashioned method of robbing one. Thieves get in, get the goods, and get out. But one enterprising group of hackers targeting a Brazilian bank seems to have taken a more comprehensive and devious approach: One weekend afternoon, they rerouted all of the bank’s online customers to perfectly reconstructed fakes of the bank’s properties, where the marks obediently handed over their account information. Researchers at the security firm Kaspersky on Tuesday described an unprecedented case of wholesale bank fraud, one that essentially hijacked a bank’s entire internet footprint. At 1 pm on October 22 of last year, the researchers say, hackers changed the Domain Name System registrations of all 36 of the bank’s online properties, commandeering the bank’s desktop and mobile website domains to take users to phishing sites. In practice, that meant the hackers could steal login credentials at sites hosted at the bank’s legitimate web addresses. Kaspersky researchers believe the hackers may have even simultaneously redirected all transactions at ATMs or point-of-sale systems to their own servers, collecting the credit card details of anyone who used their card that Saturday afternoon. “Absolutely all of the bank’s online operations were under the attackers’ control for five to six hours,” says Dmitry Bestuzhev, one of the Kaspersky researchers who analyzed the attack in real time after seeing malware infecting customers from what appeared to be the bank’s fully valid domain. From the hackers’ point of view, as Bestuzhev puts it, the DNS attack meant that “you become the bank. Everything belongs to you now.”

CFPB's Richard Cordray Touts 'Rules of the Road' at U.S. Chamber Event  - Richard Cordray’s consumer protection agency is in the throes of a fight over its constitutionality, and his job as director is widely viewed as in jeopardy with Donald Trump in the White House. But there Cordray was on Thursday—a block away from a White House that wants to“dismantle” the Obama administration’s financial reforms—at the headquarters of the U.S. Chamber of Commerce, a regular litigation foe of the Consumer Financial Protection Bureau. Cordray, speaking at a U.S. Chamber event, defended the agency against an oft-made charge: That the CFPB engages in “regulation by enforcement.” Asked about how the bureau decides between issuing a broad rule and sending a message with an enforcement action, Cordray said, “This is one of those perennial hard issues.” “First of all, rulemaking is prospective in nature and by definition then, in many respects, more evenhanded. But it does take time to fashion the rules, and it is a difficult process. It requires a lot of data, a lot of thought, a lot of input,” Cordray said. He described rulemaking as a “very good tool, a powerful tool, but a sobering tool and one that should be used very carefully.”“Enforcement is different,” Cordray continued. “It’s meant to address particular situations that arise. It’s much more factually-based. It may be more unique to a certain circumstance than a rulemaking. It needs to be.”Cordray said the CFPB makes a point of releasing detailed orders—as part of its enforcement efforts—to send a message to the market. Under the “principle of equal justice,” he said, companies engaging in conduct faulted by the CFPB should recognize that they face significant risk of an enforcement action. “If we don’t enforce with the principle of equal justice in mind, then you’re taking random enforcement actions here and there that don’t have any generalized impact,” Cordray said. “That is why, when we take enforcement actions, we make a point to publish a detailed order describing what the facts were.”

More companies challenging CFPB enforcement actions — The Consumer Financial Protection Bureau racked up an impressive track record related to enforcement actions between its formation in 2011 and 2015, winning 122 cases without losing a single one. But that unblemished record has come to an abrupt end. More companies and individuals are challenging the CFPB's authority, inspired in part by a successful suit by the nonbank mortgage lender PHH Corp. as well as a feeling that the agency has overplayed its hand.

Long day for CFPB's Cordray as accusations and innuendo fly at hearing - Consumer Financial Protection Bureau Director Richard Cordray was subjected to a barrage of accusations and innuendo by House Republicans on Wednesday, as they apparently sought to give President Trump legal justification to fire the agency head. The attacks ranged in tone and severity, often sparking heated exchanges between lawmakers and Cordray. Some criticisms were specific — that the CFPB was “asleep at the wheel” during the Wells Fargo phony-accounts scandal, and did not deserve credit for its role in the enforcement action against the bank. Others were vague, with lawmakers asking Cordray to say whether there were federal investigations into alleged misconduct by the agency and its personnel, all the while making it clear that the lawmakers themselves were not sure such investigations existed. . The onslaught, during which Cordray was often denied the ability to respond, appeared to be an effort by Republicans to lay the groundwork for Trump to remove Cordray “for cause,” the legal standard in the Dodd-Frank Act. (There is a court case challenging that standard, which could allow the president to dismiss a CFPB director at will, but that case is still under appeal.) House Financial Services Committee Chairman Jeb Hensarling touched on Cordray’s tenure at the outset of the hearing, describing the bureau head as a rogue regulator. “Under Mr. Cordray's leadership, the CFPB has acted unlawfully, routinely denied market participants, due process, and abused its powers,” Hensarling said. “For all the harm inflicted upon consumers, Richard Cordray should be dismissed by the president.” Hensarling and other Republicans alluded multiple times to rumors that Cordray might seek a run for governor of Ohio, even suggesting he should quit the CFPB now before the president fires him so he would not have to rehash the accusations against him. "Would you prefer that the president—and again, we're going to note your political aspirations in Ohio — that we'll walk through the racism, the sexism. We'll walk through the intimidation and the retaliation, all the things that we did on our oversight committee and … do that publicly to have you removed for cause? ” said Rep. Sean Duffy, R-Wis., referring to allegations that the CFPB treated its minority employees differently when it came to promotions and pay increases.  Following is a guide to some of the accusations leveled at Cordray and the CFPB.

Public interest can trump arbitration, California court rules - San Francisco Chronicle -  Businesses can’t require consumers in California to sign away their right to seek rulings prohibiting unfair or deceptive practices, the state Supreme Court ruled unanimously Thursday.The court said a provision in a Citibank credit card account, requiring the customer to arbitrate all disputes individually and barring the customer from seeking a ruling that benefits anyone else, violates state consumer-protection laws — even if the customer signed the agreement. Quoting state law, Justice Ming Chin said, “A law established for a public reason cannot be contravened by a private agreement.”That means, he said, that the customer can seek a “public injunction” — an order forbidding practices by the bank that harm the public, such as false advertising — despite the agreement. The court did not say whether a consumer could seek such an order in court or would have to go before a private arbitrator, but said businesses can’t prevent them from representing the public interest.In other words, seeking a public injunction is grounds for an exception to the arbitration clauses, allowing benefits for only the individual customer, that many companies require customers to agree to.The ruling “ensures that consumers have the ability to pursue remedies for wrongdoing guaranteed by state law,” a group of consumer rights organizations called the Fair Arbitration Now Coalition said in a news release. A lawyer for Citibank could not be reached for comment. But a lawyer for the business-backed Association of Southern California Defense Counsel predicted that the ruling would be appealed to the U.S. Supreme Court, whose past decisions have limited California courts’ authority to strike down arbitration clauses in consumer contracts.

New Report on Car Insurance Redlining - Credit Slips - Empirical studies have shown that minorities pay more for goods and services, and that they pay more to finance their purchases of those goods and services -- for instance, through subprime home and auto loans. Machine Bias, a new study from ProPublica and Consumer Reports, adds car insurance premiums to the list of what minorities can expect to pay more for. The study uses zip codes to analyze auto insurance premiums and payouts in four states, California, Illinois, Texas, and Missouri. It finds that major insurers charge up to 30% more in minority neighborhoods as compared to white neighborhoods with the same risk profile. The results mean that where someone lives matters even more, and could have devastating consequences on upward mobility. When faced with budget-busting car insurance bills, do people give up the cars they need to get to work? Or do they go out without necessities, such as food and medicine, so they can pay their car insurance premiums?

How fraudsters are gaming online lenders | American Banker -- Online lenders’ advantage in speed has exposed them to a growing problem: a type of fraud called loan stacking. People are taking advantage of the quick loan approval times online lenders offer to game the system by applying for multiple online loans in a short time before credit files update to reflect the increased debt load. By doing so, they are able to get more money than they would typically qualify for in any one loan. Some use fake identities to get loans and some use completely stolen identity information. Others use their own true identity but take out one or more loans with no intention of ever repaying. And there are people who have hit hard times and need more cash than any one lender will give them. Investigators at companies like TransUnion, ID Analytics and Clarity Services are starting to see the clues that indicate a loan applicant is up to no good and they have learned some of the characteristics of loan stackers. One surprise in investigators’ early findings is that online lending fraudsters tend to hit phone companies first. “They’ll do the rounds and they’ll apply for as much as is humanly possible; they tend to start off in telco,” said Pat Phelan, senior vice president at TransUnion, whose Fraud Prevention Exchange monitors applications for telephone and card companies as well as online lenders. “They’ll open a mobile account, get a billing address on that mobile account, then they’ll head towards traditional nonfintech borrowing, then they’ll head towards card and fintech.” What makes the telephone providers appealing? They have a lightweight customer-onboarding process; they don’t have the same Know Your Customer compliance procedures lenders have. Their main goal is to sell a phone. “You’re going in probably with someone else’s ID or a fake ID. The person examining it is probably very young and is looking at a piece of paper that has an identity,” Phelan said. “They’re probably not as attentive.”

CMBS Delinquency Rate at 16-Month High: The delinquency rate for U.S. commercial real estate loans in commercial mortgage-backed securities (CMBS) reached the 5.31 percent level in February, an increase of 13 basis points (bps) from the previous month, according to data from Trepp LLC. This marked the highest reading since August 2015. On a year-over-year level, the delinquency rate is up by 116 bps. Although delinquency rates were down in four of the five major property sectors, office delinquencies helped push the rate higher in February. Delinquencies in the office sector were up by 54 bps to 7.65 percent. In comparison, the multifamily delinquency rate dipped 14 bps to 2.82 percent, and Trepp credited apartment loans as being “the best performing major property type.” About $1.3 billion in CMBS loans that were previously delinquent paid off with a loss or at par in February, while more than $850 million in loans were cured last month, which helped to push the delinquency rate down by 20 bps.

US CMBS Delinquency Rate Continues to Climb in March -- The Trepp CMBS Delinquency Rate moved higher again in March, as loans from 2006 and 2007 continue to reach their maturity dates without being paid off via refinancing. The delinquency rate for US commercial real estate loans in CMBS is now 5.37%, up six basis points from February. This is the eleventh monthly rate increase in the past 13 periods. The delinquency rate is now 115 basis points higher than the year-ago level.Nearly $2.0 billion in CMBS loans became newly delinquent in March, as the total was once again the leading driver for the heightened rate. About $1.1 billion in CMBS loans that were previously delinquent paid off with a loss or at par last month. Over $500 million in loans were cured in March, though that figure is down by about $350 million month-over-month."With more and more loans turning delinquent after their maturity dates, another monthly increase in the CMBS delinquency rate has become par for the course," said Manus Clancy, Senior Managing Director at Trepp. "This will not last forever, but there is so much debt coming due in the immediate future that cannot be refinanced via CMBS because not many loans are making their way into new deals."Delinquency rates for three of the five major property sectors rose in March, including the industrial segment, as that reading ascended 109 basis points to 7.03%. The lodging and office rates each increased 27 basis points to 3.70% and 7.38%, respectively. The multifamily delinquency reading shed 22 basis points to 2.60% last month, as that sector remains the best performing major property type. For additional details, such as delinquency status and historical comparisons, download the March 2017 US CMBS Delinquency Report: http://info.trepp.com/march-2017-us-cmbs-delinquency-report-press-release.

 UBS Blames Fed For "Crisis High" Subprime Defaults; Says Auto Is Just The Beginning - For months now we've been writing about the mysteriously rising subprime delinquencies afflicting auto ABS structures despite repeated confirmations from the Fed and equity markets that 'everything is awesome' (see "Auto Bubble Burst Begins As Subprime Delinquencies Soar To 2009 Levels" and "Signs Of An Auto Bubble: Soaring Delinquencies In These 266 Subprime ABS Deals Can't Be Good" for a couple of recent examples).Shockingly, as confirmed by the chart below, 2016 vintage subprime auto ABS structures are even underperforming 2007/2008 vintage securitizations.And while most have attributed the rising delinquencies solely to deteriorating lending standards and an increasing mix of 'deep subprime' loans, UBS Global Macro Strategist, Matthew Mish, thinks there is a better answer, namely failed Fed policies.  As we've also argued over the years, while the Fed's misguided QE and interest rate policies have done a masterful job of creating asset bubbles around the world they've done precious little to actually stimulate economic/wage growth, in real terms.In our view, the root causes of the rise in delinquency rates can be traced back to US consumer income inequality and aggressive easing in lending conditions, primarily from non-bank lenders. In short, the mosaic we see is one where central bank reflation efforts, namely QE and low interest rate policies, have been more successful at fuelling higher asset prices and wealth creation for a subset of the consumer and less effective in stimulating real income growth (particularly at the median and below). Wealth creation becomes self-reinforcing in an environment of financial repression, with more cash looking for opportunities for deployment. For the financial sector that means more loan growth, and many less regulated, non-bank financial intermediaries have happily filled the void, incentivized by low interest rates that help sustain a lower cost of capital for themselves and lower funding costs for their borrowers.However, the overall credit quality of borrowers has not kept pace with improvement in the aggregate economy. Our prior Evidence Lab work posits that about 38% of US consumers do not generate positive cash flow and roughly 25-30% of US consumers have not seen improving consumer finances (i.e. they do not own their own home or have significant wealth tied to stock markets). As of Q4'16, 18% of US consumers indicated they were likely to default on one loan payment over the next 12 months vs. 13% in Q3'16. This cohort of at-risk consumers reported being about 4x as likely to embark on a major durable goods purchase (e.g. house, car) in the next year. This is not just a theoretical issue, but perhaps a problem already.

 March 2016: Unofficial Problem Bank list declines to 151 Institutions, Q1 2017 Transition Matrix - Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources.  Here are the monthly changes and a few comments from surferdude808: Update on the Unofficial Problem Bank List for March 2017.  During the month, the list declined slightly from 155 institutions to 151 after five removals and one addition.  Assets dropped by a minuscule $498 million to an aggregate $41.3 billion.  A year ago, the list held 223 institutions with assets of $64.6 billion. This month, actions have been terminated against NewDominion Bank, Charlotte, NC ($316 million); Abacus Federal Savings Bank, New York, NY ($253 million); The Somerville National Bank, Somerville, OH ($164 million); and The Trust Bank, Lenox, GA ($39 million).  Proficio Bank, Cottonwood Heights, UT ($68 million) left the list through failure. The addition this month was Texas Champion Bank, Corpus Christi, TX ($342 million).  Also, the FDIC issued a Prompt Corrective Action order against First NBC Bank, New Orleans, LA ($4.7 billion) on February 24, 2017.With it being the end of the first quarter, we bring an updated transition matrix to detail how banks are moving off the Unofficial Problem Bank List.  Since the Unofficial Problem Bank List was first published on August 7, 2009 with 389 institutions, a total of 1,717 institutions have appeared on a weekly or monthly list at some point.  Only 8.8 percent of the banks that have appeared on the list remain today.  In all, there have been 1,566 institutions that have transitioned through the list.  Departure methods include 898 action terminations, 402 failures, 250 mergers, and 16 voluntary liquidations.  Of the 389 institutions on the first published list, 15 or 3.9 percent still remain more than seven years later.  The 402 failures represent 23.4 percent of the 1,717 institutions that have made an appearance on the list.  This failure rate is well above the 10-12 percent rate frequently cited in media reports on the failure rate of banks on the FDIC's official list..

 Ben Carson: Housing will be part of Trump infrastructure bill - Department of Housing and Urban Development Secretary Ben Carson is back in Washington after spending some time in Dallas/Ft. Worth last week on his listening tour. And now that he’s back in Washington, the focus is turning back to the looming cuts to HUD’s budget, announced as part of the budget proposal from the Trump administration. The proposed $6.2 billion cut to HUD’s budget has many concerned about the number of housing programs that may be negatively affected or cut entirely, but Carson said Monday that those concerned with the proposed cuts aren’t seeing the big picture.According to a report from the Washington Post, Carson said Monday at the National Low Income Housing Coalition conference in Washington that there is another significant source of HUD funding yet to be revealed – the Trump administration’s $1 trillion infrastructure bill.From the Washington Post:“The part that people are not hearing even though I’ve said it several times is that this administration considers housing a significant part of infrastructure in our country. And as such, the infrastructure bill that’s being worked on has a significant inclusion of housing in it,” Carson said at the National Low Income Housing Coalition conference in Washington.Defending the White House’s proposed budget cuts to the Department of Housing and Urban Development — $6 billion would be cut, largely from operations and maintenance funds — Carson assured activists that “no one is going to be thrown out on the street.”“There is no one — Section 811, 202 — no one is going to be thrown out on the street,” he said. “What would that accomplish? That doesn’t make any sense and is certainly not going to happen while I’m around. We do have a responsibility.” Those sentiments somewhat echo other recent statements from Carson, who’s said previously that the proposed cuts to HUD’s budget did not come a surprise.

Foreclosure Crisis Update -- As the subprime foreclosure crisis grinds down slowly (there are still roughly 3 million pre-crisis subprime mortgages outstanding, many of them delinquent), and the HAMP program sunsets, the time has come to appraise the total damage done. In the ten years from 2007 through the end of 2016, about 6.7 million foreclosure sales were completed, and another 2 million or so short sales and deeds-in-lieu of foreclosure brought the total home losses to about 8.7 million, according to HOPE NOW.Subprime mortgages accounted for 2 million of those foreclosure sales and perhaps another 500,000 of the stressed sales. The 2.5 million total home losses roughly matches predictions made at the onset of the crisis, and exceed by a considerable number the total number of subprime mortgages made to first-time home buyers from 2000 to 2007. In other words, subprime mortgages subtracted more than they added to home ownership.The pre-crisis loans are by no means all resolved. About one million active mortgage loans were modified under the HAMP program, meaning that interest rates and payments were reduced for up to five years. Many of those mortgages will face steep rate and payment increases in the coming years, and many are also in negative equity, making sale or refinancing difficult or impossible. A total of around 8 million mortgages were modified under various programs at some point, although a significant portion of those later ended up among the 8 million home losses. The good news is that the number of homes whose mortgage exceeds the market value (underwater or negative equity) has declined from 30% of homes to fewer than 8%. The bad news is that just under 8% of homes are still underwater, a precarious situation that remains historically unprecedented. These stats and many others can be found in an excellent new monthly housing finance data compendium from the Urban Institute.

City officials launch plan for a 'mass foreclosure'  -- For the third time in recent years, the city of Owensboro has launched what it calls a “mass foreclosure,” taking aim at 33 properties to satisfy unpaid property taxes and property maintenance liens. The properties are all over the city, and some have unpaid taxes dating back as far as 2008. Many also owe accumulated property maintenance fees (or nuisance abatement liens) charged by the city for such things as mowing high grass, cleanups and even demolition costs when dilapidated houses or buildings have been taken down by the city. Some of the properties owe a few thousand dollars in back taxes. But a few have bills approaching $20,000 in a combination of unpaid taxes and property maintenance fines and liens. Late last week the city officially filed a lawsuit against the owners of the properties seeking payment of the delinquent taxes and maintenance liens in Daviess Circuit Court. If payment is not received, the suits asks that the Daviess County Master Commissioner sell the properties at auction on the courthouse steps. An auction date has not been set and it may be months before an actual sale will be held. The city’s last mass foreclosure began in 2015 against 24 problem properties and took about a year to finally resolve. For this mass foreclosure, the city is owed a total of nearly $225,000 in back taxes and property liens, not including any unpaid 2016 back taxes that are now overdue. Other entities, including Daviess County, the state of Kentucky, the United States and other creditors such as mortgage lenders, may also be owed money by the property owners. The suit puts all those “respondents” on notice to bring their claims forward. In 2015, the city foreclosed on 24 properties. In 2012, a city mass foreclosure targeted 21 properties.

Black Knight on Mortgages "44 Percent of Q4 Refis Were Cash-Outs, Most Equity Drawn in Eight Years" --Black Knight Financial Services (BKFS) released their Mortgage Monitor report for February today. According to BKFS, 4.21% of mortgages were delinquent in February, down from 4.45% in February 2016. BKFS also reported that 0.93% of mortgages were in the foreclosure process, down from 1.30% a year ago. This gives a total of 5.14% delinquent or in foreclosure. Press Release: Black Knight’s Mortgage Monitor: Tappable Equity Hit $4.7 Trillion in 2016, Highest Since 2006; 44 Percent of Q4 Refis Were Cash-Outs, Most Equity Drawn in Eight Years This month, Black Knight revisited the equity landscape, finding that continued annual home price appreciation at the national level has helped to both further drive down the number of underwater borrowers and increase the level of tappable, or lendable, equity available to homeowners with a mortgage. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, today’s equity landscape – in conjunction with a higher interest rate environment – will likely impact mortgage lending trends over the coming year. “December 2016 marked 56 consecutive months of annual home price appreciation,” said Graboske. “That served to not only lift an additional one million formerly underwater homeowners back into positive equity throughout the year, but also increased the amount of tappable equity available to U.S. mortgage holders by an additional $568 billion. There are now 39.5 million homeowners with tappable equity, meaning they have current combined loan-to-value (CLTV) ratios of less than 80 percent. Cash-out refinance data suggests that they have been increasingly tapping that equity, though perhaps more conservatively than homeowners had in the past. In Q4 2016, $31 billion in equity was extracted from the market via first lien refinances. While that was the most equity drawn in over eight years, borrowers are still tapping equity at less than a third of the rate they were back in 2005, and they’re doing so more prudently. In fact, the resulting post-cash-out loan-to-value-ratio was 65.6 percent, the lowest on record.

MBA: Mortgage Applications Decrease in Latest Weekly Survey - From the MBA: Mortgage Applications Decrease in Latest MBA Weekly SurveyMortgage applications decreased 1.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 31, 2017. .. The Refinance Index decreased 4 percent from the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 8 percent higher than the same week one year ago....The average contract interest rate for 30-year fixed-rate  mortgages with conforming loan balances ($424,100 or less) increased to 4.34 percent from 4.33 percent, with points decreasing to 0.31 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. (graphs)

 

CoreLogic: House Prices up 7.0% Year-over-year in February - Notes: This CoreLogic House Price Index report is for February. The recent Case-Shiller index release was for January. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA). From CoreLogic: CoreLogic US Home Price Report Shows Prices Up 7 Percent in February 2017 Home prices nationwide, including distressed sales, increased year over year by 7 percent in February 2017 compared with February 2016 and increased month over month by 1 percent in February 2017 compared with January 2017, according to the CoreLogic HPI. “Home prices and rents have risen the most in local markets with high demand and limited supply, such as Seattle, Portland and Denver,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The rise in housing costs has been largest for lower-tier-priced homes. For example, from December to February in Seattle, the CoreLogic Home Price Index rose 12 percent and our single-family rent index rose 6 percent for all price tiers compared with the same period a year earlier. However, when looking at only lower-cost homes in Seattle, the price increase was 13 percent and the rent increase was 7 percent.” “Home prices continue to grow at a torrid pace so far in 2017 and these gains are likely to continue well into the future,” said Frank Martell, president and CEO of CoreLogic. “Home prices are at peak levels in many major markets and the appreciation is being driven by a number of dynamics—high demand, stronger employment, lean supplies and affordability—that will continue to play out in the coming years. The CoreLogic Home Price Index is projecting an additional 5 percent rise in home prices nationally over the next 12 months.”

Construction Spending increased in February -- Earlier today, the Census Bureau reported that overall construction spending increased in February: Construction spending during February 2017 was estimated at a seasonally adjusted annual rate of $1,192.8 billion, 0.8 percent above the revised January estimate of $1,183.8 billion. The February figure is 3.0 percent above the February 2016 estimate of $1,157.7 billion.  Both private and public spending increased in February: Spending on private construction was at a seasonally adjusted annual rate of $917.3 billion, 0.8 percent above the revised January estimate of $910.0 billion. ... In February, the estimated seasonally adjusted annual rate of public construction spending was $275.5 billion, 0.6 percent above the revised January estimate of $273.9 billion. This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted. Private residential spending has been generally increasing, and is still 29% below the bubble peak. Non-residential spending is now 4% above the previous peak in January 2008 (nominal dollars). Public construction spending is now 15% below the peak in March 2009, and only 5% above the austerity low in February 2014. The second graph shows the year-over-year change in construction spending. On a year-over-year basis, private residential construction spending is up 6%. Non-residential spending is up 8% year-over-year. Public spending is down 8% year-over-year. Looking forward, all categories of construction spending should increase in 2017. This was close to the consensus forecast of a 1.0% increase for February.

 Reis: Office Vacancy Rate "steady" in Q1 at 15.8% - Reis released their Q1 2017 Office Vacancy survey this morning. Reis reported that the office vacancy rate was unchanged at 15.8% in Q1, from 15.8% in Q4. This is down from 16.0% in Q1 2016, and down from the cycle peak of 17.6%.  From Reis Economist Barbara Denham: Office Vacancy Holds Steady at 15.8%; Rents Increase 0.5% in the Quarter. Vacancy Increases in 42 U.S. Metros, but only 10 See Effective Rent Decline. The office market held steady in the first quarter as vacancy was flat at 15.8%, the same as the previous quarter and down from 16.0% a year ago. The vacancy rate has fallen less than 200 basis points from a high of 17.6% in 2010. The national average asking rent increased 0.5% in the first quarter while effective rents, which net out landlord concessions, increased 0.4%. At $32.13 per square foot, the average rent increased only 1.8% from the first quarter of 2016: this is the slowest annual rate of office rent growth since 2011.   Net absorption was 4.9 million square feet in the first quarter, down from an average net absorption of 9.4 million square feet per quarter in 2016. Construction was also low at 7.9 million square feet, down from an average of 8.8 million square feet in 2016. ...This graph shows the office vacancy rate starting in 1980 (prior to 1999 the data is annual). Reis reported the vacancy rate was at 15.8% in Q1.  The office vacancy rate is at the lowest level since early 2009, but remains elevated.

Reis: Mall Vacancy Rate mostly unchanged in Q1 2017 - Reis reported that the vacancy rate for regional malls was 7.9% in Q1 2017, up from 7.8% in Q4, and up from 7.8% in Q1 2016. This is down from a cycle peak of 9.4% in Q3 2011.For Neighborhood and Community malls (strip malls), the vacancy rate was 9.9% in Q1, unchanged from Q4, and unchanged from 9.9% in Q1 2016. For strip malls, the vacancy rate peaked at 11.1% in Q3 2011. Comments from Reis Economist Barbara Byrne Denham: Retail Vacancy Holds Steady at 9.9%; Rents Increase 0.3% in the Quarter. Effective rents decline in 19 metros across the U.S. while 25 see vacancy rate increase.Despite dire reports of store closures in major brands across the country, the overall retail real estate statistics recorded very little change in the quarter as the neighborhood and community shopping center vacancy rate held steady at 9.9%, unchanged from year-end 2016 as well as from the first quarter of 2016. The average national asking rent increased 0.3% in the first quarter while effective rents, which net out landlord concessions, increased 0.4%.  Vacancy stayed flat in the quarter due to very low new retail construction. At 796,000 square feet, construction was the lowest since 2011. Net absorption, or the growth in occupancy, was also low at 1.25 million square feet.

2017 Retail Bankruptcies Soar To 'Great Recession' Highs --As U.S. equity markets continue their march back toward all-time highs, courtesy of the latest BTFD binge trade, at least one 'small' segment of the U.S. economy does not seem to be participating in the rally as 9 brick-and-mortar retailers have already filed for bankruptcy protection in 1Q 2017 alone.  That volume of filings matches the total number of retail bankruptcies for all of 2016 and puts the industry on pace to exceed even the 'great recession' highs. Per CNBC:Nine retailers have filed in just the first three months of 2017, according to data provided exclusively to CNBC from AlixPartners consulting firm. That equals the number for all of 2016. It also puts the industry on pace for the highest number of such filings since 2009, when 18 retailers resorted to that action.The rising number of retail bankruptcies comes as consumers are making more purchases online, and shifting their spending toward travel and other experiences. Meanwhile, the supply of physical stores continues to outweigh shopper demand, putting pressure on the industry's profits. "It's just kind of this perfect storm where things are coming together, and it's going to continue for awhile," Deb Rieger-Paganis, a managing director in the turnaround and restructuring practice at AlixPartners, told CNBC.

These Eight Retailers Will File For Bankruptcy Next, According To Fitch - The situation is rapidly deteriorating for America's "bricks and mortar" retailers. As discussed earlier this week, some 9 retail outlets have already filed for bankruptcy protection in 1Q 2017 alone according to Alix Partners.  That volume of filings matches the total number of retail bankruptcies for all of 2016 and puts the industry on pace to exceed even the 'great recession' highs. Confirming that even more retail defaults are imminent was the following chart from Morgan Stanley according to which in just the first quarter there were nearly 2,100 store closures, nearly double the number from Q1 of last year. Appropriately, one day after our Monday report, Payless ShoeSource filed for bankruptcy. Payless filed Chapter 11 on April 4 to facilitate a balance sheet debt restructuring and operational overhaul. The company became highly leveraged in a 2012 buyout and debt became unsustainable as sales and cash flows decreased. The company plans to have liquidation sales for 400 out of 4,400 underperforming stores that are earmarked for permanent closure and intends to try to re-negotiate leases or close other stores and to emerge as a smaller concern. Some more details: a $385 million DIP facility, which consists of a $305 million asset-backed loan (ABL) and an $80 million term loan, has been negotiated with existing lenders to refinance certain prepetition debt and provide $120 million of incremental liquidity during the bankruptcy. Rating agency Fitch also noticed, saying that with this latest default, the TTM loan default rate rose to 1%. The rate fell to 0% in March and was 0.5% at the end of February. It's about to get worse, however, because in its report on the latest retail default, Fitch said it expects the rate to climb to 9%, equating to roughly $6 billion in defaults, over the next 12 months, fueled by continued challenges in the retail sector.. And, just to make the tracking of future defaults easier, Fitch also provided the list of eight other retailers with term loan debt totaling nearly $6 billion, which are also its concern list, and are most likely to be in default in the not too distant future. They are as follows:

• Sears Holdings Corp (roughly $2.5 billion);
• 99 Cents Only Stores LLC;
• Charming Charlie LLC;
• Gymboree Corp.;
• Nine West Holdings Inc.;
• NYDJ Apparel LLC;
• rue21, Inc.; and
• True Religion Apparel Inc.

U.S. households will soon have as much debt as they had in 2008 -- It feels like 2008 again. At least, if you look at Americans’ wallets. The New York Federal Reserve announced Monday that in 2017 total household debt will reach its previous peak of $12.68 trillion, which it reached in the third quarter of 2008. It’s already close: Total household debt in the fourth quarter of 2016 was nearly as high, at $12.58 trillion. While the debt level is similar to 2008, the things Americans are in debt for have changed, as household incomes have increased in recent years, and housing and stock prices have improved.Compared with 2008, fewer borrowers have housing-related debt — including their first mortgages, or home equity lines of credit — and instead more have taken on auto and student loans.This is backed up by previous research: Student loans have made it harder for younger consumers to buy homes; plus, lower housing prices are also tied to higher student loan default rates.) Here’s how the numbers stack up for indebted Americans in 2017: Housing-related debt is down nearly $1 trillion since the 2008 peak, but auto loan balances are $367 billion higher, and student loans are a whopping $671 billion higher. (Credit card debt is still down from peak recession levels, and isn’t expected to surpass them until the end of 2019.) Although housing debt has decreased since 2008, mortgages still make up the bulk of the debt total, at 67%, as of 2016. The number of subprime auto loans that have fallen into delinquency hit their highest level since 2010 during December 2016. At that time, nearly 6 million people were at least 90 days late on their payments. That is similar consumer behavior to what was seen just before the 2007 - 2009 recession, experts said.

 US Credit Card Debt Rises Above $1 Trillion For The First Time In A Decade - Unlike last month's unexpectedly week consumer credit report, which saw a plunge in revolving, or credit card, debt moments ago the Fed, in its latest G.19 release, announced that there were few surprises in the February report: Total revolving credit rose by $2.9 billion, undoing last month's $2.6 billion drop - the biggest since 2012 - while non-revolving credit increased by $12.3 billion, for a total increase in February consumer credit of $15.2 billion, roughly in line with the $15 billion expected.However, while in general the data was uneventful, there was one notable milestone: in February, following modest prior revisions, total revolving/credit card debt, has once again risen above the "nice round number" of $1 trillion for the first time since January 2007.... where it now joins both auto ($1.1 trillion) and student ($1.4 trillion) loans, both of which are well above $1 trillion as of this moment.

US Consumers' Spending Flat in March, at $100 | Gallup  -- Americans' daily self-reports of spending averaged $100 in March, about the same as the $101 average in February. This is the highest spending estimate for any March in Gallup's tracking since 2008, topping the $89 from March 2013 and 2016. March has not generally been one of the higher spending months over the past decade; it had the lowest monthly spending averages in 2008 and 2009. The latest figure is the eighth daily spending average of $100 or more that Gallup has recorded for any given month during nine years of tracking the metric. Half of these three-digit monthly spending averages have occurred in the past year, while the other four took place in 2008 before the global financial crisis in the fall. The March average is based on more than 15,000 interviews conducted as part of Gallup Daily tracking throughout the month. Gallup asks Americans each night to report how much they spent the previous day, excluding spending on normal household bills and major purchases such as a home or car. The measure gives an indication of discretionary spending. In recent years, March has more often than not yielded a spending average that is at least a few dollars higher than February's average. But it's not unprecedented for spending to remain flat in March, as it did in 2014, along with this year; or to decrease, as it did in 2008 and 2009.

U.S. Light Vehicle Sales at 16.5 million annual rate in March - Based on a preliminary estimate from WardsAuto, light vehicle sales were at a 16.53 million SAAR in March. That is down slightly from March 2016, and down 5% from last month. This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for February (red, light vehicle sales of 17.47 million SAAR from WardsAuto).This was well below the consensus forecast of 17.4 million for March. After two consecutive years of record sales, it looks like sales will be down or move sideways in 2017. The second graph shows light vehicle sales since the BEA started keeping data in 1967. Note: dashed line is current estimated sales rate.

Annual Vehicle Sales: On Pace for First Decline Since 2009 - Through March, light vehicle sales are on pace to decline about 2% in 2017 from the record year in 2016. This would be the first annual decline in auto sales since 2009, but it would still be the fourth best year on record after 2016, 2015, and 2000. This isn't a huge concern - most likely vehicle sales will move sideways at near record levels. But the economic boost from increasing auto sales is probably over. This graph shows annual light vehicle sales since 1976.   Source: BEA. Sales for 2017 are estimate at the pace of the first three months.

U.S. Car Demand Collapse Jeopardizes Trump’s Auto Factory Push --Ford Fusion: down 37 percent. Chevrolet Malibu: down 36 percent. Toyota Prius: down 29 percent. As those grim numbers suggest, the U.S. auto industry was blindsided last month by just how fast sedans have fallen out of favor with Americans now embracing roomier sport utility vehicles. Family-friendly crossovers may be more profitable, but the quick shift is causing headaches. The swerve in consumer taste is just one of the forces -- along with slumping used-car values and a pullback in subprime auto lending -- that are changing the equation for manufacturers as President Donald Trump leans on the industry to build new plants and boost hiring. That’ll be hard to pull off: A glut of both new and used vehicles on the market has sparked an incentives battle, meaning new production lines are the last thing the companies need. Industrywide deliveries in March were supposed to show a rebound following small dips in January and February. But the annualized sales pace, adjusted for seasonal trends, slowed to 16.6 million vehicles, from 16.7 million a year earlier, according to researcher Autodata Corp. Analysts had projected the rate would accelerate to about 17.2 million. Automakers set a record in the U.S. last year, with 17.6 million vehicles sold. “I’ve been expecting a slowdown for a while,” said Morningstar Inc. analyst David Whiston. “It shouldn’t be a surprise. Once you hit peak sales, it seems like you only have bad news ahead.”

U.S. gasoline consumption flattens as fuel economy improves: Kemp (Reuters) - Growth in U.S. gasoline consumption is slowing after two years of brisk increases between the middle of 2014 and the middle of 2016.The average fuel economy of vehicles on U.S. roads is improving, as a result of federal regulations, which is offsetting the continued growth in driving.U.S. refiners and fuel blenders supplied an average of 8.5 million barrels per day (bpd) of motor gasoline to domestic consumers in January, according to the U.S. Energy Information Administration.The volume of gasoline supplied was down by almost 170,000 bpd compared with the same month a year earlier and 70,000 bpd below the 10-year average (http://tmsnrt.rs/2n74kSu).Lower gasoline sales contributed to the unusually rapid accumulation of gasoline stocks in the first few weeks of 2017.  Stocks held by refiners and motor fuel blenders increased by 20 million barrels during January, almost double the normal seasonal rise of 11 million barrels (http://tmsnrt.rs/2n7eGlm).  The decline was probably an anomaly caused by poor weather and the timing of public holidays, and is likely to be reversed in future months. Nonetheless, the rate of growth in gasoline consumption has been slowing since the second quarter of 2016 (http://tmsnrt.rs/2oV6ZeF).Motor gasoline sales have been flattening even though the number of miles driven has continued to rise fairly steadily (http://tmsnrt.rs/2nXYPo6).U.S. motorists drove 2.2 percent more miles in January compared with the same month a year earlier, according to the Federal Highway Administration (http://tmsnrt.rs/2oERCHF). Since the drop in oil prices in 2014 and 2015, U.S. motorists have increasingly opted for larger and more fuel-hungry sport-utility vehicles, crossover utility vehicles and other light trucks.So the mix of new vehicles sold has become less fuel-efficient than was projected a few years ago as more light trucks are sold and fewer cars.But both light trucks and passenger cars have become much more fuel efficient than the old vehicles they are replacing (http://tmsnrt.rs/2n7hajG).Light trucks produced in 2016 were required to achieve a volume-weighted average fuel economy of 28.8 miles per gallon (mpg) in test conditions, up from just 21.6 mpg in 2006.Cars produced in 2016 were required to achieve a volume-weighted average of 37.8 mpg, up from 27.5 mpg in 2006.Critically, the fuel-economy standard for light trucks in 2016 (28.8 mpg) was tougher than the standard for passenger cars in 2006 (27.5 mpg). In practice, the fuel-economy of both cars and trucks has increased even faster than mandated by federal regulations as manufacturers have responded to demands from customers.

February 2017 wholesale trade data: U.S. wholesale inventories climbed 0.4 percent in February, falling in line with economists' expectations, the Commerce Department announced on Friday. Economists were expecting a gain of 0.4 percent in February, according to a poll by Thomson Reuters. In January wholesale inventories decreased 0.2 percent, the biggest drop since February 2016, after jumping 1 percent in December. The Friday report said February 2017 sales of merchant wholesalers, except manufacturers' sales branches and offices, and after adjustments, reached $464.9 billion. Total inventories of merchant wholesalers, except manufacturers' sales branches and offices, and after adjustments, were $594.2 billion at the end of the month, the Commerce Department added. The ratio of inventories to sales — a measure of how heavily stocked companies are — fell to 1.28 in February, down from 1.36 the same period a year earlier. The ratio has dropped abruptly since 2016.

February Trade Deficit Down $4.6B from Revised January --  The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Here is an excerpt from the latest report: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.6 billion in February, down $4.6 billion from $48.2 billion in January, revised. February exports were $192.9 billion, $0.4 billion more than January exports. February imports were $236.4 billion, $4.3 billion less than January imports. The February decrease in the goods and services deficit reflected a decrease in the goods deficit of $4.6 billion to $65.0 billion and an increase in the services surplus of less than $0.1 billion to $21.4 billion. Year-to-date, the goods and services deficit increased $2.8 billion, or 3.1 percent, from the same period in 2016. Exports increased $25.8 billion or 7.2 percent. Imports increased $28.6 billion or 6.4 percent. Today's headline number of -43.56B was better than the Investing.com forecast of -44.8B. The previous month was revised upward by 3.0M. This series tends to be extremely volatile, so we include a six-month moving average.

Trade Deficit declines to $43.6 Billion in February -- From the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $43.6 billion in February, down $4.6 billion from $48.2 billion in January, revised. February exports were $192.9 billion, $0.4 billion more than January exports. February imports were $236.4 billion, $4.3 billion less than January imports. The first graph shows the monthly U.S. exports and imports in dollars through February 2017. Imports decreased and exports increased in February. Exports are 16% above the pre-recession peak and up 7% compared to February 2016; imports are 2% above the pre-recession peak, and up 4% compared to February 2016. In general, trade has been picking up. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $45.25 in February, up from $43.94 in January, and up from $27.48 in February 2016. The petroleum deficit has generally been declining and is the major reason the overall deficit has mostly moved sideways since early 2012. The trade deficit with China decreased to $23.0 billion in February, from $28.1 billion in February 2016. Some of the decrease this year was probably due to the timing of the Chinese New Year. In general the deficit with China has been declining.

February Trade Deficit Shrinks, Smaller Than All Estimates -- The US Trade Balance shrank to $43.6 billion in February (the smallest deficit since October and smaller than all economists' estimates). Imports fell modestly (-1.8%) and exports inched higher (+0.2%) as it seems a notably weaker dollar did nothing to help. Notably US' trade deficit with China is down 4.9% on a year-to-date, year-over-year basis. The deficit decreased from $48.2 billion in January (revised) to $43.6 billion in February, as exports increased and imports decreased. The previously published January deficit was $48.5 billion. The goods deficit decreased $4.6 billion in February to $65.0 billion. The services surplus increased less than $0.1 billion in February to $21.4 billion.Exports of goods and services increased $0.4 billion, or 0.2 percent, in February to $192.9 billion. Exports of goods increased $0.4 billion and exports of services increased less than $0.1 billion.The increase in exports of goods mostly reflected increases in consumer goods ($0.7 billion), in other goods ($0.5 billion), and in industrial supplies and materials ($0.4 billion). Decreases in foods, feeds, and beverages ($0.7 billion) and in capital goods ($0.6 billion) were partly offsetting.The increase in exports of services reflected nearly offsetting changes of $0.1 billion or less in all categories.Imports of goods and services decreased $4.3 billion, or 1.8 percent, in February to $236.4 billion. Imports of goods decreased $4.2 billion and imports of services decreased less than $0.1 billion.The decrease in imports of goods mostly reflected decreases in consumer goods ($3.1 billion) and in automotive vehicles, parts, and engines ($2.6 billion). An increase in industrial supplies and materials ($1.4 billion) was partly offsetting.The decrease in imports of services reflected nearly offsetting changes of $0.1 billion or less in all categories.

A Stroll through US Trade Statistics, and How It Always Balances -- "America’s commerce with the rest of the world must be and always is balanced when taking into account investment flows as well as the exchange of goods and services. ... [O]ne key insight for public policy is that the total outflow of dollars each year from the United States to the rest of the world is matched by an equal inflow of dollars from the rest of the world to the United States. There is no need to worry about a `leakage' of dollars siphoning off demand from the domestic economy. Dollars spent on imported goods and services return to the United States, if not to buy US goods and services, then to buy US assets in the form of an inward flow of investment. ... When we account for all the dollars flowing into the United States, with an adjustment for the statistical discrepancy, it totals the exact same amount. The difference between dollars flowing out and dollars flowing in each year is zero."Thus writes Daniel Griswold in "Plumbing America’s Balance of Trade," a paper published for the Mercatus Center at George Mason University. For noneconomist readers, Griswold's statements may seem ideological or controversial. For those who needed to learn about trade statistics at some point, his statements are so obviously true--true as a matter of how the underlying terms are defined--that even writing them down feels pointless. To steal a phrase from Alan Walters (who was writing about how Milton Friedman's effort to revise monetarism was perceived during the 1950s), it's like "flogging a decomposing horse."  Here, I'll take a stroll through the US trade statistics for 2016 as published by the US Bureau of Labor Statistics, making heavy use of Griswold's explanations. Even for those familiar with basic trade statistics, flogging this particular decomposing horse may offer a few insights or surprises. Here is the data for 2016 on the US current account and capital account (terms to be explained in a moment) from the US Bureau of Economic Analysis:

AAR: Rail Traffic increased in March -- From the Association of American Railroads (AAR) Rail Time Indicators. Total carloads on U.S. railroads in March 2017 were up 7.3% (87,183 carloads) over March 2016; excluding coal, carloads in March were up 2.7% (23,337 carloads). Intermodal containers and trailers were up 3.8% (47,180 units) for the month. Year-to-date total carloads through March were up 5.7% (180,665 carloads), while year-to-date intermodal volume was up 1.4% (47,977 units) over last year.  This graph from the Rail Time Indicators report shows U.S. average weekly rail carloads (NSA).  Dark blue is 2017.  Rail carloads have been weak over the last decade due to the decline in coal shipments. U.S. railroads originated 1,283,489 total carloads in March 2017, up 87,183 carloads (7.3%) over March 2016. It’s the fifth straight year-over-year carload increase (see the chart below right) and the biggest percentage carload increase in those five months. Total carloads averaged 256,698 per week in March 2017, much better than the 239,261 weekly average in March 2016 but otherwise the lowest weekly average for March since our data begin in 1988. The best March ever was 2006, when carloads averaged 337,465 per week — 31.5% higher than in March 2017. Note that Easter Sunday and the preceding week are included in March 2016 numbers, but will be included in April 2017 numbers. For the first three months of 2017, total U.S. carloads were 3,324,102, up 5.7% (180,665 carloads) over the first three months of 2016 but otherwise the lowest January-March total since sometime prior to 1988 ... The second graph is for intermodal traffic (using intermodal or shipping containers): U.S. railroads originated 1,298,173 intermodal containers and trailers in March 2017, up 3.8% (47,180 units) over March 2016. Average weekly volume of 259,635 containers and trailers was the second highest for March ever (behind 2015).

February 2017 factory orders - Orders to U.S. factories rose in February amid a surge in demand for commercial aircraft, but a key category that tracks business investment spending slipped for the first time in five months. Factory orders increased 1 percent in February after a 1.5 percent gain in January, the Commerce Department reported Tuesday. Much of the strength stems from a second straight month of booming demand for commercial aircraft. But a key category that serves as a proxy for business investment slipped 0.1 percent. It was the first decline since investment orders fell by 1.5 percent in September. American manufacturers are slowly recovering from a weak patch caused by falling demand for American exports, reflecting weak economies overseas and the strength of the dollar which makes U.S. products cost more in foreign markets. Orders for durable goods, items such as autos and airplanes designed to last at least three years, rose 1.8 percent in February after a 2.4 percent gain in January. Demand for nondurable goods, items ranging from food to paper and chemicals, edged up a slight 0.2 percent following a 0.6 percent January increase. The strength in durable goods was led by a 47.5 percent increase in orders for commercial aircraft, a gain that followed an even bigger 83.2 percent rise in January in this volatile sector. Demand for military aircraft fell 12.8 percent after a big gain in January. Demand was also up for primary metals such as steel, computers, construction machinery and oilfield drilling equipment. On Monday, the Institute for Supply Management reported that American factories expanded for a seventh straight month in March but at a slightly slower pace than February.

U.S. factory orders increase for third straight month | Reuters: New orders for U.S.-made goods increased for a third straight month in February on growing demand for machinery and electrical equipment, suggesting the manufacturing sector recovery was gaining steam. Factory goods orders rose 1.0 percent, the Commerce Department said on Tuesday after an upwardly revised 1.5 percent increase in January. Economists polled by Reuters had forecast factory orders advancing 1.0 percent in February after a previously reported 1.2 percent increase in January. Factory orders were up 4.6 percent from a year ago. Shipments of manufactured goods increased 0.3 percent after a similar gain in January. Manufacturing, which accounts for about 12 percent of the U.S. economy, is recovering in part as steadily rising oil prices reinvigorate the energy sector, leading to demand for machinery and other equipment. The Commerce Department also said orders for non-defense capital goods excluding aircraft -- seen as a measure of business confidence and spending plans -- dipped 0.1 percent as reported last month. Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, jumped 1.0 percent, also as reported last month. The rise in shipments suggests an acceleration in business spending on equipment in the first quarter after it increased at a 1.9 percent annualized rate in final three months of 2016.Unfilled orders at factories were unchanged after falling for three straight months. Inventories of goods at factories rose 0.2 percent in February. They have increased in seven of the last eight months. The inventories-to-shipments ratio was 1.31 in February, unchanged from January.

February 2017 Manufacturing New Orders Improve (Unless One Adjusts For Inflation): US Census says manufacturing new orders improved. Our analysis is that inflation eats away any gains. The rolling averages improved. According to the seasonally adjusted data, it was civilian aircraft that caused the increase. The data in this series is noisy so I would rely on the unadjusted 3 month rolling averages which was improved.. Note that when one inflation adjusts,, there is a decline both month-over-month and year-over-year in manufacturing. Backlog improved - but remains in contraction year-over-year

• The seasonally adjusted manufacturing new orders is up 1.0 % month-over-month, and up 4.6 % year-to-date.
• Market expected (from Bloomberg / Econoday) month-over-month growth of 0.4 % to 1.1 % (consensus +1.0 %).
• Manufacturing unfilled orders down 0.0 % month-over-month, and down 1 4% year-over-year.
• Unadjusted manufacturing new orders growth decelerated.2 2 % month-over-month, and up 3.5 % year-over-year.
• Unadjusted manufacturing new orders (but inflation adjusted) down 0.5 % year-over-year.
• Three month rolling new order rolling averages was up 0.7% month-over-month, and is up 3.8 % year-over-year.
• Unadjusted manufacturing unfilled orders growth accelerated 0.6 % month-over-month, and down 1.4 % year-over-year
• As a comparison to the inflation adjusted new orders data, the manufacturing subindex of the Federal Reserves Industrial Production growth was up 0.2 % month-over-month, and up 0.5 % year-over-year.

Markit Manufacturing PMI: March Loses Some Momentum - The March US Manufacturing Purchasing Managers' Index conducted by Markit came in at 53.3, down from the 54.2 February figure. Today's headline number was slightly below the Investing.com consensus of 53.5. Markit's Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.Here is the opening from the latest press release:At 53.3 in March, down from 54.2 in February, the seasonally adjusted Markit final US Manufacturing Purchasing Managers’ Index™ (PMI™) eased further from the 22-month peak recorded at the start of 2017 (55.0). The latest reading was the lowest since September 2016.March data pointed to a further moderation in output growth from the peak seen at the start of 2017. The latest rise in production was the slowest for six months, but still much stronger than the soft patch seen in mid-2016. Survey respondents noted that the improving domestic economic backdrop and rising spending from energy sector clients had helped to boost workloads in March. [Press Release] Here is a snapshot of the series since mid-2012.

ISM Manufacturing Index: Down Slightly in March, Continued Growth -- Today the Institute for Supply Management published its monthly Manufacturing Report for March. The latest headline Purchasing Managers Index (PMI) was 57.2 percent, a slight decrease of 0.5 percent from 57.7 the previous month. Today's headline number was above the Investing.comforecast of 57.0 percent. Here is the key analysis from the report:"The March PMI^® registered 57.2 percent, a decrease of 0.5 percentage point from the February reading of 57.7 percent. The New Orders Index registered 64.5 percent, a decrease of 0.6 percentage point from the February reading of 65.1 percent. The Production Index registered 57.6 percent, 5.3 percentage points lower than the February reading of 62.9 percent. The Employment Index registered 58.9 percent, an increase of 4.7 percentage points from the February reading of 54.2 percent. Inventories of raw materials registered 49 percent, a decrease of 2.5 percentage points from the February reading of 51.5 percent. The PricesIndex registered 70.5 percent in March, an increase of 2.5 percentage points from the February reading of 68 percent, indicating higher raw materials prices for the 13th consecutive month. Consistent with generally positive comments from the panel, all 18 industries reported growth in new orders for the month of March." [source]  Here is the table of PMI components.

ISM Manufacturing index decreased to 57.2 in March -- The ISM manufacturing index indicated expansion in March. The PMI was at 57.2% in March, down from 57.7% in February. The employment index was at 58.9%, up from 54.2% last month, and the new orders index was at 64.5%, down from 65.1%. From the Institute for Supply Management: March 2017 Manufacturing ISM® Report On Business®   "The March PMI® registered 57.2 percent, a decrease of 0.5 percentage point from the February reading of 57.7 percent. The New Orders Index registered 64.5 percent, a decrease of 0.6 percentage point from the February reading of 65.1 percent. The Production Index registered 57.6 percent, 5.3 percentage points lower than the February reading of 62.9 percent. The Employment Index registered 58.9 percent, an increase of 4.7 percentage points from the February reading of 54.2 percent. Inventories of raw materials registered 49 percent, a decrease of 2.5 percentage points from the February reading of 51.5 percent. The Prices Index registered 70.5 percent in March, an increase of 2.5 percentage points from the February reading of 68 percent, indicating higher raw materials prices for the 13th consecutive month. Consistent with generally positive comments from the panel, all 18 industries reported growth in new orders for the month of March."   Here is a long term graph of the ISM manufacturing index.  This was close to expectations of 57.1%, and suggests manufacturing expanded at as slightly slower pace in March than in February.

Markit PMI vs. ISM Fantasyland GDP Projection: Stagflation Lite? -- The discrepancy between the ISM’s Report on Business and Markit’s Manufacturing PMI assessment of the economy widened today.  Both reports agree that cost inflation is rising quickly despite moderation in the price of oil.  The ISM noted 17 out of the 18 industries reported growth in March. Here’s the statement that caught my eye: “The past relationship between the PMI® and the overall economy indicates that the average PMI® for January through March (57 percent) corresponds to a 4.3 percent increase in real gross domestic product on an annualized basis.” On an over-under basis, I will take “the under” as in way under. Markit Key Findings:

• Manufacturing growth slows to six-month low in March
• Headline PMI eases to 53.3, down from 54.2 in February
• New orders rise at weakest pace since October 2016
• Input cost inflation hits two-and-a-half year high

Business conditions continued to improve across the manufacturing sector in March, but the latest upturn was the weakest recorded for six months. The loss of momentum reflected softer rates of output and new order growth, alongside a slower rise in payroll numbers. Manufacturers sought to adjust their inventory strategies in response to more subdued sales growth, with stocks of finished goods reduced for the first time in six monthsMeanwhile, higher raw material prices resulted in the strongest rate of cost inflation since September 2014. Factory gate charges also increased at the fastest pace for around two-and-a-half years.New orders expanded at the slowest pace since October 2016, thereby signalling a sustained loss of momentum from the peak seen at the start of the year. Manufacturers cited greater caution among clients, alongside intense competition for new work and subdued export sales.

 Markit Services PMI Down Again in March -- The March US Services Purchasing Managers' Index conducted by Markit came in at 52.8 percent, down 1.0 percent from the February estimate. The Investing.com consensus was for 52.9 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.Here is the opening from the latest press release:Growth of the US service sector was maintained during March, albeit to a lesser degree than in the previous month as volumes of incoming business rose at a slower rate. Companies were subsequently able to make some further inroads into their work outstanding, with these efforts supported by a modest increase in payroll numbers. Latest data also showed input costs rising at a solid rate, although a desire to strengthen profitability meant higher costs were passed onto clients wherever possible.The seasonally adjusted Markit U.S Services Business Activity Index remained above the 50.0 no-change mark in March to extend the current period of growth to 13 months. However, the index continued to fall from January’s recent peak, reaching a six-month low of 52.8 (February: 53.8). [Press Release] Here is a snapshot of the series since mid-2012.

ISM Non-Manufacturing Index decreased to 55.2% in March - The March ISM Non-manufacturing index was at 55.2%, down from 57.6% in February. The employment index decreased in March to 51.6%, from 55.2%. Note: Above 50 indicates expansion, below 50 contraction. From the Institute for Supply Management:March 2017 Non-Manufacturing ISM Report On Business®: "The NMI® registered 55.2 percent, which is 2.4 percentage points lower than the February reading of 57.6 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 58.9 percent, 4.7 percentage points lower than the February reading of 63.6 percent, reflecting growth for the 92nd consecutive month, at a slower rate in March. The New Orders Index registered 58.9 percent, 2.3 percentage points lower than the reading of 61.2 percent in February. The Employment Index decreased 3.6 percentage points in March to 51.6 percent from the February reading of 55.2 percent. The Prices Index decreased 4.2 percentage points from the February reading of 57.7 percent to 53.5 percent, indicating prices increased for the 12th consecutive month, at a slower rate in March. According to the NMI®, 15 non-manufacturing industries reported growth in March. The sector continues to reflect growth; however, the rate of growth has declined since last month. The majority of respondents’ comments indicate a positive outlook on business conditions and the overall economy. There were several comments about the uncertainty of future government policies on health care, trade and immigration, and the potential impact on business."

ISM Non-Manufacturing: Slower, But Continued Growth in March - The Institute of Supply Management (ISM) has now released the March Non-Manufacturing Purchasing Managers' Index (PMI), also known as the ISM Services PMI. The headline Composite Index is at 55.2 percent, down 2.4 from 57.6 last month. Today's number came in below the Investing.com forecast of 57.0 percent.Here is the report summary:"The NMI^® registered 55.2 percent, which is 2.4 percentage points lower than the February reading of 57.6 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 58.9 percent, 4.7 percentage points lower than the February reading of 63.6 percent, reflecting growth for the 92nd consecutive month, at a slower rate in March. The New Orders Index registered 58.9 percent, 2.3 percentage points lower than the reading of 61.2 percent in February. The Employment Index decreased 3.6 percentage points in March to 51.6 percent from the February reading of 55.2 percent. The Prices Index decreased 4.2 percentage points from the February reading of 57.7 percent to 53.5 percent, indicating prices increased for the 12th consecutive month, at a slower rate in March. According to the NMI^®, 15 non-manufacturing industries reported growth in March. The sector continues to reflect growth; however, the rate of growth has declined since last month. The majority of respondents’ comments indicate a positive outlook on business conditions and the overall economy. There were several comments about the uncertainty of future government policies on health care, trade and immigration, and the potential impact on business." [Source] Unlike its much older kin, the ISM Manufacturing Series, there is relatively little history for ISM's Non-Manufacturing data, especially for the headline Composite Index, which dates from 2008. The chart below shows Non-Manufacturing Composite. We have only a single recession to gauge is behavior as a business cycle indicator.

 Weekly Initial Unemployment Claims decrease to 234,000 - The DOL reported: In the week ending April 1, the advance figure for seasonally adjusted initial claims was 234,000, a decrease of 25,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 258,000 to 259,000. The 4-week moving average was 250,000, a decrease of 4,500 from the previous week's revised average. The previous week's average was revised up by 250 from 254,250 to 254,500.  The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.

ADP: Private Employment increased 263,000 in March  -- From ADP: Private sector employment increased by 263,000 jobs from February to March according to the March ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. “The U.S. labor market finished the first quarter on a strong note,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Consumer dependent industries including healthcare, leisure and hospitality, and trade had strong growth during the month.” Mark Zandi, chief economist of Moody’s Analytics said, “Job growth is off to a strong start in 2017. The gains are broad based but most notable in the goods producing side of the economy including construction, manufacturing and mining.” This was well above the consensus forecast for 170,000 private sector jobs added in the ADP report.

First Look at March: ADP Says 263K New Nonfarm Private Jobs - The economic mover and shaker this week is Friday's employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, the most publicized being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository). Today we have the ADP March estimate of 263K new nonfarm private employment jobs, an increase over February's 245K, which was a downward revision of 53K.The 263K estimate came in well above the Investing.com consensus of 187K for the ADP number.The Investing.com forecast for the forthcoming BLS report is for 180K nonfarm new jobs (the actual PAYEMS number) and the unemployment rate to remain tick down to 4.7%.Here is an excerpt from today's ADP report:“The U.S. labor market finished the first quarter on a strong note,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Consumer dependent industries including healthcare, leisure and hospitality, and trade had strong growth during the month.”Mark Zandi, chief economist of Moody’s Analytics said, “Job growth is off to a strong start in 2017. The gains are broad based but most notable in the goods producing side of the economy including construction, manufacturing and mining.” Here is a visualization of the two series over the previous twelve months.

March Employment Report: 98,000 Jobs, 4.5% Unemployment Rate -  From the BLS: The unemployment rate declined to 4.5 percent in March, and total nonfarm payroll employment edged up by 98,000, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services and in mining, while retail trade lost jobs.... The change in total nonfarm payroll employment for January was revised down from +238,000 to +216,000, and the change for February was revised down from +235,000 to +219,000. With these revisions, employment gains in January and February combined were 38,000 less than previously reported. ...In March, average hourly earnings for all employees on private nonfarm payrolls increased by 5 cents to $26.14, following a 7-cent increase in February. Over the year, average hourly earnings have risen by 68 cents, or 2.7 percent.  The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes).Total payrolls increased by 98 thousand in March (private payrolls increased 89 thousand).Payrolls for January and February were revised down by a combined 38 thousand. This graph shows the year-over-year change in total non-farm employment since 1968.In March, the year-over-year change was 2.13 million jobs.  This is a decent year-over-year gain.The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate was unchanged in March at 63.0%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics.  The fourth graph shows the unemployment rate.  The unemployment rate decreased in February to 4.5%. This was well below expectations of 178,000 jobs, and the previous two months were revised down.

March Jobs Report: 98K New Jobs Added, Worst in Almost a Year - This morning's employment report for March showed a 98K increase in total nonfarm payrolls. The unemployment rate ticked downward from 4.7% to 4.5%. The Investing.com consensus was for 180K new jobs and the unemployment rate to remain at 4.7%. January and February nonfarm payrolls were revised downward for a total loss of 38K.Here is an excerpt from the Employment Situation Summary released this morning by the Bureau of Labor Statistics:The unemployment rate declined to 4.5 percent in March, and total nonfarm payroll employment edged up by 98,000, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services and in mining, while retail trade lost jobs. Here is a snapshot of the monthly percent change in Nonfarm Employment since 2000. We've added a 12-month moving average to highlight the long-term trend. The unemployment peak for the current cycle was 10.0% in October 2009. The chart here shows the pattern of unemployment, recessions and the S&P Composite since 1948. Unemployment is usually a lagging indicator that moves inversely with equity prices (top series in the chart). Note the increasing peaks in unemployment in 1971, 1975 and 1982. The mirror relationship appears to be repeating itself with the most recent and previous bear markets. Now let's take a look at the unemployment rate as a recession indicator or more specifically the cyclical troughs in the UR as a recession indicator. The next chart features a 12-month moving average of the UR with the troughs highlighted. As the inset table shows, the correlation between the MA troughs and recession starts is remarkably close.

March Jobs Report – The Numbers - Job growth slowed sharply across the U.S. economy in March. Meanwhile, the unemployment rate fell to the lowest level in nearly a decade, suggesting the labor market is at or near the level the Federal Reserve considers full employment. Here are key figures from Friday’s release of the March jobs report.Employers added 98,000 jobs to their payrolls in March, an unusually low figure in what has been a strong run of job growth in recent years. They added 219,000 jobs in February, down from the initially reported 235,000. And they added 216,000 in January instead of the previously reported 238,000.The jobless rate fell two-tenths of a percentage point last month to 4.5%, the lowest level since May 2007. The rate dropped because the number of employed workers grew more quickly than did the labor force. The drop in the jobless rate sends a major signal to the Fed that the economy is at or near maximum employment. The average hourly paycheck of private-sector workers grew 5 cents from a month earlier and 2.7% from a year earlier. That suggests wages continue to rise a bit more quickly than earlier in the recovery, another sign of a tightening labor market. However, inflation is also picking up, eating away at some of those wage gains. The share of working-age Americans who hold a job or are actively looking for work remained 63% in March. That’s near a multidecade low. The lack of progress in labor-force participation suggests many working-age Americans remain on the sidelines despite years of hiring by employers. A broad measure of unemployment and underemployment fell to 8.9% in March, the lowest level since December 2007, offering more evidence the labor market is tightening. Still, the rate averaged 8.3% in the two years before the recession.

Underwhelming Job Growth -- Cooley-Rupert U.S. Economic Snapshot (9 graphs) The BLS announcement of a 98,000 increase in payroll employment for March was far below expectations. Moreover, both the January and February employment growth numbers were revised down, -22,000 and -16,000, respectively. Many forecasters estimated job growth between 180,000 to 200,000, especially given the 236,000 increase from the ADP report. The household employment numbers shot up 472,000. There was a decline in the number of unemployed persons, down 326,00. while labor force participation held steady at 63% and the employment to population ratio increased slightly from 60.0 to 60.1. Combined, these changes led to the headline unemployment rate ticking down to 4.5% Average hourly pay rose from $26.09 to $26.14 while weekly average hours of work remained at 34.3 for the second consecutive month. Other indicators of economic health, like the composition of jobs, suggested improving conditions: part-time for economic reasons fell by 151,000, while the number of marginally attached workers fell by nearly 150,000. In combination, it seems that conditions have improved for those without strong ties to the labor market. The composition of the unemployed continued to show signs of improvement. The employment gains were largely in the service producing sector, up 61,000 despite a 29,700 decline in retail trade. Professional and business services was the largest gainer in the services sector, up 56,000. Construction jobs increased by 9,000.

 US Employment Growth Slows Sharply In March -- The private workforce grew by a weak 89,000 in March, the US Labor Department reports. The gain, which fell far short of the 221,000 increase for February, is well below what the crowd was expecting. Economists were looking for a moderate increase of 170,000 in private-sector employment last month, according to Econoday.com’s consensus forecast. Meanwhile, the strong ADP Employment Report for March hinted at even faster growth at the close of the third quarter. Today’s update from Washington, however, presents a dramatically softer tone for the US labor market. Some analysts advise against assuming the worst. “Even if payrolls are slowing down, I’m not sure that that means the labor market is weakening,” Stephen Stanley, chief economist at Amherst Pierpont Securities, tells Bloomberg. “To the extent that it is slowing down or going to slow down, it’s probably more a function of tight supply than weakening demand.”“It was not a particularly good number, that’s for sure, but I think one of the things we have to do in fairness is take out the retail number,” JJ Kinahan, chief strategist at TD Ameritrade, adds via CNBC. “Let’s face it, retail stores are trying to figure out what is the proper balance between brick-and-mortar and online sales. If you do take that number out, it’s not quite as bad a jobs report.”It’s also worth reminding that month-to-month employment numbers can be noisy and history suggests taking any one data point with a grain of salt. Recall that the May 2016 change in private employment fell to nearly zero (+17k), prompting worries at the time that the US economy was destined for a new recession. As it turned out, employment growth bounced back and the economy continued to grow at a moderate pace.Revisions can be dramatic as well. It’s not unusual to see big gains or losses moderate, sometimes dramatically, in the second and third round of estimates for a given month.Keep in mind, however, that even if today’s monthly comparison is noise, the March data feeds into a trend that’s been in force for several years: decelerating year-over-year growth.The annual rate of private-employment growth, which is a more reliable measure for business-cycle analysis, ticked lower in March, dipping to 1.67%. That’s the softest year-over-year advance since 2011. Taken at face value, that’s not terrible, but the numbers du jour suggest that the downside bias in the annual pace that’s been in force for the last two years remains intact.

March jobs report: participation up, unemployment down, wage growth miserly -- HEADLINES:

• +98,000 jobs added
• U3 unemployment rate down 0.2% from 4.7% to 4.5%
• U6 underemployment rate down 0.3% from 9.2% to 8.9%
• Not in Labor Force, but Want a Job Now:  up +284,000 from 5.597 million to 5.781 million   
• Part time for economic reasons: down -151,000 from 5.704 million to 5.553 million
• Employment/population ratio ages 25-54: up +0.2% from 78.3% to 78.5%
• Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.04 from $21.86 to $21.90,  up +2.3% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

January was revised downward by -22,000. February was also revised downward by -16,000, for a net change of -38,000.   The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were positive with one exception.

• the average manufacturing workweek was fell from 40.8 hours to 40.6 hours.  This is one of the 10 components of the LEI. 
• construction jobs increased by +6,000. YoY construction jobs are up +177,000.   
• manufacturing jobs increased by +11,000, and after being down YoY for a year, in the last two months have now turned up.
• temporary jobs increased by 10,500.
• the number of people unemployed for 5 weeks or less decreased by -232,000 from 2,566,000 to 2,324,000.  The post-recession low was set nearly 18 months ago at 2,095,000.Overtime fell 0.1 from 3.3 to 3.2 hours.
• Professional and business employment (generally higher- paying jobs) increased by +56,000 and are up +639,000 YoY.
• the index of aggregate hours worked in the economy rose by 0.1 from 106.3 to 106.4
• the index of aggregate payrolls rose by 0.3 from 132.6 to 132.9.

Jobs report for March: A tale of two surveys (but not of a jobs slump) – Bernstein - The monthly survey of workplaces revealed a slower pace of job growth in March, as payrolls grew by 98,000, the lowest gain since last May, and down from the pace in recent months, while downward revisions reduced payroll gains from the first two months in the quarter by 38,000. The survey of households, however, told a more robust story of the March labor market, with unemployment down to a cyclical low of 4.5%, and for the right reasons: job seekers finding work, not giving up and leaving the labor market.That’s the lowest unemployment rate since May 2007, while the underemployment rate–a more encompassing measure of labor demand important gauge–fell from 9.2% in February to 8.9% in March, its lowest rate since December 2007.While some news sources will be tempted by this below-trend payroll number to declare a slump in employment growth–“if it bleeds, it leads”–that would be a mistake. One month does not a new trend make. The monthly confidence interval for change in payrolls is 120,000 (meaning that there is a 90 percent chance that the true change in payroll employment for the month of March lies between about -20,000 and 220,000; that’s the statistical noise I’m always going on about), the underlying trend remains solid, weather effects may have been in play in March, and the household survey looks strong.It is not unusual for the two surveys released on jobs day to tell somewhat different stories, and the key point to keep in mind re these monthly numbers is that they are noisy. Therefore, we want to be careful not to over-interpret one month’s results. Instead, we should look at the underlying trends. Our monthly smoother helps amp up the payroll signal by averaging out some of the noise in the monthly data, taking averages of monthly payroll gains over 3-, 6-, and 12-month spans. Over the past three months, payrolls added 178,000 jobs on average, close to the underlying trend for the past year of 182,000. Given the size and growth of the US labor force, these averages represent a solid pace of job gains that is clearly and steadily moving the job market to full employment. It is, however, a slower pace of monthly payroll gains compared to earlier in the recovery (a year ago, the 12-month average was 229,000).

'Comment: A Mostly Solid Employment Report - The headline jobs number was below expectations, and there were combined downward revisions to the previous two months. However the weakness in the headline jobs number can be blamed on the weather (both payback from a warm February, and storms during the reference week in March).
Note: The weather impact was no surprise (I took the under in my employment preview). There was plenty of good news - especially with the unemployment rate falling to 4.5% (with the participation rate steady), and wages picking up. Overall this was mostly a solid report. In March, the year-over-year change was 2.13 million jobs. Decent job growth. This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation. The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees. Nominal wage growth was at 2.7% YoY in March. Wage growth is trending up. Since the overall participation rate has declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old. In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle. The 25 to 54 participation rate was unchanged in March at 81.7%, and the 25 to 54 employment population ratio increase to 78.5%. The participation rate has been trending down for this group since the late '90s, however, with more younger workers (and fewer older workers), the participation rate might move up some more. The number working part time for economic reasons suggests a little slack still in the labor market. This is the lowest level since May 2008. These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 8.9% in March. This is the lowest level for U-6 since December 2007. This graph shows the number of workers unemployed for 27 weeks or more. According to the BLS, there are 1.69 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.80 million in February. This was the lowest number since 2008. This is generally trending down, but still somewhat elevated.

Where The March Jobs Were: Plunging Retail Workers Offset By Doormen Hiring Surge  -- March was a month of giving back: after a very strong, if downward revised start to the year, with both January and February payrolls revised lower by a total of 38,000 jobs, March saw the worst job gains since May 2016, with only 98,000 jobs added. While many have claimed it was the weather's fault, the BLS reported that 164K people said they were unable to work in March due to poor weather conditions. This was just fractionally more than the 143K long-term average.This is where the job gains, and losses, were: While most job sectors performed in line with recent trends, there were three major outliers: growth in the Education and Health jobs category tumbled from +66K to +16K; Construction jobs dropped from +59K to +6K, while the big detractor was Retail Trade, where for the second month in a row, 30K jobs were lost. Worse, employment in general merchandise stores declined by 35,000 in March and has declined by 89,000 since a recent high in October 2016, which confirms the recent speculation that "bricks and mortar" stores and malls in general may be the next big short. A smaller, if perhaps more painful to Donald Trump, drop was experienced in the manufacturing sector, where last month's gain of 26K jobs was revised to just 11K.   The one bright category was Professional and Business Services, where March saw an increase in monthly payrolls from 27.1K to 45.5K, however of this the biggest category was the odd "Services to buildings and dwellings", i.e. Doormen and Supers. Some other notables: Mining added 11,000 jobs in March, with most of the gain occurring in support activities for mining (+9,000).  Mining employment has risen by 35,000 since reaching a recent low in October 2016. Employment in financial activities continued to trend up in March (+9,000) and has increased by 178,000 over the  past 12 months. Finally, everyone's favorite job category, waiters and bartenders, aka "Food services and drinking places" leisure workers, continued their relentless rise, adding another 21.7K jobs in March. The complete breakdown of changes in key job categories in February and March is shown in the chart below.

Jamie Dimon on labor force participation and disability - I want to post this for future reference.  Via Business Insider, this is from Jamie Dimon's letter to stockholders: If the work participation rate for this group [men ages 25-54] went back to just 93% – the current average for the other developed nations – approximately 10 million more people would be working in the United States. Some other highly disturbing facts include: Fifty-seven percent of these non-working males are on disability ....I don't know where he got the 57% statistic from, but if it is true it is potent evidence that the main factor behind the 60 year long decline in prime age labor force participation by men is an increase in those on disability, probably due to both the expansion of the program, and better longevity and diagnostics -- and probably also tied in to opiate addiction as well.

The Conversation About Basic Income is a Mess. Here’s How to Make Sense of It. -Yves here. I know a universal basic income is a popular idea among readers, and I have to tell you, you are being set up. Like it or not, even though we live in a fiat currency system, most people believe that their Federal taxes are necessary to fund Federal spending. We also live in a capitalist system, where most people have to work to earn income as a condition of their survival. The big conservative argument for a universal basic income, and many neoliberals buy into it, is because it would be cheaper administratively and fairer than our patchwork of social safety nets. One of the benefits, for instance, is the benefits could be designed to taper off for those who had earned income, while many programs have sharp cutoffs that create disincentives against earning more than a certain level of income. Tech squillionaires are pushing the idea for their own selfish reasons: they think it will make more people willing to take the risk of starting a company (when 90% fail in three years in decent economic times) or donating their labor to one of their incubators. Now why is this so bad? Consider that hatred of taxes and spending has been so successfully inculcated that there’s now widespread resentment of paying public teachers adequately (and let’s put aside the fact that the bigger problem with public schools is adminisphere bloat), when the experience of other countries suggests that higher levels of teacher pay are correlated with better academic performance. Degrading the status of teachers isn’t good for societal outcomes, yet most of the American public seems to have bought into that paradigm. How does this relate to the universal basic income scheme? One of the reasons that social safety nets are still standing to a degree is that they have business support. Food stamps are good for Big Ag. Medicaid provides more income to the medical industrial complex. And they separately are targeted to recognized human needs. Even people who believe that the poor are really malingers are more willing to give their precious tax dollars to targeted spending than giving them a check that they stereotype will be used for drugs or gambling.

 Companies Have Begun Implanting Microchips In Workers --The Associated Press reported Monday that companies there have begun implanting microchips in their employees, marking the first time the practice has been used on a broad scale.“What could pass for a dystopian vision of the workplace is almost routine at the Swedish start-up hub Epicenter,” AP reports. “The company offers to implant its workers and start-up members with microchips the size of grains of rice that function as swipe cards: to open doors, operate printers or buy smoothies with a wave of the hand.”Epicenter, home to more than 100 companies and about 2,000 workers, began offering the implants in January of 2015. Now, about 150 workers have been chipped.“The biggest benefit, I think, is convenience,” Patrick Mesterson, Epicenter co-founder, told AP. “It basically replaces a lot of things you have, other communication devices, whether it be credit cards or keys.”A “body hacker” shows up at your office, ready with a preloaded syringe. He injects the chip into the fleshy part of the hand near the thumb. Now you’re a cyborg.The chips use near-field communication technology, the same as in credit cards. When swiped by a reader a few inches away, data flows via electromagnetic waves. The chips are passive, meaning they contain information but can’t read other devices.The technology isn’t new. Such chips are used for things such as tracking deliveries and virtual dog collars. And there have been other, isolated cases of companies chipping their employees in the past.But Epicenter is bringing it to a whole new level, and workers there seem alright with the idea. In the article, the general attitude is perhaps best captured by the comment of one 25-year-old worker: “I want to be part of the future.”

This Economy Is Ruined For Many Americans - Wolf Richter - Those who lost out on the Fed’s “wealth effect.” Here’s a mystery: Has this “wealth-effect” economy that the Fed so beautifully engineered since the Financial Crisis gotten a lot riskier, scarier, and uglier in some profound ways for lower-income Americans, those making $30,000 or less a year?One of the questions that Gallup posed was this:  Next, I’m going to read a list of problems facing the country. For each one, please tell me if you personally worry about this problem a great deal, a fair amount, only a little, or not at all? First, how much do you personally worry about – Then came 13 issues, including “hunger and homelessness.” Turns out, among Americans making $30,000 or less a year, 67% worry “a great deal” about hunger and homelessness! Food and shelter, two of the most basic human needs. That’s the highest percentage ever in Gallup’s data series on this question going back to 2001. It’s up from 52% in 2001/2004; up from 56% in 2007/2008; and up from 51% in 2010/2011.Median annual household income in February was $58,714, according to Sentier Research. On an inflation-adjusted basis, this was about flat with February 2016 and below February 2000. Median income means 50% make more and 50% make less. Other studies have shown that incomes have risen sharply at the upper end of the spectrum, but have fallen at the lower end, with the gap widening. Thus the median might have stagnated, but for many of those below the median, things haven’t turned out so well. And there are a lot of them! With the prices of stocks, homes, art, classic cars, commercial real estate, and the like inflated to dizzying heights after eight years of radical monetary policies, why would these folks, making $30,000 or less – worry more than ever about such basic and dreadful conditions? There are other elements in this mystery: Even among people making $30,000 to $75,000, a record 47% worry “a great deal” about hunger and homelessness, up from 40% in 2010-2011. And even among high-income Americans, the percentage, though small, has risen (chart by Gallup): Rising worries about hunger and homelessness can have a number of causes, including media coverage of those topics, or coverage of rising income and wealth inequality in America. In its survey report, Gallup points out that occasionally, when something terrible happens, such as 9/11, it might be “dominating the national consciousness,” and hunger and homelessness recede as primary concerns. We get that. But Gallup goes on: Since 2001, worry has been highest among those residing in lower-income households, likely because those with limited financial resources are more at risk of going hungry or becoming homeless. A consistent majority of lower-income adults worried about the problem before 2012, but that has only increased in the past five years. Lower-income Americans worry more in general than those with higher incomes. Everything is riskier and tougher for them. But nothing compares to the worries about hunger and homelessness.

Half of Americans are desperately living paycheck to paycheck -- More than seven years after the Great Recession officially ended, there is yet more depressing research that at least half of Americans are vulnerable to financial disaster. Some 50% of people is woefully unprepared for a financial emergency, new research finds. Nearly 1 in 5 (19%) Americans have nothing set aside to cover an unexpected emergency, while nearly 1 in 3 (31%) Americans don’t have at least $500 set aside to cover an unexpected emergency expense, according to a survey released Tuesday by HomeServe USA, a home repair service. A separate survey released Monday by insurance company MetLife found that 49% of employees are “concerned, anxious or fearful about their current financial well-being.”One explanation: Americans are crippled under the same amount of debt as they had during the recession. The New York Federal Reserve on Monday predicted that total household debt will reach its previous peak of $12.68 trillion in 2017. The last time it reached that level was in the third quarter of 2008, during the depths of the Great Recession. Indeed, it’s already close: Total household debt in the fourth quarter of 2016 was $12.58 trillion. Fewer borrowers have housing-related debt in 2017 and, instead, have taken on auto and student loans. One illness can push people to the brink of financial ruin. Wanda Battle, a registered nurse for four decades, was recently hit with a $100,000 medical bill. She has visited her local emergency room on more than one occasion due to severe migraines and mini-strokes. Battle, who is based near Nashville, Tenn., managed to reduce her latest hospital bill to $32,000 based on her relatively low income, but still faces $650 monthly payments for a previous $22,000 medical bill. “There were times I couldn’t work,” she told MarketWatch. “I have not held a job that is continuous.”

The growing divide between the haves and the have-nots, in one stunning chart --The 1% tend to sweep it under their elegant Persian rugs, while those struggling to make rent scream it from the unemployment line: Inequality in the United States is bad and it’s only getting worse. To further the discussion, the Center for Economic and Policy Research, a Washington, D.C.-based think tank, this week shared research from a trio of contributors, led by French economist Thomas Piketty, in an attempt “to create inequality statistics for the U.S. that overcome the limitations of existing data.”  This chart, originally published in December on the Washington Center for Equitable Growth website, caught some refreshed social-media buzz: “It’s a tale of two countries,” the authors wrote. “For the 117 million U.S. adults in the bottom half of the income distribution, growth has been nonexistent for a generation, while at the top of the ladder it has been extraordinarily strong.” And it’s not due to the aging population. Rather, income has actually dropped for the working class. In fact, none of the growth from 1980 to 2014 went to the bottom 50%, the study pointed out. Only 32% went to the middle class, while the top 10% reaped 68% of the growth. A full 36% went to the 1% alone. Troubling? “An economy that fails to deliver growth for half of its people for an entire generation is bound to generate discontent with the status quo and a rejection of establishment politics,” the authors said. University of Michigan economist Justin Wolfers, who helped make the chart a hot topic on Twitter, had this say when he saw the illustration: “Just think how amazing it is that both of these lines even fit on the same chart with the same axes.”

Improving Economic Opportunity in the United States | Center on Budget and Policy Priorities -  Testimony of Jared Bernstein Before the Joint Economic Committee. In our often hyper-partisan era, it is refreshing to see this joint committee coming together to think about ways in which public policy can enhance the opportunity, mobility, and living standards of Americans who’ve not been sufficiently reached and lifted by economic growth in recent decades. My testimony stresses the following points:

• Though the U.S. economy continues to grow steadily at moderate rates and the labor market closes in on full employment, many barriers to economic opportunity and mobility remain in place.
• These opportunity barriers include high levels of income inequality, unequal access to educational opportunities, residential segregation by income, inadequate investments in children and certain areas, and a markedly slower employment recovery in rural relative to metro areas.
• Near-term policy solutions aimed at reducing these barriers include running tight labor markets, infrastructure investment, direct job creation, health care and other work supports, apprenticeships, and more.
• Longer-term solutions invoke policy interventions targeting inequality, inadequate housing, income and wage stagnation, nutritional and health support, the criminal justice system, and educational access.
• Avoiding policies that keep opportunity barriers in place is just as important as the proactive agenda items I recommend. Reducing the provision of public health care, regressive tax cuts, and budget cuts to programs that help low- and moderate-income families would all reduce opportunity.

U.S. court rules 1964 civil rights law protects LGBT workers from bias -- A U.S. appeals court, for the first time ever, on Tuesday ruled that federal civil rights law protects lesbian, gay, bisexual and transgender employees from discrimination in the workplace. The ruling from the 7th U.S. Circuit Court of Appeals in Chicago represents a major legal victory for the gay rights movement. In its 8-3 decision, the court bucked decades of rulings that gay people are not protected by the milestone civil rights law, because they are not specifically mentioned in it. "For many years, the courts of appeals of this country understood the prohibition against sex discrimination to exclude discrimination on the basis of a person's sexual orientation," Chief Judge Diane Wood wrote for the majority. "We conclude today that discrimination on the basis of sexual orientation is a form of sex discrimination." The ruling also allows a lawsuit to go forward in Indiana, where plaintiff Kimberly Hively said she lost her community college teaching job because she is lesbian. "I have been saying all this time that what happened to me wasn't right and was illegal," Hively said in a statement released by the gay rights legal organization Lambda Legal, which represents her. In its decision to reinstate Hively's 2014 lawsuit, which was thrown out at the local level in Indiana, the Court of Appeals ruled that protections against sex discrimination in Title VII of the Civil Rights Act of 1964 protect people from job discrimination based on their sexual orientation. In so doing, the full appeals court overruled a decision by a smaller panel of its judges to uphold the district court's decision in the college's favor. To reach its conclusion, the court examined 20 years of rulings by the U.S. Supreme Court on issues related to gay rights, including the high court's 2015 ruling that same-sex couples have a right to marry, Wood wrote. The Supreme Court has not yet ruled on the question of whether the Civil Rights Act protects gays and lesbians, she wrote.

Since 2007, the DEA Has Taken $3.2 Billion in Cash from People Not Charged with a Crime - The Drug Enforcement Administration takes billions of dollars in cash from people who are never charged with criminal activity, according to a report issued today by the Justice Department’s Inspector General.Since 2007, the report found, the DEA has seized more than $4 billion in cash from people suspected of involvement with the drug trade. But 81 percent of those seizures, totaling $3.2 billion, were conducted administratively, meaning no civil or criminal charges were brought against the owners of the cash and no judicial review of the seizures ever occurred.That total does not include the dollar value of other seized assets, like cars, homes, electronics and clothing.These seizures are all legal under the controversial practice of civil asset forfeiture, which allows authorities to take cash, contraband and property from people suspected of crime. But the practice does not require authorities to obtain a criminal conviction, and it allows departments to keep seized cash and property for themselves unless individuals successfully challenge the forfeiture in court. Critics across the political spectrum say this creates a perverse profit motive, incentivizing police to seize goods not for the purpose of fighting crime, but for padding department budgets.In the absence of this information, the report examined 100 DEA cash seizures that occurred “without a court-issued warrant and without the presence of narcotics, the latter of which would provide strong evidence of related criminal behavior.”Fewer than half of those seizures were related to a new or ongoing criminal investigation, or led to an arrest or prosecution, the Inspector General found.“When seizure and administrative forfeitures do not ultimately advance an investigation or prosecution,” the report concludes, “law enforcement creates the appearance, and risks the reality, that it is more interested in seizing and forfeiting cash than advancing an investigation or prosecution.” The scope of asset forfeiture is staggering. Since 2007 the Department of Justice’s Asset Forfeiture Fund, which collects proceeds from seized cash and other property, has ballooned to $28 billion. In 2014 alone authorities seized $5 billion in cash and property from people — greater than the value of all documented losses to burglary that year.

Neoliberalism Is Killing Us: Economic Stress as a Driver of Global Depression and Suicide -- In anticipation of World Health Day on April 7, the World Health Organization (WHO) published a report showing rates of depression increased 18 percent between 2005 and 2015, now estimated to afflict over 300 million people worldwide. Approximately 800,000 people commit suicide each year. According to the WHO, poverty and unemployment are leading causes. To be sure, mental health services are in critically short supply globally. While often correlated with poverty, mental illnesses can cause misery regardless of one's socioeconomic status.  However, as a faculty member in Global Health Studies at Northwestern University, I find it striking that the WHO highlights poverty and unemployment as leading causes of depression, yet suggests exercise, school-based prevention programs, therapy and medication to solve it. If poverty and unemployment are major causes of depression, shouldn't our remedies address economic drivers of poverty and unemployment, rather than narrowly focusing on school programs and exercise? Is expanding mental illness solely a health issue, or is it also a foreseeable response to expanding economic stress? This gets at a fundamental issue with how global health is conceptualized at the highest levels. We prefer quick and "doable" solutions instead of addressing complex problems. We innovate around the dilemma -- more antidepressants, more mental health services, more exercise -- but we fail to address the underlying structural issues. At what point will we tackle drivers of globally expanding health problems? We actually know quite a bit about why poverty spreads but often blame poverty, unemployment and inadequate social services on government corruption and incompetence. However, while this view has some merit, it is shortsighted, particularly in low and middle-income countries. In fact, institutions in wealthy countries carry significant responsibility for weakened economies worldwide, and thus for the rise of global health crises.

Why would millennial men prefer stay-at-home wives? Race and feminism. - The liberal imagination tends to assume not only that history unfolds in a progressive direction but also that progressivism’s disparate values and groups need not contradict one another. But from Brexit to Donald Trump, the past year has served as a bracing reminder that history does not always head in a progressive direction, and that important constituencies of the progressive coalition — such as the white working class — do not always push history in a leftward direction. Now there are new signs that another prized progressive value, gender equality, may be in trouble — partly thanks to key members of the progressive coalition. New research indicates that young millennials, who many assumed would be torchbearers for a more progressive approach to family life, actually take a more traditional view of family arrangements than Generation Xers and baby boomers when they were young adults. After embracing increasingly feminist family attitudes from the 1970s to the 1990s, young adults are more likely to embrace traditional attitudes about male breadwinning, female homemaking and male authority in the home, according to a new report from sociologists Joanna Pepin and David Cotter. They note that although millennials have not backed off their support for opportunities for working women, they are less likely to embrace egalitarianism at home compared with young adults two decades ago. In other words, the gender revolution in attitudes among young adults has stalled out or even shifted course.

Stop looking to the federal government on early childhood education -- For decades, early childhood education advocates and the scientists, economists, and philanthropists who back them have been waiting for the federal government to step up to the plate and do what’s responsible, moral, and economically wise: make high-quality early childhood education a reality for everyone. With no indication that this is happening, even less so now, we need to focus on more promising pathways. A smart path forward might combine adapting high-quality state-level strategies across more states and bubbling up lessons from pioneering districts. The latter help ensure a targeted focus on community-level needs and assets, and some offer timely lessons on how to link early childhood to the elementary years and beyond. Recent presidents have all expressed support for investments in early childhood education. Still, even the strongest advocate, President Obama, left a legacy that includes higher standards and more funding but far too little of either to ensure all children a strong start. President Trump’s early childhood agenda consists so far of his daughter’s proposal to use tax deductions for the costs of child care to boost resources for the middle-class and wealthy families that can already afford it, while neglecting working-class and poor parents who can’t and expanding the budget deficit. Other policies he has advanced would compound problems for disadvantaged students. His “skinny budget” would strip public schools of key resources and, had the repeal-and-replace of Obamacare passed, it would have deprived millions of children of the physical and mental health care needed to succeed in them.A recent study that I presented at the 2017 Federal Reserve Community Development Research Conference found that gaps in kindergarten readiness between high- and low-income children are enormous, and that they haven’t budged in the past 10-15 years—highlighting the need for more intensive policy responses. Other, more hopeful findings may point the way. Data from the same study indicate that parents are increasingly doing their part—reading to their children, singing with them, and playing games—regardless of their social class. So even though today’s low-social class parents are poorer and working odd hours at low-wage jobs, they are devoting the time and resources that science indicates are critical for child development.

Climate Change-Deniers ‘Spam’ Thousands Of Teachers With Anti-Global Warming Packages - One of America’s most prominent climate-denying groups, galvanized by the Trump administration listening to their claims, has set it sights on a new target: teachers. The Heartland Institute, a conservative think tank that’s become one of the loudest voices when it comes to climate denial, has sent more than 25,000 science teachers across the country a package of material it hopes they’ll use in the classroom, according to a report from PBS Frontline. Alongside a note from Lennie Jarratt, the group’s project manager for transforming education, the package contains a book called Why Scientists Disagree About Global Warming and a 10-minute video about using their guidance. “I’m writing to ask you to consider the possibility that the science in fact is not ‘settled,’” Jarratt says in the memo. “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.” However, there’s near universal consensus among climate researchers that the planet is warming ― rapidly ― and human-induced greenhouse gas emissions are the primary cause. Earth experienced its hottest year on record in 2016, and officials have warned we’re running out of time to address the threat of climate change. Jim Lakely, the Heartland Institute’s director of communications, confirmed thousands of copies of the group’s book have been sent out, and more are yet to come. “The number put out by PBS Frontline might be low before it’s all done. We’ll see,” he said in an email. “We’re mailing out the material because the science is not ‘settled’ when it comes to what are the causes and consequences of climate change.”

These high school journalists investigated a new principal’s credentials. Days later, she resigned - A group of reporters and editors from the student newspaper, the Booster Redux at Pittsburg High School in southeastern Kansas, had gathered to talk about Amy Robertson, who was hired as the high school’s head principal on March 6.The student journalists had begun researching Robertson, and quickly found some discrepancies in her education credentials. For one, when they researched Corllins University, the private university where Robertson said she got her master’s and doctorate degrees years ago, the website didn’t work. They found no evidence that it was an accredited university. “There were some things that just didn’t quite add up,” Balthazor told The Washington Post.The students began digging into a weeks-long investigation that would result in an article published Friday questioning the legitimacy of the principal’s degrees and of her work as an education consultant.On Tuesday night, Robertson resigned.“In light of the issues that arose, Dr. Robertson felt it was in the best interest of the district to resign her position,” Pittsburg Community Schools announced in a statement. “The Board has agreed to accept her resignation.”The resignation thrust the student newspaper staff into local, state and national news, with professional journalists nationwide applauding the students for asking tough questions and prompting change in their administration.“Everybody kept telling them, ‘stop poking your nose where it doesn’t belong,'” newspaper adviser Emily Smith told The Post. But with the encouragement of the superintendent, the students persisted.“They were at a loss that something that was so easy for them to see was waiting to be noticed by adults,” Smith said.

At U-Va., a ‘watch list’ flags VIP applicants for special handling - WaPo -- The University of Virginia’s fundraising team for years has sought to help children of wealthy alumni and prominent donors who apply for admission, flagging their cases internally for special handling, according to documents obtained by The Washington Post. The records from the U-Va. advancement office, which oversees fundraising for the prestigious public flagship, reveal nearly a decade of efforts to monitor admission bids and in some cases assist those in jeopardy of rejection. U-Va. denies that the advancement office held any sway over admissions decisions. But the documents show the office kept meticulous notes on the status of certain VIP applicants and steps taken on their behalf. Within U-Va., the records were known as an annual “watch list.” They provide a case study of what is regarded as an open secret in higher education: that schools do pay attention when an applicant’s family has given them money — or might in the future. The 2011 list, for example, shows that one hopeful was initially marked as denied. Then an advancement officer scribbled a handwritten note on the tracking file: “$500k.” A typed notation said “must be on WL,” for wait list. A final handwritten note urged, “if at all possible A,” for accepted. The final decision on the applicant was not shown. The 2013 records show a donor’s dismay after an applicant was put on the wait list. “According to people who have talked to him, [the person] is livid about the WL decision and holding future giving in the balance,” an advancement officer wrote in the tracking file. “Best to resolve quickly, if possible.”

Why do colleges still give preference to children of alumni? -- The recent revelation by T. Rees Shapiro in The Washington Post that the University of Virginia kept a watch list of VIP applicants for special handling wasn’t that surprising, given that prominent universities have long sought to help prominent donors and even the children of Hollywood stars. What perhaps was most surprising was the casualness in which U-Va. officials discussed applicants with donor ties in the internal documents obtained by the newspaper.But the existence of the U-Va. watch list, which also included prominent alumni donors, raises an important question about the modern college admissions system: Why do campuses still give preferential treatment to the children of graduates?Legacy admissions is particularly an issue at dozens of selective colleges and universities, which have become ever more difficult to gain admittance to in recent years. Every spring, the most elite colleges and universities announce their acceptance rates for next fall’s freshman class, and every year it seems the number gets smaller and smaller (now somewhere south of 10 percent for Harvard, Stanford, and Princeton). What is almost never mentioned in these announcements is how many students were admitted because their parents graduated from the institution. That’s because few colleges publish their legacy admissions numbers. Higher education researchers have sought over the years to measure the extent of legacy admissions. In reviewing admission data from 30 top colleges in the Economics of Education Review in 2011, Michael Hurwitz concluded that children of alumni at the time had a 45 percent greater chance of admission. The acceptance rate for legacies at Stanford University is estimated to be three times higher than the acceptance rate for the overall pool, which was just 4.7 percent last year. The conventional wisdom about legacy admissions is that it helps boost alumni giving. The thinking goes that alumni are more likely to give to their alma mater if they have a good feeling about it, and that fondness only grows stronger if their children attend the school. There is little evidence, however, that this longstanding belief about legacy admissions is actually true. In the book Affirmative Action for the Rich, Chad Coffman found that at seven institutions that dropped legacy preferences between 1998 and 2008, there was “no short-term measurable reduction in alumni giving as a result.”

What Is An Elite College Really Worth? -- Many parents and students think there is a world of difference between the lifelong outcomes of (a) an A-minus student who gets into, say, Princeton, and (b) an A-minus student who applies to Princeton but “only” gets into some less selective school, like Penn State or the University of Wisconsin. They assume that a decision made by faceless adjudicators in Ivy League cloisters will mark the difference between success and failure in life. There are two important things to say about this stress. First, to put the anxiety into context, the kids applying to these schools are already doing quite well. Seventy percent of 29-year-olds don’t have a bachelor’s degree, and the majority of BAs are earned at non-selective schools that accept a majority of their applicants. Many of the people applying to selective colleges have already won life’s lottery. But if that doesn’t ease the nerves of the 40,000 people waiting on Stanford or Penn, here is a more counter-intuitive—and even heartening—conclusion from economics. For most of these applicants, it simply doesn’t really matter if they don’t get into their top choice, according to a paper by Stacy Dale, a mathematician at Mathematica Policy Research, and Alan Krueger, an economist at Princeton University. These researchers tracked two groups of students—one that attended college in the 1970s and another in the early 1990s. They wanted know: Did students attending the most elite colleges earn more in their 30s, 40s, and 50s than students with similar SAT scores, who were rejected from those elite colleges? The short answer was no. Or, in the author's language, the difference between the students who went to super-selective schools and the students with similar SAT scores who were rejected from those schools and went to less selective institutions was "indistinguishable from zero.”

Penn State Graduate Student Union, CGE of Penn State, Penn State Opposes Grad Student Union | Centre Daily Times: In February, the Coalition of Graduate Employees at Penn State filed for union representation with the Pennsylvania Labor Relations Board, but on Monday Penn State President Eric Barron released a letter in opposition to the coalition’s unionization efforts. Following the filing in February, CGE presented the administration with a letter signed by alumni, local government officials and labor unions asking for “full neutrality and non-interference” with the unionization process. The university then released a statement recognizing the graduate students’ rights to begin the unionization process, but said “Penn State considers graduate assistants, like all graduate students, to be students first and foremost, whose primary responsibility is to earn advanced degrees.” Barron expanded on the university’s position Monday. “Penn State does not oppose the concept of unions or the unionization of employees,” Barron said in a statement. “However, the University’s relationship with our students is fundamentally different from that of an employer and employee. For this reason, Penn State opposes this petition for representation with the PLRB.” The CGE formed just more than a year ago in an effort to engage in a dialogue with the university about wages, health care, working conditions and the grievance process for graduate students.

Diplomas to Doorsteps: Education, Student Debt, and Homeownership --  Evidence overwhelmingly shows that the average earnings premium to having a college education is high and has risen over the past several decades, in part because of a decline in real average earnings for those without a college degree. In addition to high private returns, there are substantial social returns to having a well-educated citizenry and workforce. A new development that may have important longer-term implications for education investment and for the broader economy is a significant change in the financing of higher education. State funding has declined markedly over the past two decades, a trend that has coincided with a significant increase in college tuition. To cover the rising cost of college, students and families have increased their reliance on student loans, funding a greater share of an increasing overall college cost. While the federal student loan program has undoubtedly helped mitigate the impact of higher costs on college access and enrollment, more and more students now leave college with higher amounts of debt. Given these trends, it is critical to understand whether holding student debt has affected young Americans’ later life outcomes, such as homeownership.  Previous work has documented that student debt holders endured a sharper decline in homeownership during the recession (relative to those who did not hold student debt), and that a college education is associated with a higher probability of becoming a homeowner. But there is significant heterogeneity among those who go to college and across the type of colleges students attend, and past research has not been able to disentangle how different types of educational attainment and student debt interact to impact the likelihood of owning a home. In this blog post, we begin to close that gap, merging two unique data sets to address the following questions:

At the N.Y. Fed: Press Briefing on Household Borrowing with Close-Up on Student Debt -- An examination of recent developments in household borrowing was the focus of a press briefing held this morning at the New York Fed. President William Dudley offered opening remarks on the latest developments, then Bank economists briefed the press on their analysis of household indebtedness, placing a spotlight on student loans. Their research is based on the New York Fed Consumer Credit Panel—which is based on Equifax credit report data—as well as data from the National Student Clearinghouse. The presentation contained three components: (1) an analysis how aggregate household debt today differs from its 2008 peak, (2) new evidence on student debt growth, delinquency and repayment, and (3) an investigation of the relationship between homeownership, student debt, and educational attainment.  Household debt reached a historic peak in the third quarter of 2008, at $12.7 trillion, followed by years of declining balances as Americans reduced their balances by consciously scaling back their borrowing and lenders charged off loans and tightened lending criteria. Over the past three and a half years total household indebtedness began to grow again, reaching $12.6 trillion in the fourth quarter of 2016. However, the American balance sheet looks quite different now than it did in 2008, with major shifts in the types of debts held as well as in the types of borrowers who hold the debt.  A key change is that borrowers have shifted away from housing-related debt (including first mortgage and home equity lines of credit) toward auto and student loan debt. Housing-related balances are still nearly $1 trillion below the peak reached in the third quarter of 2008, but this gap was nearly entirely offset by higher auto loan balances (+$367 billion) and student loans (+$671 billion).

Student Loans at $1.3 Trillion Shove Family Debt Toward Pre-Crisis Peak -- In the aftermath of the 2008 financial crisis, U.S. consumers watched as the Joneses they had tried frantically to keep up with lost their jobs, their cars and eventually, their over-leveraged homes. It was an object lesson in the risks of household debt, which topped out at $12.68 trillion in the third quarter of 2008, and many began paring their own as quickly as possible. Through late 2013, total debt declined by about $330 billion. Now, the level of borrowing is creeping back toward its pre-crisis peak, reaching $12.58 trillion in the last three months of 2016, according to a report from the New York Federal Reserve Bank. "Given past experience, one might wonder whether this level of indebtedness is sustainable or a reason for concern," New York Fed President William Dudley said at a news briefing on Monday. Perhaps, it's both. The upside is that the debt's makeup is different today, and much of it is less risky than before. Only 71% comes from mortgages, down 7.4 points from 2008, when the collapse of a housing bubble prompted a wave of high-risk loan defaults that eventually toppled investment bank Lehman Brothers and led to bailouts for lenders from Bank of America (BAC) to Citigroup. That relatively rosy picture masks risks, however, that could spell trouble for the U.S. economy in the long term. One is student debt that has increased more than fivefold over the past 14 years, the New York Fed said, totaling $1.3 trillion at the end of last year. That could leave millennials, the largest generation in U.S. history, less able to afford homes and curb their spending power for decades. Recent graduates who borrowed money to finance their degrees leave school with about $34,000 in debt -- a 70% increase from a decade ago -- and about 5% of the borrowers have more than $100,000 in debt. Over the past 20 years, "there has been a significant change in the financing of higher education -- with state and local funding covering a smaller share, and students and their families bearing a greater proportion of rising college costs," Dudley said. "Because of the increase in income inequality and stagnant or declining incomes for the least well-off, the consequences of being born to low- versus high-income parents are greater today than in the past," Dudley noted, and have contributed to a sharp decrease in upward mobility.

New York Fed's Dudley Admits Fed-Inspired Student Debt Bubble Is Headwind For Economy -- Having confessed to the fact that Fed "forecasts" are as useless as any other guess (and not commitments), NY Fed's Bill Dudley admitted this morning that the Fed-inspired student-loan bubble is a debt overhang that both inhibits home ownership and is a headwind to economic growth. “If you look at the Summary of Economic Projections, it’s a forecast” and not a commitment, New York Fed President William Dudley says in New York at press conference on trends in household borrowing and student debt. We would tend to suggest it was not even that Mr. Dudley... But the real headlines were for the research report his PhDs had created that suggested - shock, horror - that gorging one's self on cheap credit in the short-run to get an education that is worth less each day is potentially a bad thing and could hamper the long-run economy. But let's let the PhDs explain... Student debt has more than doubled over the past decade to $1.3 trillion. But a significant minority of borrowers are defaulting on their student loans and in turn harming their credit and ability to purchase homes, the report shows. More than 1 in 10 borrowers are at least 90 days behind on their student debt. The delinquency rate for student loans is far higher than it is for other forms of credit, including mortgages, credit cards and auto loans. Only about 5% of student-loan borrowers owe more than $100,000. But they account for almost a third of all outstanding student debt. Borrowers on average leave school owing about $34,000, up nearly 70% from a decade ago. Student debt appears to dampen homeownership rates among those with the same level of education, the report said. ..our analysis shows that for any given level of educational attainment, those with student debt are less likely to own a home in their early thirties than those who completed their education without taking on as much—or any—debt.To the extent that the statistical associations we uncovered reflect a causal impact of debt on homeownership, they have important implications for the housing market and future spending behavior.

 Number of people who owe over $100,000 in student debt has quadrupled in 10 years -The number of borrowers with balances over $100,000 has more than quadrupled in the last 10 years, according to data released Monday by the Federal Reserve Bank of New York. The default rate of borrowers with high balances “appears to have deteriorated over time,” Donghoon Lee, a research officer at the NYFed, said during a press briefing with reporters. In 2016, borrowers with $100,000 in student loans or more make up just 5% of borrowers, but account for about 30% of total outstanding student debt, the data show. What’s more, these borrowers appear to be struggling more than they have in recent years. But the default rates have spiked over the decade. Just 6% of borrowers with $100,000 or more in loans who left school between 2005 and 2006 defaulted on their debts five years later, according to the NY Fed. More than 20% of borrowers who left school between 2010 and 2011 owing that amount defaulted within five years. William Dudley, the bank’s president, noted in prepared remarks that the change in the way we finance higher education over the past two decades -- from state and local governments funding a larger share to families carrying a larger percentage of the load -- is likely contributing to the trend of borrowers leaving college with higher levels of debt. What’s more, rising college costs and student debt burdens may be diminishing the power of higher education as an engine of economic mobility, Dudley said. Borrowers who come from areas with lower incomes tend to struggle more with student debt, research from the New York Fed and others note.

Student Debt Giant Navient to Borrowers: You’re on Your Own -- Over the past several years, Jack Remondi, chief executive of student loan giant Navient Corp., has gone out of his way to tout the company’s devotion to helping Americans cope with student debt. He’s mentioned it in meetings with investors, on calls with Wall Street analysts, in testimony before Congress, and even on his Medium blog. “At Navient, our priority is to help each of our 12 million customers successfully manage their loans in a way that works for their individual circumstances,” he said March 20. But faced with a potential multi-billion dollar lawsuit by the federal government for not living up to that mantra, Remondi’s company, formerly an arm of student lender Sallie Mae, sang a different tune in court filings. Borrowers can’t reasonably rely on America’s largest student loan servicer to counsel them about their many options, Navient said on March 24 in a motion to dismiss the case, because its primary role is, after all, to collect their payments.“There is no expectation that the servicer will act in the interest of the consumer,” Navient said in response to the litigation filed Jan. 18 by the U.S. Consumer Financial Protection Bureau. Navient says its public statements encouraging borrowers to contact the company didn’t mean it would act in their best interest. With about one in four of the nation’s roughly 44 million student debtors either in default or struggling to stay current, there’s broad agreement that loan servicers such as Navient are key to ending the crisis. Remondi, 54, has said as much on several occasions. But in court, Navient made clear that the company’s main job isn’t helping debtors; it’s getting them to cough up cash for creditors like its biggest client, the U.S. Department of Education. The department, Navient explained, didn’t agree to pay for the level of customer service the CFPB wants Navient to give.  “This ranks among the most appalling statements I have heard in my career,” said David Bergeron, who after more than 30 years of working at the Education Department recently retired as the head of postsecondary education. “If that’s all they are doing,” Bergeron said of Navient’s claim that its only responsibility is to collect, “the Treasury Department and the Internal Revenue Service would do it better.”

Big Companies Shake Fingers at Employees for Raiding 401(k)s --Yves Smith - The Wall Street Journal gave us yet another a taste of the World According to Corporate America. Companies are unhappy that employees are dipping into their 401(k)s, although they’ve managed to devise one of those agency-free words, “leakage,” to the process. Why are they upset? Because lower savings means their employees will want (as in need) to stay wage slaves longer. Can’t have that, dammit. Need to clear those cobwebs out so as to make room for young, frisky workers.  Per the Journal: American companies are trying to stop employees from raiding their 401(k)s, in an attempt to ensure that older workers can afford to retire and make room for younger, less-expensive hires…. Tapping or pocketing retirement funds early, known in the industry as leakage, threatens to reduce the wealth in U.S. retirement accounts by about 25% when the lost annual savings are compounded over 30 years, according to an analysis by economists at Boston College’s Center for Retirement Research.

Aetna to stop selling Iowans individual plans. - A second major health-insurer has decided to quit selling individual policies in Iowa, raising fears that tens of thousands of Iowans will have no options for coverage next year.Aetna informed Iowa regulators Thursday that it had decided to stop selling such policies, which cover people who lack access to employer-provided coverage or government plans. The move would affect 36,205 customers, the company told regulators.Aetna’s move takes effect in January. It came three days after Iowa’s dominant health-insurer, Wellmark Blue Cross & Blue Shield, announced that it would no longer sell individual health-insurance policies in Iowa. Only one other insurer, the relatively small Minnesota carrier Medica, currently sells individual policies in most Iowa counties. Medica has declined to say if it intends to continue selling such policies here for 2018. "We are currently evaluating the situation and our options," spokesman Greg Bury said Thursday. If Medica pulls out, many Iowans could have no options for individual coverage, either on or off the Affordable Care Act's "exchange" marketplace.  An Aetna spokesman said in a statement that the decision was “a result of financial risk and an uncertain outlook for the marketplace.”Aetna’s brief statement didn’t detail its reasons. But the national carrier already had stopped selling such policies in 11 other states for 2017, citing turmoil in the wake of the Affordable Care Act.Wellmark cited similar reasons, plus the inability of Republicans controlling Congress to replace the Affordable Care Act with a plan that could provide more stability for the market. Many of Aetna’s individual Iowa customers were originally on plans sold by the carrier Coventry, which Aetna bought in 2013.   Aetna said Thursday it had not decided whether to pull out of the three remaining states — Delaware, Nebraska and Virginia — where it sells individual health-insurance policies. The company announced last year that it would no longer sell such policies in 11 other states. The Aetna and Wellmark decisions will sharply curtail choices for Iowans who want to buy insurance plans that could qualify for federal subsidies under the Affordable Care Act. As things stand now, Medica could be the only choice for most such Iowans for 2018. If that company pulls out and no new carrier comes in, most Iowans could be without options for policies that qualify for the subsidies.

Thousands of brokers exit HealthCare.gov as plan commissions go unpaid - Each year since the launch of HealthCare.gov, insurance broker Craig Paulson faces a difficult question: Should he continue to sell individual market plans even though insurance companies increasingly refuse to pay commissions?  If his Utah-based insurance brokerage firm, Altura Benefits, stops selling exchange plans, consumers may be left with lower quality coverage or none at all. In the past year, Aetna announced it would stop paying any commissions on the individual market in Utah. Molina Healthcare later announced that it wouldn't pay for commissions on special enrollment plans. “It's created a moral conflict,” Paulson said. “We want to do what's right for the client, but if you're not getting paid for your services, you can't remain in business.”Paulson isn't alone in his dilemma. More insurance companies around the country are refusing to pay brokers commissions on higher-tier exchange plans or special enrollment sales as the companies face financial losses on the federal marketplace, according to Ronnell Nolan, CEO of Health Agents for America, which represents independent insurance brokers. “It's the Wild West out here, and companies are doing what they can to survive,” Nolan said. “They're not paying commissions on platinum plans, and they are not paying them for special enrollment plans which cover some of the sickest patients.” That policy has led to an exodus of brokers from the federal marketplace, which could undermine enrollment efforts since brokers historically sign up at least 50% of exchange enrollees, according to Kevin Counihan, the former CEO of HealthCare.gov under President Barack Obama.

The Obamacare Unraveling -- Cochrane -- I usually leave Brad DeLong and Paul Krugman alone. If you haven't figured them out by now, you are beyond my help. In particular, Brad a few years ago made fun of me for "predicting" in 2013 that Obamacare exchanges would unravel due to adverse selection. I have so far  resisted the temptation to needle Brad about that as, well... the Obamacare exchanges unraveled due to adverse selection!  But, unbelievably, Brad is doubling down. While recommending again a snarky 2015 Krugman piece, in which even Krugman was not naming his snarks, DeLong writes: Who is he talking about? John Cochrane, among others: John Cochrane (December 2013): What To do When Obamacare Unravels: “The unraveling of the Affordable Care Act presents a historic opportunity for change….…Next spring [2014] the individual mandate is likely to unravel when we see how sick the people are who signed up on exchanges, and if our government really is going to penalize voters for not buying health insurance. The employer mandate and ‘accountable care organizations’ will take their turns in the news. There will be scandals. There will be fraud. This will go on for years…As you may have noted, there was no adverse-selection meltdown of the ObamaCare exchanges in the spring of 2014...OK. Mea Culpa. I got "2014" wrong. Though not "this will go on for years." It took three years longer than I said. (And I will admit, I did not think hard about how long it would take before writing "2014")The insurers pulling out of exchanges, the swaths of the country with only one insurer left, the policies that are nice cards in your pocket but don't actually pay for much, the skyrocketing premiums... it all took three more years. But of all this, Brad seems completely unaware. What, Obamacare is going just swimmingly? People (other than those getting subsidies and medicaid) are just delighted with their nice low premiums and great coverage? Insurance companies are all swarming to provide exchange policies? Just what rock did Brad crawl out from under? He continues…

Half of Americans are responsible for only 3 percent of health care costs --  Here’s a simple reason crafting health policy is so devilishly hard: Most Americans are pretty healthy and a few are really sick. The top 1 percent of health-care spenders use more resources, collectively, than the bottom 75 percent, according to a new study based on national surveys. Slice the data a different way, and the bottom half of spenders all together rack up only about 3 percent of overall health care spending — a pattern that hasn’t budged for decades. This creates a fundamental inequality in the country's health spending that is the crux of the challenge policymakers face: They need a system that works for people who are ill, but is attractive to those who are healthy and spend little on health care. The political debate over health care often focuses on how a new system will meet the needs of the sick: Will cancer patients or people with diabetes access and afford care when they need it? But the Health Affairs study, “Most Americans have good health, little unmet need and few health care expenses,” shows just how important the healthy people who spend very little on health care are. The message you draw from that, however, may depend on your politics. “The key takeaway message really is most people are in good health; they don’t spend a lot of money, and yet it’s important to have them be part of our insurance system. If they’re left out of the system, we’re not going to have the funds to take care of people who are very sick,” said Marc Berk, a health policy researcher and contributing editor of Health Affairs who led the analysis. But Tom Miller, a resident fellow at the American Enterprise Institute, disagreed. He said that the study is based on quick and incomplete snapshots of health and argued that it is yet another way to divert from the health-care discussion we should be having: about how to rein in spending. Using this data to argue about where to get premium dollars from — from the pockets of the well or the sick — simply allows the system to grow ever bigger and prop up an even-more-expensive medical system.

Expanded coverage has pushed health services employment up by roughly 240,000 jobs - In a November 2015 Health Affairs blog post, we argued that expanded coverage was responsible for much of the increase in health job growth that we observed from the middle of 2014 through the middle of 2015. In this post, we carry our analysis forward to December 2016 and provide our best estimate of the total number of additional health jobs that are attributable to the expansion in health insurance coverage that began in 2014 under the Affordable Care Act (ACA). While for now, the American Health Care Act (AHCA) is dead, should it be resurrected and a portion of these coverage gains be reversed as projected by the Congressional Budget Office (CBO) in their scoring of the bill, we would expect a proportional reversal in these job gains.[i] The percentage of the US population with health insurance increased slowly from 2010 to 2014 and then rose sharply in 2014 and 2015, coinciding with the expanded coverage provisions of the ACA that were introduced in 2014 (Figure 1). As expected, coverage began to level off in 2016 with a relatively small increase in the percent insured. Health job growth was stable through 2012, but dropped in 2013.  Despite the jump in coverage, it dropped further in 2014, but then more than doubled in 2015.

Health Care Corporate CEOs Fret About Physician Burnout….Because It Hurts Their Profits? - Physician burnout is in the news again.  Late in 2015, an article by Shaneyfelt and colleagues in the Mayo Clinic Proceedings showed an increase in the proportion of physicians reporting at least one symptom of burnout to 54.4% in 2014(1), up from the 45.5% they reported in 2012(2).  A March 28, 2017, post in the Health Affairs blog based on the latest article warning about burnout and suggesting how to address it got considerable attention. However, physician burnout is hardly new.  As we wrote in 2012 about the predecessor the 2012 Shaneyfelt article, this is just the latest in a long series of studies showing physicians’ growing angst, dissatisfaction, burnout, or whatever one calls it. In 1987, in an AMA survey of physicians over 40, 44% replied that were they given chances to do it all over again, they would not go into medicine.(3)  In a 2001 survey of Massachusetts physicians, 62.3% were dissatisfied with the practice environment.(4)  In 2002, a national survey by the Kaiser Family Foundation showed that 45% of physicians would not recommend that a young person should go into medicine.(5)   In a survey of primary care physicians in 2007, 38.7% were somewhat or very dissatisfied.(6)  I have a 6 inch thick set of paper files containing articles on the subject, although it is remarkable how many research studies reported only average scores on instruments, and hence did not report proportions of physicians who were burned out or dissatisfied. Yet the 2017 Health Affairs post garnered headlines  declaring physician burnout to now be a crisis.Whether the current attention to burnout will lead to any real improvements is doubtful.  In particular, I am concerned that the Health Affairs blog post that sparked all the attention was at best misdirected. It avoided discussing more than a few of the most immediate, proximate causes of burnout.  It seemed more motivated more by concerns about money than about patients and the physicians that try to serve them.  It read like a top down diktat uninfomed by the concerns of physicians or patients, maybe because all of its authors were CEOs of large health care organizations, all but one large hospital systems. I will venture to go through the issues point by point in the hope of sparking a discussion more focused on the physicians subject to or at risk of burnout, and ultimately the effects of their burnout on their patients.

The Hidden Monopolies That Raise Drug Prices -- David Dayen -- Like any retail outlet, Frankil pharmacy purchases inventory from a wholesale distributor and sells it to customers at a small markup. But unlike butchers or hardware store owners, pharmacists have no idea how much money they’ll make on a sale until the moment they sell it. That’s because the customer’s co-pay doesn’t cover the cost of the drug. Instead, a byzantine reimbursement process determines Frankil’s fee. “I get a prescription, type in the data, click send, and I’m told I’m getting a dollar or two,” Frankil says. The system resembles the pull of a slot machine: Sometimes you win and sometimes you lose. “Pharmacies sell prescriptions at significant losses,” he adds. “So what do I do? Fill the prescription and lose money, or don’t fill it and lose customers? These decisions happen every single day.” Frankil’s troubles cannot be traced back to insurers or drug companies, the usual suspects that most people deem responsible for raising costs in the health-care system. He blames a collection of powerful corporations known as pharmacy benefit managers, or PBMs. If you have drug coverage as part of your health plan, you are likely to carry a card with the name of a PBM on it. These middlemen manage prescription drug benefits for health plans, contracting with drug manufacturers and pharmacies in a multi-sided market. Over the past 30 years, PBMs have evolved from paper-pushers to significant controllers of the drug pricing system, a black box understood by almost no one. Lack of transparency, unjustifiable fees, and massive market consolidations have made PBMs among the most profitable corporations you’ve never heard about. Americans pay the highest health-care prices in the world, including the highest for drugs, medical devices, and other health-care services and products. Our fragmented system produces many opportunities for excessive charges. But one lesser-known reason for those high prices is the stranglehold that a few giant intermediaries have secured over distribution. The antitrust laws are supposed to provide protection against just this kind of concentrated economic power. But in one area after another in today’s economy, federal antitrust authorities and the courts have failed to intervene. In this case, PBMs are sucking money out of the health-care system—and our wallets—with hardly any public awareness of what they are doing.

Time for transparency in prescription drug marketplace -- Local pharmacists play a vital role in America’s neighborhoods and communities—  Today however, community pharmacists routinely incur losses of approximately $100- or in some cases much more- on individual prescriptions because insurance middlemen, known as pharmacy benefit managers (PBMs), reimburse pharmacies well below their cost to acquire and dispense generic prescription drugs that have skyrocketed in price. The PBMs may wait weeks or months to update the reimbursement benchmarks they use to compensate pharmacies while drug prices increase virtually overnight. This situation jeopardizes pharmacists' ability to continue to serve patients because it leaves community pharmacies with unsustainable losses. Preserving patient access to pharmacies is one of my top priorities in Congress.  PBMs like to talk about making healthcare affordable. But in doing so, they fail to realize that we must also make healthcare accessible. Unlike my local pharmacist in Hall County, and those across the nation, PBMs do not have to real relationship with patients. In fact, it is not uncommon for them to secretly retain most manufacturer payments – rebates, discounts and other fees – instead of passing the savings on to patients. Additionally, PBMs have been known to switch plan members from low-to-high cost drugs and manipulate generic pricing. This is why I support strong PBM transparency requirements. I believe they are the key to delivering real savings to patients.

 India’s top drug lobbyist explains why Indian drugs are often not bioequivalent - Western regulators have found evidence of it, scholars unearthed empirical support for it, but now even the lead lobbyist for its industry admits it; most Indian medicines are not equivalent to the medicines they copy.  DG Shah, the head of the Indian Pharmaceutical Alliance has written an eye-opening column on the many failings of India’s laws and medicine.As Shah explains, Indian law stipulates that products launched within four years of first approval are required to establish bioequivalence. But after four years, any manufacture can launch without bioequivalence or stability data. A quick estimate shows that only about 15% of the products in the market are launched in the first four years.This means 85% of products sold in India have been approved for sale without any bioequivalence or stability data.His most telling statement is this: Thus, majority of the products in the market have not established their equivalence or proved their stability. There is an accumulated mass of more than 50 years of such products in the market. They may or may not be harmful but will certainly not cure patients. Perhaps this explains why so many Indian companies have to fabricate data required by US FDA. They don’t have to provide it domestically and would rather fake it for us.

Why Are So Many White Americans Dying? - Politico interview with Anne Case - It’s a mystery with profound implications for American politics, not to mention public health: Why are so many white people dying? When economists Anne Case and Angus Deaton released their first bombshell study in 2015, showing that mortality rates were rising for middle-aged white Americans after years of decline, the finding stunned the research world. This wasn’t a global trend—it was a distinctly American phenomenon, Case and Deaton had discovered. Among other races and age groups in Europe, mortality rates had continued to fall. But in the U.S. white people aged 45 to 54 without a college degree were dying sooner, and not from the usual suspects like heart disease and diabetes. For an advanced country where the notion of continuous progress is practically a national creed, the revelation was shocking.  Now Deaton, who won the Nobel Prize in 2015, and Case, his wife and coauthor, are back with a new paper that aims to refine their original findings, digging into the group that’s seeing the largest increases in mortality rates: white people without college degrees, accelerated by what they call deaths of despair, or suicide, alcohol- and drug-related deaths. “Ultimately,” they write, “we see our story as about the collapse of the white, high school educated, working class after its heyday in the early 1970s, and the pathologies that accompany that decline.” The discussion over Case and Deaton’s research has come along with a spate of media coverage on the economic anxieties, poor marriage prospects and the surge in substance-abuse-related deaths in the distressed white communities that powered Trump’s victory. But because Case and Deaton’s topic is so central to one of the biggest storylines of the past election, it’s also been a magnet for criticism. In particular, journalists and scholars have voiced concern about the spotlight on white people’s economic problems, which are still, relatively speaking, far smaller than those of, say, African-Americans.  And, Case argues, the reversal of decades of progress on health among the least educated should be setting a fire under political leaders and policy wonks in both parties as they try to craft real solutions: This conversation has been edited and condensed for clarity.

 Switch from nuclear to coal-fired power linked to low birth weight in US region -- Children in a region of the US were born smaller after the area switched from nuclear plants to coal-fired power stations, new research has found. The study looked at of the impact of nuclear power plant closures in the aftermath of the Three Mile Island accident in Pennsylvania in 1979 – the most serious such accident in US history – in which one of the power station’s reactors underwent a partial meltdown. “At the time policymakers thought they were protecting public health by scrutinising nuclear power plants, given the partial meltdown that happened in Three Mile Island,”  While the study is based on a historical incident, experts say the results are pertinent given the shift from nuclear to coal power in Japan and Germany following the Fukushima accident in 2011, and the eagerness of the Trump administration to embrace coal. Writing in the journal Nature Energy, Severnini describes how he sought to analyse a so-called “natural experiment” whereby a number of nuclear power plants were closed following country-wide inspections carried out after the Three Mile Island accident. Among them were Browns Ferry and Sequoyah in the Tennessee Valley area: both remained closed for several years after they were shut down in 1985. The analysis of data from the US Energy Information Administration by Severnini reveals that the loss of nuclear energy following the two closures was made up almost entirely by an increase in energy production by coal-fired power plants in the Tennessee Valley area, although the increase varied across different plants. The result was that particle pollution increased in areas where coal use rose. Around the Paradise plant, which accounted for almost a quarter of the rise in coal-fired energy, concentration of particulates increased by 27% in the 18 months after the nuclear shutdown. At the same time average birth weight fell. After taking into account a host of factors relating to the child, county and mother, including her age and education levels – although smoking habits were not specifically probed – birth weight in areas with coal-fired plants declined by around 5.4% in the 18 months after the nuclear shutdown. The impact was greatest in the areas which showed the greatest boom in coal-fired power plant activity after closure of the two nuclear sites.

Wealth didn’t matter. Pollution from a coal-fired plant, carried miles by wind, still hurt their babies. - Air pollution from power plants has wanderlust. It never stays still. It rides the wind, drifting far from its source, visiting homes miles away with potentially harmful effects. New research released Monday documents the impact that pollution from a coal-fired plant in Pennsylvania had on four wealthy New Jersey counties as far as 30 miles downwind. Women in those counties had a greater risk of having babies of low or very low birthweight — less than 5½ pounds — than did women in similarly affluent areas. It didn’t matter that the mothers there had advantages that low-income mothers don’t: money and access to private health care. Their babies still appeared to suffer from the effects of air pollution, specifically wind-borne sulfur emissions. The study authors say stronger federal regulation of emissions from coal-fired plants is needed to safeguard human health. Plenty of research has looked at the negative effects of air pollution made worse by smoke drifting from coal-burning power plants. But this study by scientists at the University of Pennsylvania and Lehigh University is the first to assess cross-state sulfur dioxide pollution from a specific plant, the Portland Generating Station in Knowlton Township, Pa., and to use atmospheric dispersal modeling to link it to downwind areas — in this case, Warren, Morris, Hunterdon and Sussex counties in New Jersey. “Most studies focus on low-wage areas, and we looked at a wealthy region. We are filling a very important gap. This is just the beginning step, an impact on early life through birth outcomes.”

Trump’s EPA moves to defund programs that protect children from lead-based paint -  Environmental Protection Agency officials are proposing to eliminate two programs focused on limiting children’s exposure to lead-based paint, which is known to cause damage to developing brains and nervous systems.The proposed cuts, outlined in a 64-page budget memo revealed by The Washington Post on Friday, would roll back programs aimed at reducing lead risks by $16.61 million and more than 70 employees, in line with a broader project by the Trump administration to devolve responsibility for environmental and health protection to state and local governments.Old housing stock is the biggest risk for lead exposure — and the EPA estimates that 38 million U.S. homes contain lead-based paint.Environmental groups said the elimination of the two programs, which are focused on training workers in the safe removal of lead-based paint and public education about its risks, would make it harder for the EPA to address the environmental hazard.Washington Post reporter Dennis Brady talks with Mustafa Ali, a former EPA environmental justice leader who served more than two decades with the agency, to discuss the consequences of President Trump's budget proposal. (McKenna Ewen/The Washington Post) One of the programs falling under the ax requires professional remodelers to undergo training in safe practices for stripping away old, lead-based paints from homes and other facilities.The training program for remodelers was set up under a 2010 EPA regulation that aims to reduce exposure to toxic lead-paint chips and dust by requiring renovators to be certified in federally approved methods of containing and cleaning up work areas in homes constructed before 1978.The rule applies to a broad range of renovations, including carpet removal and window replacement, in homes inhabited by pregnant women and young children.

Exposure to BPA substitute, BPS, multiplies breast cancer cells-- Bisphenol S (BPS), a substitute for the chemical bisphenol A (BPA) in the plastic industry, shows the potential for increasing the aggressiveness of breast cancer through its behavior as an endocrine-disrupting chemical, a new study finds. The results, which tested BPS in human breast cancer cells, will be presented Saturday at ENDO 2017, the Endocrine Society's 99th annual meeting in Orlando, Fla. BPS is found in polycarbonate hard plastics, currency bills and thermal paper receipts as well as many products touted to be free of BPA, a known endocrine-disrupting chemical suspected of having multiple possible health risks. "Despite hopes for a safer alternative to BPA, studies have shown BPS to exhibit similar estrogen-mimicking behavior to BPA," said the study's principal investigator, Sumi Dinda, Ph.D., associate professor at Oakland University School of Health Sciences, Rochester, Mich. Their study confirmed that BPS acts like estrogen in breast cancer cells, Dinda said, adding, "So far, BPS seems to be a potent endocrine disruptor." Using two commercially available breast cancer cell lines obtained from women with estrogen-receptor-positive breast cancer, the research team exposed the cancer cells to varying strengths of BPS or to an inactive substance as a control. The investigators also treated the breast cancer cells with estradiol (estrogen) and found that BPS acted like estrogen in multiplying breast cancer cells, Dinda said. Compared with the control, BPS heightened the protein expression in estrogen receptor and BRCA1 after 24 hours, as did estrogen. After a six-day treatment with BPS, the breast cancer cells in both cell lines reportedly increased in number by 12 percent at the lowest dose (4 micromolars) and by 60 percent at 8 micromolars.

Pyrethroid pesticide exposure appears to speed puberty in boys - -- Environmental exposure to common pesticides may cause boys to reach sexual maturity earlier, researchers have found. They will present their study results Saturday at the Endocrine Society's 99th annual meeting in Orlando, Fla. Previous research shows that early puberty increases the risk of diseases in adulthood, for example, testicular cancer in men and breast cancer in women. Early puberty also can stunt growth and cause behavioral problems. The class of pesticides studied, pyrethroids, accounts for more than 30 percent of global insecticide use, said Jing Liu, Ph.D., lead investigator and an associate professor at Zhejiang University in Hangzhou, China. These chemicals are known endocrine-disrupting chemicals that interfere with the body's hormones. "We recognize pyrethroids as a new environmental contributor to the observed trend toward earlier sexual maturity in boys," Liu said. Today, a boy's body matures into an adult's between the ages of 9 and 14 years on average, the Hormone Health Network reports. Experts believe that many factors, including environmental toxins, are responsible for the decreasing age at onset of puberty for both boys and girls. Pyrethroids are used indoors and outdoors to kill mosquitoes and other insects, and are sprayed on crops. Humans likely receive most of their exposure to pyrethroids from food and residential use. Evidence of recent exposure to the chemical appears in human urine as a metabolite, or molecule, called 3-phenoxybenzoic acid (3-PBA).

Dow Chemical Pesticide Linked to Autism - Three environmental groups asked a federal appeals court on Wednesday to order the EPA to ban the pesticide chlorpyrifos. EarthJustice, which is representing the Pesticide Action Network and the Natural Resources Defense Council, was responding to the EPA’s recent announcement that it would not be following through on its own decision to ban the pesticide, which has been repeatedly found to damage children’s developing brains.Scientists have spent years documenting that exposure to chlorpyrifos increases children’s chances of having long-term, developmental problems, including attention, memory and intelligence deficits, tremors, and autism. After carefully weighing that evidence — as well as critiques of it from Dow Chemical, which patented and still sells most of the pesticide — the EPA decided to move ahead with a ban on chlorpyrifos in 2015.On November 10, the agency took what was supposed to be a final step in banning the pesticide: issuing a revised assessment of the chemical’s effects on human health, which set a new exposure limit for the pesticide. According to the report, many children are already being exposed to high levels of chlorpyrifos and some children between ages one and two are exposed to levels that are more than 14,000 percent above that limit. Only a 60-day public comment period was necessary before the pesticide would be removed from use. But the deadline the federal court gave EPA to finalize its decision — March 31 — pushed the finalization of the decision into Trump’s presidency. Many have since been watching chlorpyrifos as a test for whether the new administration would tackle even the clearest, most studied health threats. The pesticide presented a case in which scientific questions have already been asked and answered and in which children are being directly harmed. Safe drinking water is at stake, and that’s something both Trump and EPA administrator Scott Pruitt have insisted they care about. 

 “Pesticides’ Lives Matter”, Says the European Government - “Pesticides are products that matter—to farmers, consumers, and the environment. We need effective competition in this sector so companies are pushed to develop products that are ever safer for people and better for the environment,” says Margrethe Vestager, the EC commissioner in charge of competition policy. That’s the industry’s American Chemical Society quoting the European central government’s competition czar. The European Commission has given its approval to the pending Dow-DuPont merger, contingent on DuPont divesting several holdings including its pesticides R&D division. The reason they give is that they think combining the Dow and DuPont R&D divisions would result in lower quantity and quality of research and development. Pesticides invariably become ever more harmful to people and the environment, but the EC reads from Orwell’s playbook. As we see, the Poisoner ideology and the pesticide mandate of regulators is so normative that antitrust regulators publicly avow that they are motivated by a mandate to ensure maximal research and development of poisons toward maximal usage. Here the regulator is engaging in pro-corporate propaganda, promising the public that agrochemical sector consolidation will result in better, less toxic poisons. This is a premeditated lie, since the inertia of corporate industrial agriculture is exclusively toward ever more toxic poisons in ever greater amounts.This is an example of the corporate-technocratic regulator template in action. As per (1) the corporate project is normative. As per (2) the antitrust regulator makes a show of ordering sham concessions from the corporation. As per (3) the regulator then turns corporate propagandist and assures the public that the government has acted in the public interest, that the corporate project now will proceed in a benevolent way, and that the people therefore should tend to their private concerns and go to sleep. Of course the public rationale here is idiotic. The whole point of consolidation such as the Dow-DuPont combination is that research and development has run out of road and the oligopoly needs to self-cannibalize. As a rule mergers among oligopolists are the sign of a superannuated, calcifying, decadent sector. It means companies are running out of ideas, losing confidence in the sector and in themselves. It’s the most extreme version of buying your ideas, patents, and products rather than being an innovator and entrepreneur who develops these yourself. Dow and DuPont believe they’re reaching dead ends and each needs to buy what the other has.

House staffer, Monsanto vet named to top Interior posts | TheHill: Interior Secretary Ryan Zinke appointed a House staffer and a former official at Monsanto to two top agency positions on Thursday. Zinke named Aurelia Skipwith deputy assistant secretary for fish, wildlife and parks; and Katharine MacGregor deputy assistant secretary for land and minerals management. Skipwith, a biologist and lawyer, spent six and a half years at agriculture giant Monsanto before joining the U.S. Department of Agriculture in 2013. MacGregor is a House of Representatives veteran, working for former Rep. Thelma Drake (R-Va.), former House Majority Leader Eric Cantor (R-Va.) before joining the staff of an Energy and Natural Resources subcommittee in 2011. Skipwith will work on public lands and wildlife issues, and MacGregor will focus on energy development and public land use, according to the Interior Department.

Trump administration protects endangered mussels | TheHill: President Trump has made a name for himself by repealing all sorts of regulations, but on Tuesday his administration proposed new regulations to protect a threatened species for the first time. The Fish and Wildlife Service (FWS) proposed listing the yellow lance freshwater mussel on the Endangered Species List. The agency says the creature is threatened, which means it could become endangered in the near future. The yellow lance mussel is found in Maryland, Virginia and North Carolina. But its population has declined by about 57 percent, the agency said. The Center for Biological Diversity petitioned the FWS in 2010 to list the yellow lance mussel as an endangered species. The FWS last year agreed to conduct a review of the mussel’s status and submit a 12-month finding. But the agreement did not require the agency to list the mussel as endangered. President Trump eventually allowed the agency’s ruling on the mussel’s threatened status to move forward. The public has 60 days to comment.

Pepsi, McDonalds, Nestle, other major brands implicated in illegal destruction of critical elephant habitat - A Rainforest Action Network field investigation team has documented new evidence of large-scale, illegal rainforest destruction within habitat critical to the survival of the Sumatran elephant, tiger and orangutan. RAN’s research has uncovered supply chain connections that link the rogue palm oil company responsible for the deforestation to major global brands through their shared supplier, Wilmar. The companies implicated include PepsiCo, McDonalds, Nestle, Unilever and Procter and Gamble. This forest clearance is taking place in direct breach of the Indonesian government moratorium on the clearance of rainforests for palm oil plantations announced last April, as well as the no-deforestation policies announced by palm oil giant Wilmar and other brands that commit the companies to eliminate conflict palm oil such as this from their products. Please watch and share the RAN-produced video below and take action to raise the pressure on Wilmar, PepsiCo and others to immediately suspend relations with all palm oil mills being supplied by the company responsible for this large-scale forest destruction.

Disastrous Decision for Rhinos: South Africa's Top Court Lifts Ban on Rhino Horn Sales - As a result of South Africa's highest court rejecting a bid by the government to keep a ban on the sale of rhinoceros horn, it will soon be legal to buy and sell the land mammals' horns in the country. This news comes just weeks after poachers broke into a rhino orphanage in South Africa, killing two baby rhinos for their prematurely developed horns. The development also follows the news that 16 rhino carcasses were been found in Kruger National Park in South Africa since the beginning of March. According to National Geographic , the moratorium on the domestic trade has been lifted as a result of a lengthy legal battle between rhino owners, who farm rhinos like livestock and desire to sell their horns on the market and the government's Department of Environmental Affairs. Though the trade of rhinoceros horn was internationally banned in 1977, the Department of Environmental Affairs restricted domestic tradition in 2009 after a jump in poaching . John Hume is one of the individuals who fought hard against the government's moratorium. The owner of the world's largest rhino farm (with more than 1,000 rhinos he's bred), he sued the government in 2009 to overturn the policy. Hume claims the only way to protect the rhinos he raises is to sell the horns they grow, that way enough funds will be procured to protect them. Now that it is legal to domestically trade rhino horn, people in South Africa can get a permit to sell the item that is responsible for driving poaching. Foreigners will be allowed to export a maximum of two horns for "personal purposes."  Rhino horn is worth more than its weight in gold, as The Dodo pointed out , despite it being made of keratin—the same material as one's fingernails. Already, organized crime groups profit from the illegal trafficking of the horn into Asia, where it is believed to have medicinal properties.

Farmed Salmon Industry Causing Global Sea Lice Crisis -A tiny bug is behind a major problem in the global farmed salmon industry.  The sea louse, or salmon louse, is eating into farmed Atlantic salmon supplies in Scotland, Norway, Iceland and Canada, driving salmon prices higher and creating a "chemical arms race in the seas," the Guardian reports.  Salmon companies around the world are spending an estimated $1.25 billion a year combined to tackle such outbreaks, the publication notes.   Salmon lice attach themselves onto wild or farmed salmon, living off the host fish's blood and skin and leaving it vulnerable to infections. As EcoWatch explained previously , crowded conditions in pens used for raising salmon can provide an ideal breeding ground for sea lice. In farms in some parts of the world, a pesticide is used to combat sea lice that is toxic to marine life and banned by both the European Union and U.S. Food and Drug Administration. "What we are seeing now is a chemical arms race in the seas, just like on the land farms, where the resistance of plants to chemicals is growing," Don Staniford, head of the Global Alliance Against Industrial Aquaculture , told the Guardian. "In fish farms, the parasites are increasing resistance to chemicals and antibiotics. There has been a 10-fold increase in the use of some chemicals in the past 18 months." Chemicals used to control salmon lice rose 932 percent on Scottish farms in the last decade, even though farmed salmon production only increased by 35 percent. Norway has ramped up its usage of hydrogen peroxide baths surged as well. But like superweeds , salmon lice are growing resistant to such chemicals and antibiotics, leading some salmon farms to resort to potentially risky methods to beat back the parasite.  "They are using hydro-dousers, like huge carwashes, and thermal lousing, which heats them up," he said. In Scotland, fish farming giant Marine Harvest used such a warming device called a thermolicer to delouse its caged salmon, but ended up accidentally killing 95,000 fish .

First world survey finds 9,600 tree species risk extinction --The first ever global database of trees on Wednesday revealed that 9,600 tree species are threatened with extinction and identified a total of 60,065 in existence.Brazil is the country with the most diverse tree population, with 8,715 species, according to the Botanic Gardens Conservation International (BGCI) group.It also has the largest number of tree species—4,333—that only exist there.In total 58 percent of trees are so-called single country endemics, with 2,991 species only found in Madagascar and 2,584 only found in Australia. After Brazil, Colombia is the second most diverse country, with 5,776 different tree species, followed by Indonesia, with 5,142.The London-based BGCI, which represents an estimated 2,500 botanic gardens around the world, used data from more than 500 published sources to create the list.Of the 60,065 tree species, only around 20,000 have been assessed for their conservation status—of which 9,600 are threatened with extinction."BGCI's main reason for publishing the list is to provide a tool for people trying to conserve rare and threatened tree species," the organisation said in a statement."Currently, around 10,000 tree species are known to be threatened with extinction, largely by deforestation and over-exploitation."This number includes over 300 species that are critically endangered with fewer than 50 individuals remaining in the wild."Aside from the Arctic and the Antarctic where there are no trees, the Nearctic region—comprising most of North America—has the lowest diversity, with less than 1,400 tree species.The database will be continually updated, as around 2,000 new plants are discovered and described each year.

Brazil halves environment budget amid rising Amazon deforestation -  The Brazilian government is cutting its environment ministry budget by 51% as part of a bid to limit the country’s spiralling deficit. The cuts come as deforestation rates are rising, driven by demand for timber, soy and beef. The Amazon region saw a 29% increase in forest clearance last year, according to preliminary data from Brazil’s National Space Research Institute. It is an even steeper drop in spending than the 31% Donald Trump’s administration is proposing for the US Environmental Protection Agency.The environment ministry oversees Ibama, the agency responsible for enforcing laws to protect the forest. Sharp spending cuts risk weakening its capacity to carry out inspections, warned NGO Observatorio do Clima.Other ministries hit by the austerity drive include transport, tourism and planning, budget and management. Certain programmes have been protected under the government’s “growth acceleration programme”. The move comes among reports that Brazilian government environment and land policy is being swayed by a dominant pro-beef caucus.

Farming becoming riskier under climate change - Scientists the world over are working to predict how climate change will affect our planet. It is an extremely complex puzzle with many moving parts, but a few patterns have been consistent, including the prediction that farming as we know it will become more difficult. Scientists infer the impact on agriculture based on predictions of rainfall, drought intensity, and weather volatility. Until now, however, the average farmer may not have been able to put predictions like these into practice. A new University of Illinois study puts climate change predictions in terms that farmers are used to: field working days."Everything else flows from field working days," says U of I and USDA Agricultural Research Service ecologist Adam Davis. "If you're not able to work, everything else gets backed up. Workable days will determine the cultivars, the cropping system, and the types of pest management practices you can use. We're simply asking, 'Can you get in to plant your crop?'"  In a previous study, the group developed models that reliably translated past climate data into field working days for Illinois. In the new study, they coupled those models with climate change scenarios to forecast field working days into the future. The group ran the models for nine crop districts in Illinois for two time periods, mid-century (2046 to 2065) and late-century (2080 to 2099), using three climate scenarios ranging from mild to extreme. The models suggest that the typical planting window for corn will no longer be workable; April and May will be far too wet to work the fields in most parts of Illinois. "Going forward, we're predicting warmer and wetter springs, and drier, hotter summers," Davis says. "The season fragments and we start to see an early-early season, so that March starts looking like a good target for planting in the future. In the past, March has been the bleeding edge; nobody in their right mind would have planted then. But we've already seen the trend for early planting. It's going to keep trending in that direction for summer annuals."

Vital groundwater depleted faster than ever – China, the world’s most populous country, doubled within just 10 years its use of irreplaceable groundwater from underground reservoirs that are replenished more slowly than they are drained.And in the same decade, 2000 to 2010, global use of this non-renewable water resource for irrigation increased by a quarter, according to a new study published in the journal Nature.The research suggests that unless producers and consumers of food make changes, this trend could lead to depleted water reserves, limited availability of food imports, and higher food prices.Groundwater – from underground supplies, as opposed to water in rivers or lakes – supplies global agriculture with 43% of its crop irrigation needs.The country exporting the most crops produced using irreplaceable groundwater is Pakistan, with 29% of global non-renewable sources embedded in trade – closely followed by the US (27%), with India (12%) in third place. The study’s authors say excessive extraction of groundwater for irrigation – part of the wider virtual water trade – is leading to rapid depletion of aquifers in key food-producing regions, including north-western India, the North China Plain, central US, and California. “This depletion of the largest liquid freshwater stock on Earth,” they write, “threatens the sustainability of food production, and water and food security, not only locally, but also globally via international food trade.“Aquifer depletion can also induce significant environmental degradation, such as land subsidence and seawater intrusion.”In another example of the way in which climate change works to intensify existing threats, the researchers say the depletion of local water reserves also risks putting large populations at serious danger during emergencies such as droughts, earthquakes or fires, when immediate access to water is needed.Using UN trade data and estimates of non-renewable groundwater removal, researchers traced the sources of water used to produce agricultural crops. They found that the crops contributing most to the non-renewable groundwater trade are rice (29%), wheat (12%), cotton (11%), maize (4%), and soybeans (3%). “Where and how the products are grown is crucial, and basic foods like rice and bread could have a damaging impact on global water supplies.

Why Oroville Dam’s woes could cut into California water supplies The fractured spillway at Oroville Dam has forced the state to spend tens of millions of dollars on emergency repairs, with millions more to come.Here’s another potential cost: a slice of California’s water supply.Dam operators are expected to run Lake Oroville, the state’s second largest reservoir, at lower-than-usual water levels this summer as they wrestle with the complicated and lengthy task of fixing the dam’s broken spillway. Despite one of the rainiest winters on record, that will mean less water held in storage – and less available for delivery later this year to Southern California, Silicon Valley and portions of the San Joaquin Valley.“If they can’t continue to fill the reservoir and they have to hold it down while they’re in the process of making repairs to the spillway ... they’ll have less water available to release for export,” said Curtis Creel of the Kern County Water Agency, an agricultural irrigation supplier that’s one of the Oroville’s major customers. Creel said he thinks the lake could be held considerably lower, sacrificing several hundred thousand acre-feet of water that would otherwise be available for crops. The state Department of Water Resources, which runs Oroville, said it hasn’t determined yet how low it plans to run the lake this summer but acknowledged that risk factors at the dam will likely figure into its calculations.  State water customers, hoping for a hydrological bonanza after five-plus years of drought, are now bracing for some measure of disappointment. They said they believe dam operators will release some water out of the reservoir earlier than usual for safety’s sake. Because the state’s main downstream reservoir in Merced County is already full, that means much of that Oroville water will wind up in the ocean instead of getting delivered during California’s sweltering summer and fall to the agricultural and municipal water districts that take deliveries from Oroville and pay for its upkeep.

State and federal officials make Oroville Dam report secret | The Sacramento Bee: Citing potential security risks, state and federal officials are blocking the public’s ability to review documents that could shed light on repair plans and safety issues at crippled Oroville Dam. One of the secret reports is a memo from an independent panel of experts brought in to guide state officials’ repair plans. Another confidential document is labeled a “Project Safety Compliance Report.” The secrecy on the part of state dam operators prompted state Sen. Jim Nielsen to call for an immediate oversight hearing. “I’m alarmed and on the verge of outrage. We have an absolute, significant public safety concern,” said Nielsen, a Republican who represents thousands of residents who were evacuated when it appeared the dam might flood the region in February. “We need to know what cause they have to believe that there’s such a (security) risk, or is that just cover-up?” Dam managers at the state Department of Water Resources declined an interview request. In a written statement, spokeswoman Lauren Bisnett cited federal dam-security regulations. “Within the bounds of security restrictions, DWR is committed to regularly updating the public on the findings and recommendations of the Board of Consultants and on the work to rebuild the Oroville spillways before the next storm season,” she said in an email.

Too much of a good thing? An illustrated guide to solar curtailment on California’s grid -   The end of California's drought is exposing the full effect of the state's move to renewable energy. A wet winter has loaded up the hydroelectric system, while solar generation rose by 33 percent in the past year. These increases, combined with the usual spring winds, are pushing gas off the grid, cutting imports, and reducing carbon emissions at an unprecedented level. As California's independent system operator said: “The growth in these preferred resources is nothing short of phenomenal.” But that "phenomenal" growth is also setting new records for negative prices and curtailment of renewables, primarily utility-scale solar plants. CAISO predicts 6,000 megawatts to 8,000 megawatts of curtailment this year. “It’s an interesting growing pain of our increasingly green grid,” said Shannon Eddy of the Large-Scale Solar Association. “We’re curtailing the cleanest and newest resource on the grid, and leaving alone the 2,000+ megawatts of mostly fossil imports and in-state gas.” And the growing pains will likely continue. The latest U.S. Solar Market Insight report from GTM and SEIA counts solar projects in the works that will double California’s capacity from 17 gigawatts in 2016 to 34.5 gigawatts by 2022. With springtime power demand peaking at well under 30 gigawatts, we may see a very solar future.

 Trump Donates First-Quarter Salary to National Park Service -- President Trump, who promised to work for free, donated his salary for the first quarter of the year on Monday to the National Park Service, which, like other government agencies, faces major cuts in the president’s first budget proposal. At the daily White House briefing, Sean Spicer, the president’s press secretary, presented a check signed by Mr. Trump for $78,333.32 to Ryan Zinke, the interior secretary, who oversees the park service. “I’m thrilled,” Mr. Zinke said. Presidents are paid $400,000 a year, not counting benefits that come with the job, including housing in a fairly spacious residence. But Mr. Trump, perhaps the wealthiest person ever to hold the presidency, made a point during the campaign of saying he did not need taxpayers to compensate him. His daughter Ivanka Trump and son-in-law, Jared Kushner, who together are worth as much as $740 million, are working on his staff without taking salaries.The White House had previously said that Mr. Trump would donate his salary to charity at the end of the year and suggested he would even allow reporters to decide the beneficiary. “He kindly asked that you all help determine where that goes,” Mr. Spicer said last month. “The way that we can avoid scrutiny is let the press corps determine where it should go.” Mr. Spicer did not explain on Monday why the plan had changed, but said the White House Counsel’s Office presented a series of alternatives to the president and he chose the National Park Service.“The park service has cared for our parks since 1916, and the president is personally proud to contribute the first quarter of his salary to the important mission of the park service, which is preserving our country’s national security,” Mr. Spicer said. But in picking a government agency, Mr. Trump chose one with a large backlog of deferred maintenance that could be deferred even longer under his budget. Mr. Trump proposed a cut of $1.5 billion, or 12 percent, from the Interior Department, which oversees the park service and other agencies. The proposal did not specify how much of that would come out of the park service budget.

California governor declares historic drought over - for now - Thirsty California lawns faded to brown from a lack of water in four extraordinarily dry years have revived to bright green in neighborhoods across the state. Dry riverbeds of sand and tumbleweeds that snake their way through farmers' fields now charge with water swelling up their banks. Scenes like these and many others prompted California Gov. Jerry Brown on Friday to declare an end to the state's drought emergency that had drained reservoirs and wells, devastated forests and farmland and forced millions of people to slash their water use. The turnaround has been stark. After years of brown fields and cracked earth, monster storms blanketed California's Sierra Nevada Mountains this winter with deep snow that flows into the network of rivers and streams that supply much of the state's water. Still, lifting the emergency drought order is a largely symbolic measure that doesn't remove most of the restrictions. Officials insisted they're holding onto some conservation rules for the 40 million residents of the nation's most populous state. California uses more water each year than nature makes available, and one wet winter won't change the long-term outlook, environmentalists cautioned. "Water may appear to be in abundance right now," said Kate Poole, director of the Natural Resources Defense Council. "But even after this unusually wet season, there won't be enough water to satisfy all the demands of agriculture, business and cities, without draining our rivers and groundwater basins below sustainable levels."

U.S. had 2nd warmest year to date and 9th warmest March on record - Last month, the average contiguous U.S. temperature was 46.2 degrees F, 4.7 degrees above the 20th-century average. This ranked as the ninth warmest March in the 123-year period of record, according to scientists from NOAA’s National Centers for Environmental Information. Record and near-record warmth spanned 13 states in the West and Great Plains, with below-average temperatures in the Northeast.The average precipitation total for March was 2.56 inches, 0.05 inch above the 20th-century average, and ranked near the middle of the record. Much-above-average precipitation across the Northwest offset much-below-average precipitation in the Southeast. The year-to-date (January through March 2017) average temperature was 40.3 degrees F, 5.1 degrees above the 20th-century average. This was the second warmest first quarter of the year in the record behind 2012. The year-to-date precipitation total for the Lower 48 states was 8.09 inches, 1.13 inches above average. This ranked as the 10th wettest for this period on record. From January to March, the U.S. experienced 5 billion-dollar weather and climate disasters, a record start to the year. These included a flood, a freeze, and three severe storms, collectively causing 37 fatalities. Wildfires burned vast areas of Great Plains, Southeast: Warm and windy conditions across the Great Plains and Southeast fueled wildfires that burned more than two million acres. This was nearly 700 percent of average and set a new record for March.Record-warm March for the Southern Rockies: Colorado and New Mexico had their warmest March on record, with near record warmth throughout the West and Southern Plains.Tornadoes plagued the Midwest: Several tornado outbreaks impacted the central U.S., including tornadoes in late February and early March that killed 4 people in Illinois and Missouri.  Cold returned to Alaska: The average statewide temperature in March was 4.1 degrees F, 6.7 degrees F below average and the coldest since 2007. This ended the state’s stretch of 17 continuous months of above-average temperatures.

Green Climate Fund urged to aid poorest amid Ethiopia drought row | Reuters: The Green Climate Fund, set up to channel billions of dollars to help poor countries tackle climate change, came under fire on Thursday over its choice of which projects to back, as activists said it was overlooking the needs of the most vulnerable people. The board, which met for the past three days at the fund's head office in South Korea, approved $755 million in funding for eight new projects, bringing its total allocation to $2.2 billion since 2015. But civil society groups were disappointed the board did not support a $100 million proposal to bolster Ethiopians, especially women, against an increasing risk of drought, which is currently affecting more than a fifth of the population. The refusal by some rich nations to get behind the U.N.-led project reflected disagreement over whether the fund's cash should be used for activities that might be regarded as overseas development assistance rather than closely focused on helping people adapt to climate change effects. "The ones who benefit most from adaptation are the most vulnerable, the most marginalized, the poorest - and in my opinion, those are the people who should be at the heart of the Green Climate Fund," said Karen Orenstein, a climate finance specialist with Friends of the Earth U.S., who was at the board meeting in Songdo. Brandon Wu, ActionAid USA policy director, said he hoped the Ethiopia decision would not deter other developing nations. "This is potentially a disincentive for countries to come forward with really ambitious adaptation proposals," he said.

The role of rainfall in Africa's ethnic conflicts -- Civil conflicts have been recurring events in recent human history, despite the immense cost to people and societies. According to the Uppsala Conflict Data Program, more than 200 civil conflicts have broken out since 1945. Roughly one-third of these took place in Africa, most of which were ethnic conflicts (Wimmer et al. 2009).  Although each conflict is the result of a complex combination of factors, researchers and policymakers have tried to identify common determinants to help them create more effective conflict prevention and conflict management tools. There is a lively debate, for example, about the role of inequality as a trigger of violence.  This column reports groundbreaking research into the effect of the amount of regional rainfall on crops, which is used to measure inequality between ethnic groups. Inequality caused by the weather's effect on crops has a large and significant impact on the prevalence of ethnic conflict. This effect is strongest when a lack of rainfall penalises ethnic groups with no access to power.

South African Government warns of El Niño drought in 2017 - The notorious little boy is once again in the news. El Niño fears are doing the rounds once again. This time it is the South African Government which has been giving the El Niño information. As per the statement, in the next few months, drought conditions which are associated with the pattern of an El Niño are expected. As per the government, during the next summer the possibility of an El Niño condition development has increased. This condition is often associated with both water scarcity and drought which was recently observed in the South African region. During the previous El Niño, South Africa had suffered a massive drought with crop production being severely hit. Not only this, inflation was fueled to quite an extent which further resulted in food aid for millions of people across South Africa. Now, as per South Africa's weather service and several forecasters across the globe, El Niño is expected to form again during the southern hemisphere winter or spring, which occurs between the months of July and September. The government also added that the likelihood of the formation of an El Niño has increased as compared to the previous assessments as the southern hemisphere winter period nears. If El Niño does make an appearance once again between July and September, the reformation of this phenomenon at such a quick pace will take place for the very first time since the mid-1960s.

2017 Atlantic hurricane forecast: Possible El Nino to limit development of storms -- Experts are calling for a below-normal hurricane season this year, as a potential El Niño may limit the development of storms. AccuWeather meteorologists are predicting 10 named storms, five of which are projected to become hurricanes and three of which may become major hurricanes. “The big factor is going to be the fact that we now believe El Niño will come on board some time during the summer and will continue all the way through the rest of the hurricane season,” AccuWeather Meteorologist Dan Kottlowski said. El Niño is characterized by warmer-than-normal ocean water temperatures in the Pacific Ocean near the equator. It typically causes episodes of strong westerly winds in the tropics, which inhibit the development of storms. “That’s the number one reason we’re going with just below normal,” Kottlowski said. Though the transition is likely, it's too soon to tell how quickly El Niño will develop and how strong it will become. If the El Niño pattern becomes moderate in the late summer and fall - meaning episodes of these winds are more frequent, the season could end early. Despite these uncertainties, two to four tropical impacts are forecast for the United States.

Miami’s fight against rising seas: Just down the coast from Donald Trump's weekend retreat, the residents and businesses of south Florida are experiencing regular episodes of water in the streets. In the battle against rising seas, the region – which has more to lose than almost anywhere else in the world – is becoming ground zero. Ask nearly anyone in the Miami area about flooding and they’ll have an anecdote to share. Many will also tell you that it’s happening more and more frequently. The data backs them up. It’s easy to think that the only communities suffering from sea level rise are far-flung and remote. And while places like the Solomon Islands and Kiribati are indeed facing particularly dramatic challenges, they aren’t the only ones being forced to grapple with the issue. Sea levels are rising around the world, and in the US, south Florida is ground zero – as much for the adaptation strategies it is attempting as for the risk that it bears.  One reason is that water levels here are rising especially quickly. The most frequently-used range of estimates puts the likely range between 15-25cm (6-10in) above 1992 levels by 2030, and 79-155cm (31-61in) by 2100. With tides higher than they have been in decades – and far higher than when this swampy, tropical corner of the US began to be drained and built on a century ago – many of south Florida’s drainage systems and seawalls are no longer enough. That means not only more flooding, but challenges for the infrastructure that residents depend on every day, from septic tanks to wells. “The consequences of sea level rise are going to occur way before the high tide reaches your doorstep,” says William Sweet, an oceanographer at the National Oceanic and Atmospheric Administration (NOAA). The flooding would be a challenge for any community, but it poses particular risks here. One recent report estimated that Miami has the most to lose in terms of financial assets of any coastal city in the world, just above Guangzhou, China and New York City. This 120-mile (193km) corridor running up the coast from Homestead to Jupiter – taking in major cities like Miami, Fort Lauderdale and West Palm Beach – is the eighth most populous metropolitan area in the US.  Recent studies have shown that Florida has more residents at risk from climate change than any other US state.

Plan to pump cold water on to Barrier Reef to stop bleaching labeled 'band-aid' -  A proposal to use $9m to pump cold water on to the Great Barrier Reef’s tourist hotspots to stave off coral bleaching has been described as a “band-aid” solution, which does little to address the fundamental threats to the world’s largest living structure. The plan, proposed by the tourism industry and the Reef and Rainforest Research Centre, seeks to protect six reefs with high economic or environmental value near Cairns and Port Douglas.It would involve using low-energy technology to push adjacent cold water from a depth of about 40 metres to the surface. The aim is to use the cooler waters to alleviate bleaching, which is caused by global warming-induced rises in sea surface temperatures. The plan has been submitted to the federal government, and proponents say it is a measure that could prevent localised bleaching to valuable parts of the reef.  But others have warned the proposal would waste money and time to, at best, temporarily save small pockets of the reef, while vast swaths are lost to bleaching elsewhere. A former Great Barrier Reef Marine Park Authority director Jon Day said the government should be trying everything it could, but the idea that such an approach would save the reef from bleaching was “ridiculous”. Day, a protected area planner and manager, said solutions to the bleaching event must look at the entirety of the Great Barrier Reef system. “We should be taking broad-area results,” Day said.“But instead we do these sort-of band-aid, small localised scale things, which in terms of trying to maintain tourism sites might actually work, but we’re going to actually lose the whole reef and spend a lot of money on these things.

Ridding the oceans of plastics by turning the waste into valuable fuel -- Billions of pounds of plastic waste are littering the world's oceans. Now, a Ph.D. organic chemist and a sailboat captain report that they are developing a process to reuse certain plastics, transforming them from worthless trash into a valuable diesel fuel with a small mobile reactor. They envision the technology could someday be implemented globally on land and possibly placed on boats to convert ocean waste plastic into fuel to power the vessels.  The researchers will present their results today at the 253rd National Meeting & Exposition of the American Chemical Society (ACS).A sailor for 40 years, James E. Holm says he has watched the sea and coastline become more and more polluted. "A few years ago, I was sailing through the Panama Canal, and when I stopped at an island on the Atlantic side, I was stunned by the amount of plastic covering the beach. I thought if I had a chance to do something about it, I should."His partner, Swaminathan Ramesh, Ph.D., was driven by the desire and excitement of searching for a new "killer idea" with the power to change the world. Ramesh took early retirement in 2005 from BASF after 23 years as a research chemist and began looking for new opportunities. Ramesh formed EcoFuel Technologies and coupled his chemical knowledge with Holm's concerns about plastic wastes and ocean pollution. In the meantime, Holm had formed Clean Oceans International, a nonprofit organization.They sought to optimize a technology that can use waste hydrocarbon-based plastics as a feedstock for valuable diesel fuel. Their goal was to rid the world of plastic  waste by creating a market for it.

Global Shipping Fleet Braces for Chaos of $60 Billion Fuel Shock -- Little more than 2 1/2 years from now, the global fleet of merchant ships will have to reduce drastically how much sulfur their engines belch into the atmosphere. While that will do good things -- like diminishing the threat of acid rain and helping asthma sufferers -- there’s a $60 billion sting in the tail. That’s how much more seaborne vessels may be forced to spend each year on higher-quality fuel to comply with new emission rules that start in 2020, consultant Wood Mackenzie Ltd. estimates. For an industry that hauls everything from oil to steel to coal, higher operating costs will compound the financial strain on cash-strapped ship owners, whose vessels earn an average of 70 percent less than they did just before the 2008-09 recession. The consequences may reach beyond the 90,000-ship merchant fleet, which handles about 90 percent of global trade. Possible confusion over which carriers comply with the new rules could lead to some vessels being barred from making deliveries, which would disrupt shipments, according to BIMCO, a group representing ship owners and operators in about 130 countries. Oil refiners still don’t have enough capacity to supply all the fuel that would be needed, and few vessels have embarked on costly retrofits. “There will be an absolute chaos,” said Lars Robert Pedersen, the deputy secretary general of Denmark-based BIMCO. “We are talking about 2.5 million to 4 million barrels a day of fuel oil to basically shift into a different product.”

The Arctic Ocean Is Becoming More Like the Atlantic Ocean - Scientific American - The Arctic is undergoing an astonishingly rapid transition as climate change overwhelms the region. New research sheds light on the latest example of the changes afoot, showing that parts of the Arctic Ocean are becoming more like the Atlantic. Warm waters are streaming into the ocean north of Scandinavia and Russia, altering ocean productivity and chemistry. That’s making sea ice recede and kickstarting a feedback loop that could make summer ice a thing of the past. The findings, published in Science on Thursday, show that while warming air has a role to play, processes are playing out in the ocean itself that are fundamentally altering the region. Those changes will have impacts on the people, plants and animals that call the Arctic home. They could also create more geopolitical tension as resources previously locked under ice become available and shipping lanes open up. In the east Arctic Ocean, the shift is manifesting itself in changing the layers of the ocean. There’s a cap of cold, less salty water that covers the eastern portion of the Arctic Ocean. Underneath it sits a pool of warm, salty Atlantic water that until recently hasn’t been able to find a way to surface. That stratification of layers has kept ice relatively safe from its warm grip. The ocean has become gradually less stratified since the 1970s. Using data from buoys and satellites, Polyakov and his colleagues have found a more marked shift over the past decade and a half. Since 2002, the difference in water temperatures between the layers has dropped by about 2°F. In winter from 2013-2015, the cap separating the deep water and surface water disappeared completely in some locations, allowing the warm Atlantic waters to reach the surface and cut further into sea ice pack. At the same time, warm air has further reduced sea ice, which is allowing still more mixing of the ocean layers. The result is a feedback loop that is essentially turning roughly a third of the eastern Arctic Ocean into something resembling the ice-free Atlantic Ocean.

Climate change is literally turning the Arctic ocean inside out -   There’s something special — and very counterintuitive — about the Arctic Ocean. Unlike in the Atlantic or Pacific, where the water gets colder as it gets deeper, the Arctic is upside-down. The water gets warmer as it gets deeper. The reason is that warm, salty Atlantic-originating water that flows into the Arctic from the south is more dense, and so it nestles beneath a colder, fresher surface layer that is often capped by floating sea ice. This state of “stratification” makes the Arctic Ocean unique, and it means that waters don’t simply grow colder as you travel farther north — they also become inverted. But in a paper in Science released Thursday, a team of Arctic scientists say this fundamental trait is now changing across a major part of the Arctic, in conjunction with a changing climate. “I first went to the Arctic in about 1969, and I’ve never seen anything like this,” said Eddy Carmack, a researcher with Fisheries and Oceans Canada and one of the study’s authors. “Back then we just assumed the Arctic is as it is and it will be that way forevermore. So what we’re seeing in the last decade or so is quite remarkable.” In a large area that they term the eastern Eurasian basin — north of the Laptev and East Siberian seas, which in turn are north of Siberia — the researchers found that warm Atlantic water is increasingly pushing to the surface and melting floating sea ice. This mixing, they say, has not only contributed to thinner ice and more areas of open water that used to be ice covered, but it also is changing the state of Arctic waters in a process the study terms “Atlantification” — and these characteristics could soon spread across more of the Arctic ocean, changing it fundamentally.

Greenland’s Coastal Ice Caps Have Melted Past The Point Of No Return - The coastal glaciers and ice caps of Greenland are "doomed," according to a new study.  In a study published in Nature Communications on Friday, scientists based in Europe and the U.S. describe how the glaciers and ice caps that cover tens of thousands of square miles along the coast of Greenland have reached a critical “tipping point,” beyond which further melting is unavoidable.  Troublingly, the ice had already surpassed this tipping point 20 years ago, the researchers said — only the technology to confirm this hadn’t existed until now.  “These peripheral glaciers and ice caps can be thought of as colonies of ice that are in rapid decline, many of which will likely disappear in the near future,” said Ian Howat, study co-author and glaciologist at Ohio State University, in a statement last week. “In that sense, you could say that they’re ‘doomed.’” The complete melting of Greenland’s coastal ice could raise global sea levels by about 1.5 inches, researchers said. It’s an increase that could impact some islands and low-lying coastal areas through flooding, erosion and other effects. But according to the study’s authors, there’s much more at stake than even that.“The [1.5 inch figure] does not sound like much,” lead author Brice Noël told The Huffington Post on Thursday from Utrecht University in The Netherlands, where he’s a doctoral researcher. “But these ice caps are an alarm signal of what will happen on the Greenland ice sheet if temperatures continue to increase.” The Greenland ice sheet, which covers about 80 percent of the island’s surface, is the second-largest ice body in the world after the Antarctic ice sheet. The same processes that have caused the accelerated melting of Greenland’s coastal ice bodies could also influence the island’s massive ice sheet — with devastating results, Noël said. “For now, the ice sheet is still safe,” he said. “Its tipping point hasn’t been crossed yet. But if warming continues, it’s very likely that it will be crossed.” If the entire Greenland ice sheet were to melt, it would cause a global sea level rise of more than 20 feet.

Greenland's Coastal Ice Passed a Climate Tipping Point 20 Years Ago, Study Says - Ice caps and glaciers along the coast of Greenland passed a tipping point in 1997, when a layer of snow that once absorbed summer meltwater became fully saturated. Since then, the coastal ice fields—separate from the main Greenland Ice Sheet—have been melting three times faster than they had been, according to a new study published Friday in the journal Nature Communications. "The melting ice caps are an alarm signal for the ice sheet. It means long-term ice mass loss is inevitable. It will increase and accelerate if nothing changes," said lead author Brice Noël, a scientist at the University of Utrecht Institute for Marine and Atmospheric Research. "It's very unlikely the ice caps will recover. It's a climate tipping point—the time at which a change or an effect cannot be stopped." Climate scientists are wary of tipping points, when a series of small changes make a much larger change inevitable. The fear is a total meltdown of the Greenland Ice Sheet, which would raise global sea level by 24 feet, Noël said. Overall, the rate of ice sheet melting is accelerating, according to peer-reviewed studies cited in the most recent Arctic report from NOAA. "On a warming planet, there will be less snow and more rain. That will limit the formation of healthy snow that could absorb the runoff in summer. Additional melt will just run off toward the ocean, raising sea level," he said. "What we saw there in normal conditions, before 1997, is that the snow was able to absorb most of the melt and then refreeze. So the melting was not contributing to sea level rise before 1997, even though warming was already ongoing." The new study, which included scientists from the Netherlands, Switzerland, Norway, Denmark and the United States, focused on coastal ice caps and glaciers at 12 locations around Greenland, tracking the melt-freeze cycle from 1958 to 2015. The sites represent a total of 38,000 square miles of ice, a little larger than Indiana.  The study found most of the fields are likely to melt by 2100, raising global sea level by about 1.5 inches.

Massive Iceberg Hangs by 12-Mile 'Thread' -  The growing rift in the Antarctic Peninsula has now lengthened to 110 miles, meaning that the Larsen C ice shelf is now connected to the main ice shelf by only a 12-mile "thread," USA TODAY reports.  The British Antarctic Survey determined that the crack has expanded by 50 miles since 2011. "It is particularly hard to predict when it will occur," Adrian Luckman of Project MIDAS told USA TODAY about the eventual calving, which would create a Delaware-sized iceberg. "I am quite surprised as to how long it is holding on!" "The rift (or crack) has continued to open, and the berg continues to drift outward at a very consistent rate," Luckman added. However, he noted that the crack has not grown longer in recent weeks. As EcoWatch mentioned previously , the loss of this portion of the ice shelf will not raise sea levels as it is already floating on the water. However, as these ice shelves disintegrate, the land-locked glaciers they hold back may begin sliding into the sea. If all of the ice the Larsen C ice shelf holds back slides into the ocean, it will raise sea levels globally by four inches. According to Project MIDAS, "there is not enough information to know whether the expected calving event on Larsen C is an effect of climate change or not, although there is good scientific evidence that climate change has caused thinning of the ice shelf."  Temperatures at the Antarctic Peninsula , where the Larsen ice shelf is found, have risen by 2.5 degrees Celsius in the past 50 years. Antarctica's ice shelves are indeed melting rapidly as ocean waters warm. Climate Nexus reported in October that three glaciers in West Antarctica have undergone "intense unbalanced melting," risking their stability and further acceleration of sea level rise . Research published in Nature Communications found that the Smith, Pope and Kohler glaciers in the Amundsen Sea embayment collectively lost about 1,000 feet of ice from 2002 to 2009.

Money to burn: As the wealthy get wealthier, carbon emissions grow in US states - Across the U.S., state-level carbon emissions are higher in states where income is more highly concentrated among the wealthiest residents, according to a new study by two Boston College researchers. On a global level, the connection between national wealth and carbon emissions has been well documented. The study, by sociologists Andrew Jorgenson and Juliet Schor, is the first to link income inequality and carbon emissions within and across the individual U.S. states.The study found that state-level carbon emissions between 1997 and 2012 were positively associated with the income share of the top 10 percent of a state's population, according to the findings, published online and in the April edition of the journal Ecological Economics.Using the 2012 state data for carbon emissions, and based on the statistical analysis reported in the research article, a one percent increase in the income share of the top 10 percent of a state's population results in tons of additional carbon emissions, led by:

• 1. Texas - 812,325 to 934,174 metric tons
• 2. California - 437,035 to 502,590 metric tons
• 3. Pennsylvania - 284,980 to 327,728 metric tons
• 4. Florida - 269,030 to 309,395 metric tons
• 5. Illinois - 261,170 to 300,966 metric tons
• 6. Ohio - 260,622 to 299,716 metric tons
• 7. Louisiana - 246,618 to 283,611 metric tons
• 8. Indiana - 232,886 to 237,819 metric tons
• 9. New York - 196,234 to 225,670 metric tons
• 10. Michigan - 184,835 to 212,560 metric tons

South Carolina was the median in the analysis, with income share growth adding 89,175 to 102,551 metric tons of carbon emissions in 2012. The District of Columbia saw the lowest growth in carbon emissions at an increase of 3,251 to 3,738 metric tons for each 1 percent increase in wealth.The findings come as states are increasingly taking the lead in their own environmental protection. California Gov. Jerry Brown recently pledged the state would maintain its broad environmental regulations, regardless of any federal shift toward deregulation.

Congress passes comprehensive weather forecasting and research bill  - A sweeping piece of legislation that aims to improve forecasts for everything from Category 5 hurricanes to El Nino has passed both houses of Congress. Years in the making, it will become the first major weather legislation enacted since the early 1990s if signed by President Trump. The 97-page bill, the Weather Research and Forecasting Innovation Act of 2017, H.R. 353, gained bipartisan support in Congress. It passed the Senate on Thursday and the House on Tuesday afternoon. “The Weather Research and Forecasting Innovation Act is a major step toward more accurate and timely weather predictions, and I am eager to see these lifesaving policies signed into law soon,” Rep. Frank D. Lucas (R-Okla.) said. The bill places a great deal of emphasis on research that will improve forecasts for extreme weather events from the short-range to the long-term. “Research into the atmosphere provides an enormous return on investment,” said Antonio J. Busalacchi, president of the University Corporation for Atmospheric Research, which supported the bill. “Weather affects all of us, and being able to make plans based on forecasts of likely weather conditions is literally worth many billions of dollars to households and businesses.” An entire section of the bill, championed by Sen. John Thune (R-S.D.), is devoted to improving weather forecasts between two weeks and two years into future, which would prove tremendously valuable for farmers and utilities. Another section of the bill focuses on stimulating the private sector to generate weather data that the government can use to improve forecasts.

New EPA documents reveal even deeper proposed cuts to staff and programs - The Environmental Protection Agency has issued a new, more detailed plan for laying off 25 percent of its employees and scrapping 56 programs including pesticide safety, water runoff control, and environmental cooperation with Mexico and Canada under the North American Free Trade Agreement. At a time when the agency is considering a controversial rollback in fuel efficiency standards adopted under President Obama, the plan would cut by more than half the number of people in EPA’s division for testing the accuracy of fuel efficiency claims by automakers. It would transfer funding for the program to fees paid by the automakers themselves. The spending plan, obtained by The Washington Post, offers the most detailed vision to date of how the 31 percent budget cut to the EPA ordered up by President Trump’s Office of Management and Budget would diminish the agency. The March 21 plan calls for even deeper reductions in staffing than earlier drafts. It maintains funding given to states to administer waste treatment and drinking water. But as a result, the budget for the rest of EPA is slashed 43 percent.

Lead poisoning, oil-spill programs targeted for cuts at EPA -- The Trump administration is proposing to slash funding for grants to prevent lead poisoning, climate change research and criminal enforcement against polluters as part of its plan to reduce funding at the Environmental Protection Agency by nearly a third. An internal budget memo released by the American Federation of Government Employees shows President Donald Trump’s plan to eliminate dozens of programs at the EPA and slash many more. The details go beyond what was released by the White House last month as part of its budget proposal, which set an overall 31 percent funding cut, to $5.7 billion. "This budget puts America and Americans at risk," John J. O’Grady, president of the American Federation of Government Employees Council 238, said in a statement. It "threatens the lives and dignity of all Americans, particularly the most vulnerable in our society." O’Grady emailed the 64-page memo, dated March 21, to reporters Monday. John Konkus, an EPA spokesman, said the agency could both effectively serve taxpayers and protect the environment. "While many in Washington insist on greater spending, EPA is focused on greater value and real results," Konkus said. "The EPA will partner with the states to ensure a thoughtful approach is used to maximize every dollar to protect our air, land, and water."“It’s simply shameful that President Trump continues to put the interests of corporate polluters ahead of the health and safety of New Jersey families,” Senator Cory Booker, a New Jersey Democrat, said in a statement after attending a rally at an EPA building in his home state Monday.

East Chicago lead crisis highlights risk of proposed EPA cuts -- East Chicago resident Sara Jimenez, 59, remembers the moment she stopped feeling safe in her home. In July, the Environmental Protection Agency (EPA) sent her a letter that said the soil in her front and back yards contained high concentrations of lead and arsenic. Officials from the EPA had taken soil samples more than a year previously, but Jimenez hadn’t heard from them since. “I was angry and confused,” Jimenez said. “I thought we had regulations in place to protect us from pollution like this.” Jimenez lives in East Chicago about a mile from the USS Lead smelting facility, now an EPA Superfund site. Lead pollution has endangered families, slashed property values and forced some residents to evacuate their homes. Locals have criticized the EPA for not addressing the problem sooner, and they are worried about President Trump’s proposed cuts to the agency’s budget.  “When my husband and I bought our home in 1999, we were not told that the soil was contaminated,” Jimenez said. In the years since, Jimenez and her husband have invested tens of thousands of dollars into home improvements. Jimenez said that, based on data from the county assessor, the value of their home dropped in half after the area was labeled a Superfund site in 2009. Her home is one of 120 the EPA named for a round of cleanups this spring. Since finding lead and arsenic concentrations in the soil, EPA officials have has gone door to door warning children not to play in the dirt. Some 20 percent of children under the age of seven living in the western part of the Superfund site had high levels of lead in their blood.Closer to the smelting facility, lead contamination is especially severe. Authorities plan to demolish the West Calumet Housing Complex, which was built on top of a former lead smelting plant. West Calumet is home to more than 1,100 people, mostly children. The East Chicago Housing Authority hopes to relocate the remaining families to temporary housing this week, despite residents’ requests to stay until the end of the school year. Government officials have known about the risks associated with the USS Lead Superfund site for decades. In 1985, the EPA sampled soil around the USS Lead facility after the Indiana Health Department found 53 children in West Calumet with elevated levels of lead in their blood.

‘Critical’ NASA Climate Missions Targeted in Budget Cuts -- In his most recent weekly address, President Trump praised NASA’s “mission of exploration and discovery” and its ability to allow mankind to “look to the heavens with wonder and curiosity.” But left out of his statements was the work NASA does to peer back at our home planet and unravel its many remaining mysteries — a mission targeted for cuts in his administration’s budget outline released earlier this month. In a budget otherwise scant on specifics, four climate-related NASA satellite missions were proposed for termination, including one already in orbit.  Those missions are aimed not only at helping scientists learn more about key parts of the climate system and how global warming is changing them, but also at practical matters such as monitoring the health of the nation’s coastal waters and providing earlier warnings of drought stress in crops.  While the budget outline is not the final say, as Congress ultimately controls the purse strings, the proposed cuts are indicative of an "undeclared war on climate"  The proposed cancellations mesh with statements made by Trump, administration officials and some members of Congress who have argued that NASA should be focused on outer space and leave the job of observing Earth to other agencies. But NASA’s unparalleled experience and expertise in developing new observational technologies and launching satellites makes it a crucial part of the Earth science enterprise, many experts say. “I don’t see anybody else who could fill that gap,” Adam Sobel, a Columbia University climate scientist, said.

Transition aide: We're not 'quite done' with executive orders -- Wednesday, April 5, 2017 -- President Trump could issue new executive orders related to the environment and energy, according to a former transition official. Mike McKenna, the former head of the Department of Energy transition team, said yesterday that offshore energy development and aspects of the Antiquities Act are the most likely contenders for action under Trump's pen.

Putin says climate change is not man-made and we should adapt to it, not try to stop it | South China Morning Post: Russian leader Vladimir Putin on Thursday said climate change was not caused by human activity, as the White House announced that President Donald Trump would decide by May on continued US participation in the landmark Paris Agreement limiting global carbon emissions. One day after visiting the Franz Josef Land archipelago in the Arctic, Putin claimed that icebergs had been melting for decades and suggested that global warming was not mankind’s fault. “The warming, it had already started by the 1930s,” Putin said in comments broadcast from an Arctic forum held in the northern Russian city of Arkhangelsk. “That’s when there were no such anthropological factors, such emissions, and the warming had already started.” The Kremlin strongman added: “The issue is not stopping it... because that’s impossible, since it could be tied to some global cycles on Earth or even of planetary significance. The issue is to somehow adapt to it.”The declaration came as the White House said Trump would make his pronouncement on the Paris Agreement before a meeting of G7 leaders in Sicily that is scheduled to begin May 26. Putin supported his argument by saying that an Austrian explorer who had a “photographic memory” visited the Franz Josef Land archipelago “in the 1930s.” Twenty years later the explorer was shown photographs from another expedition there “by the future king of Italy” and concluded that “there were fewer icebergs there,” Putin said. It wasn’t immediately clear which explorers Putin was referring to and Italy did not have a king in the 1950s.

 Donald Trump 'won't discuss climate change' at meeting with Xi Jinping despite US and China being worst polluters | The Independent: The US and China between them produce 44 per cent of the world’s carbon dioxide, but environmental campaigners fear the issue of climate change – one of the world’s existential threats – will not be on the agenda when the leaders of the two countries meet. Donald Trump is set to host Chinese President Xi Jinping for two days at his Mar-a-Lago estate in Florida. They are likely to discuss trade, North Korea and the geopolitics of the South China Sea. Yet global warming, something Mr Trump once claimed was a hoax “created by the Chinese”, is unlikely to be addressed, something that has dismayed environmentalists who say there is no more pressing issue confronting the planet. “My guess is that this issue will not come up at this meeting, and I think that is a lost opportunity if it’s not raised,” Barbara Finamore, founder of the Natural Resources Defence Council’s China programme, told The Independent. “For many years, this issue was one of the brighter spots of the US-China relationship, and it helped to build dialogue.” In 2014, Mr Obama visited Mr Xi in Beijing for talks that ultimately led to the 2015 Paris Agreement. Mr Obama said the US would cut emissions immediately, with a target of 28 per cent by 2025, while Mr Xi said China would seek to ensure the nation’s emissions peaked by 2030 and then started to fall.

Former N.J. governors decry Trump push to gut environmental agency | NJ.com: -- A bipartisan group of former New Jersey governors and lawmakers on Tuesday expressed grave concerns about the state's environmental future under President Donald Trump's administration. "These budget cuts in Washington are going to have a dramatic impact, which is not going to be a good one, in New Jersey," said former Gov. Jim Florio, a Democrat who wrote the federal Superfund law and other environmental bills while in Congress, of the steep cuts to the Environmental Protection Agency proposed in Trump's budget. Florio was joined by fellow Democratic Gov. Brendan Byrne and Republicans Christie Whitman, a former governor and administrator of the Environmental Protection Agency, and Maureen Ogden, a former assemblywoman, calling on members of Congress to fight the cuts. The four spoke during a conference calls with reporters organized by NJ Conservation Foundation, which released a letter Tuesday outlining "principles to protect our public lands, water, air and wildlife." The Trump administration released budget plans last month that, if approved, would slash the EPA's budget by nearly a third, cutting 3,200 of its 15,000 jobs along with funding for climate change research and Superfund cleanups, among other programs. Democratic Sen. Cory Booker and U.S. Rep. Frank Pallone Jr. appeared outside an EPA lab in Edison on Monday to decry the cuts.

World's Largest Geoengineering Study Triggers Major Controversy - In an effort to cool the atmosphere, Harvard University will inject aerosols 12 miles into the atmosphere, leading the charge on the largest geoengineering study to ever take place. The first two "small-scale" dispersals will consist of water and calcium carbonate—two naturally occurring aerosols that regulate Earth's radiation balance. The idea is to mimic a volcanic eruption, which has been shown in previous studies to have some offsetting effects to atmospheric temperature. Scientist plan to have this first step completed by 2022. If the first stage is successful, a limestone compound would then be used, which scientists believe will act as a shield against incoming solar radiation and not deplete the ozone layer.  The project was launched following a major conference in Washington, DC last week. Funding for this effort is being provided by Bill Gates and other foundations. This massive $20 million project is believed to be the last hope to combat climate change , or could become the drastic measure for scientists if all other climate action fails.  "[It's] a terrifying prospect," Frank Keutsch, Harvard professor and lead scientist, said . "At the same time, we should never choose ignorance over knowledge in a situation like this."  But, there is cause for concern. Mimicking an eruption could be fatal, such as the Mount Tambora eruption in 1815, which caused disease, crop failure and ultimately famine, killing more than 200,000 people. There is a lot of uncertainty about a project at this level and the vast majority of scientists disagree with the approach, saying it is not thought out and could be catastrophic.  Scientists at the Helmholtz Centre for Ocean Research in Kiel, Germany, studied five geoengineering schemes and concluded they're "either relatively ineffective with limited warming reductions, or they have potentially severe side effects and cannot be stopped without causing rapid climate change."

 Trump’s budget would slash funding for EPA’s top science panel - It’s nowhere near the biggest proposed cut to the Environmental Protection Agency by the Trump administration. But it could be the most symbolic. In a 64-page agency budget document revealed by the Post Friday, a particularly deep cut is aimed at the agency’s 47-member Science Advisory Board, an august panel of outside advisers to the EPA created by Congress in 1978. The board, which is mostly comprised of academic scientists, reviews EPA research to ensure that environmental regulations have a sound foundation. It would see an 84 percent or $ 542,000 cut to its operating costs, which cover travel and public meetings for outside experts. There would be a smaller reduction for agency support staff of 14 percent. The decision, said the document, “[reflects] an anticipated lower number of peer reviews,” presumably since so many other agency scientific functions would also be cut. “Independent science advice is a real pain in the neck for people who already know the answer, and don’t want to be confused by the facts,” said Granger Morgan, a professor engineering and public policy at Carnegie Mellon University who previously chaired the Science Advisory Board, in response to the news. But an agency spokesperson, who was not cleared to speak on the record, countered in a statement to the Post that such advice “is a valuable resource to the Agency, and as such, will remain a part of our overall structure.” “While we are reviewing new approaches to funding the Science Advisory Board Staff Office, the office budget has fluctuated over the years and had room for improvement,” the spokesperson said. “We will continue to comply with Congress’s directive to maintain the panel.”

Financialization impedes climate change mitigation: Evidence from the early American solar industry - Science -- The article investigates how financialization impedes climate change mitigation by examining its effects on the early history of one low-carbon industry, solar photovoltaics in the United States. The industry grew rapidly in the 1970s, as large financial conglomerates acquired independent firms. While providing needed financial support, conglomerates changed the focus from existing markets in consumer applications toward a future utility market that never materialized. Concentration of the industry also left it vulnerable to the corporate restructuring of the 1980s, when the conglomerates were dismantled and solar divisions were pared back or sold off to foreign firms. Both the move toward conglomeration, when corporations became managed as stock portfolios, and its subsequent reversal were the result of increased financial dominance over corporate governance. The American case is contrasted with the more successful case of Japan, where these changes to corporate governance did not occur. Insulated from shareholder pressure and financial turbulence, Japanese photovoltaics manufacturers continued to expand investment throughout the 1980s when their American rivals were cutting back. The study is informed by Joseph Schumpeter’s theory of creative destruction and Hyman Minsky’s theory of financialization, along with economic sociology. By highlighting the tenuous and conflicting relation between finance and production that shaped the early history of the photovoltaics industry, the article raises doubts about the prevailing approach to mitigate climate change through carbon pricing. Given the uncertainty of innovation and the ease of speculation, it will do little to spur low-carbon technology development without financial structures supporting patient capital.

Musktopia here We Come! -- Kunstler - It ought to be sign of just how delusional the nation is these days that Elon Musk of Tesla and Space X is taken seriously. Musk continues to dangle his fantasy of travel to Mars before a country that can barely get its shit together on Planet Earth, and the Tesla car represents one of the main reasons for it — namely, that we’ll do anything to preserve, maintain, and defend our addiction to incessant and pointless motoring (and nothing to devise a saner living arrangement). Even people with Ivy League educations believe that the electric car is a “solution” to our basic economic quandary, which is to keep all the accessories and furnishings of suburbia running at all costs in the face of problems with fossil fuels, especially climate change. First, understand how the Tesla car and electric motoring are bound up in our culture of virtue signaling, the main motivational feature of political correctness. Virtue signaling is a status acquisition racket. In this case, you get social brownie points for indicating that you’re on-board with “clean energy,” you’re “green,” “an environmentalist,” “Earth –friendly.” Ordinary schmoes can drive a Prius for their brownie points. But the Tesla driver gets all that and much more: the envy of the Prius drivers!  This is all horse shit, of course, because there’s nothing green or Earth-friendly about Tesla cars, or electric cars in general. Evidently, many Americans think these cars run on batteries. No they don’t. Not really. The battery is just a storage unit for electricity that comes from power plants that burn something, or from hydroelectric installations like Hoover Dam, with its problems of declining reservoir levels and aging re-bar concrete construction. A lot of what gets burned for electric power is coal. Connect the dots. Also consider the embedded energy that it takes to just manufacture the cars. That had to come from somewhere, too. The Silicon Valley executive who drives a Tesla gets to feel good about him/her/zheself without doing anything to change him/her/zhe’s way of life. All it requires is the $101,500 entry price for the cheapest model. For many Silicon Valley execs, this might be walking-around money. For the masses of Flyover Deplorables that’s just another impossible dream in a growing list of dissolving comforts and conveniences. In fact, the mass motoring paradigm in the USA is already failing not on the basis of what kind of fuel the car runs on but on the financing end. Americans are used to buying cars on installment loans and, as the middle class implosion continues, there are fewer and fewer Americans who qualify to borrow. The regular car industry (gasoline branch) has been trying to work around this reality for years by enabling sketchier loans for sketchier customers — like, seven years for a used car.  The borrower in such a deal is sure to be “underwater” with collateral (the car) that is close to worthless well before the loan can be extinguished. We’re beginning to see the fruits of this racket just now, as these longer-termed loans start to age out. On top of that, a lot of these janky loans were bundled into tradable securities just like the janky mortgage loans that set off the banking fiasco of 2008. Wait for that to blow.

Total U.S. energy production falls in 2016 after six consecutive years of increases – EIA - U.S. primary energy production totaled 84.1 quadrillion British thermal units (Btu) in 2016, falling 4% from the 2015 level, the first annual decline in U.S. energy production since 2009. The decline in production coincided with an increase in both total energy imports and exports.U.S. fossil fuel production fell 7% from 2015 to 2016. Most of this decline was from coal production, which decreased 18% and fell to its lowest level since 1978. Relatively low natural gas prices, especially in the first half of 2016, and relatively flat electricity demand contributed to the decline in coal production. Petroleum and natural gas production also declined, falling 5% and 2%, respectively, as prices for both fuels were below their respective 2015 levels.After declining slightly in 2015, U.S. renewable energy production increased 7% in 2016. Wind energy made up almost half the increase in renewable production, while solar energy accounted for nearly a quarter. Both fuels saw substantial electricity generating capacity additions in 2015 and 2016. Hydroelectricity also accounted for almost a quarter of the increase in renewable energy production, largely because of easing drought conditions in the West Coast states, where most of the U.S. hydroelectric capacity is located. After ten consecutive years of decline, U.S. total energy net imports rose 6% from 2015 to 2016, as the growth in gross imports outpaced the increase in gross exports. U.S. gross energy imports increased 7% from 2015 to 2016. Most of the increase came from additional crude oil imports, which rose 7% as low gasoline prices led to an increase in gasoline demand.Despite the decrease in production, total energy exports rose 7% from 2015 to 2016. Petroleum product exports increased 8%, natural gas exports increased 30%, and crude oil exports increased 13%. These increases and relatively small changes in biofuels, electricity, and coal coke exports offset a 19% decline in coal exports.For the first time on record, gross exports of natural gas from the United States exceeded those of coal in energy-equivalent terms. EIA projects that the United States will become a net exporter of natural gas on an annual basis by 2018, as domestic production continues to grow and additional natural gas export capacity, particularly to Mexico, comes online.

U.S. energy consumption rose slightly in 2016 despite a significant decline in coal use – EIA - Primary energy consumption in the United States in 2016 totaled 97.4 quadrillion British thermal units (Btu), a slight increase from the 2015 level. Consumption of coal decreased by 9%, nearly offsetting increases in the consumption of renewables, petroleum, natural gas, and nuclear fuel.  Fossil fuels continue to account for the bulk of U.S. energy consumption, and the consumption of petroleum and natural gas both increased in 2016. However, those increases were more than offset by lower coal consumption. Overall, fossil fuels made up 81% of the United States’ total energy consumption in 2016, slightly lower than 2015 levels, but down from 86% in 2005. Petroleum consumption increased to 19.6 million barrels per day in 2016, led by increases in the transportation sector. Natural gas consumption increased to 27.5 billion cubic feet, led by higher demand in the electric power and industrial sectors. Natural gas consumption in the residential and commercial buildings sectors fell slightly, reflecting lower heating demand. Coal consumption fell to 730 million short tons in 2016, the third consecutive year of declining coal consumption. Coal consumption decreased in the electric power sector by 61 million short tons (8%), while industrial sector coal consumption fell by 6 million short tons (11%).  Nuclear fuel consumption in the United States increased 1% in 2016. The number of total operable nuclear generating units briefly increased from 99 to 100 when Watts Bar Unit 2 in Tennessee came online. Later in the year, the retirement of Nebraska’s Fort Calhoun nuclear facility brought the number of nuclear units in the United States back to 99. Year-end 2016 nuclear capacity was slightly higher than in 2015 (99.3 gigawatts versus 98.7 gigawatts), and annual average nuclear capacity factors, which reflect the use of power plants, were also slightly higher, at 92.5% versus 92.3% in 2015.  Renewable fuels had the largest increase in energy consumption in 2016. Wind generation increased by nearly 20%, making up almost half of all renewable consumption increases. Solar consumption also significantly increased, as considerable electric generating capacity was added for both wind and solar resources in 2016. Hydroelectric consumption increased by 7% as the West Coast recovered from severe drought conditions. Together, wind, hydro, and solar made up 91% of renewable consumption increases. Biomass consumption, which accounted for 47% of all renewable consumption in 2016, remained close to its 2015 level.

The next Carrington Event -  Here on Energy Matters we’ve discussed at length the potential for blackouts resulting from the closure of fossil fuel plants. There is, however, another potential cause of blackouts that we haven’t addressed – solar storms, or more accurately coronal mass ejections (CMEs). Experts disagree as to the likely impacts of a major CME, with estimates ranging from a few days of power outages affecting a comparatively small number of people to months or even years of outages affecting hundreds of millions. All we can be certain of is that the Earth will sooner or later be impacted by another major CME, and probably sooner rather than later because major CMEs occur about once every 150 years and the last one – the Carrington Event – occurred 158 years ago. The Carrington Event caused an aurora that was visible as far south as the tropics and bright enough to allow people in the Northeast US to read newspapers by its light at night.   It also brought down the rudimentary telegraph system of the day: Telegraph systems all over Europe and North America failed, in some cases giving telegraph operators electric shocks. Telegraph pylons threw sparks. Some telegraph operators could continue to send and receive messages despite having disconnected their power supplies.  CMEs damage electrical grids and equipment by inducing currents in the ground and in power lines, blowing out transformers and other equipment. Power lines are most vulnerable in regions where they are long and where the ground is poorly conducting.   The “March 1989 superstorm” blacked out the entire province of Quebec for 9 hours.  So what might a Carrington-sized CME do? No one knows for sure. Predicted impacts are necessarily based on assumptions and computer models and as might be expected with analyses of this type range from minor to catastrophic. Falling in the latter category is a 2008 study by Kappenman: …. an estimate of $1 trillion to $2 trillion during the first year alone was given for the societal and economic costs of a “severe geomagnetic storm scenario” with recovery times of 4 to 10 years.  Figure 5 shows Kappenman’s assessment of the areas of the US vulnerable to system collapse during a major CME (outlined in black). According to the caption “the impacts would be of unprecedented scale and involve populations in excess of 130 million”: Kappenman also predicted that the disruptions caused by a large CME could last for a year or more, with the reason being that the high-voltage transformers that are particularly vulnerable to damage during solar storms are not available off-the-shelf; they have to be manufactured. And how many of them are there in the US? Three hundred and sixty-five, according to Kappenman’s Figure 7.2:

U.S. Renewables Up 7% in 2017; Fossil Fuel Production Down 7% - Institute for Energy Economics & Financial Analysis: Renewable energy grew at a 7 percent clip in 2016, according to the report, with wind power making up nearly half of that increase. But fossil fuel production was down 7 percent, driven in large part by falling coal use. Electricity from coal decreased 18 percent between 2015 and 2016, reaching its lowest level since 1978. Natural gas production — while down about 2 percent from 2015 — helped fuel a reduction in coal-fired power due to its low cost, EIA said. For the first time on record, natural gas exports in 2016 exceeded those for coal, EIA said. The U.S. should become a net exporter of natural gas by 2018, the agency predicted. President Trump this week signed an order laying the groundwork for undoing an Obama administration climate rule for power plants. His administration has said the order is designed to help fossil fuel industries — with a special focus on coal — in the United States, but that goal still faces significant hurdles from energy markets.

New York, other states take on Trump over energy efficiency | Reuters - A coalition of U.S. states has mounted a broad legal challenge against what it called the Trump administration's illegal suspension of rules to improve the energy efficiency of ceiling fans, portable air conditioners and other products. The challenge, also joined by environmental groups, came after the U.S. Department of Energy last month delayed standards proposed under the Obama administration to reduce air pollution and operating costs associated with the products. Ten Democratic attorneys general, plus New York City and a Pennsylvania regulator, on Monday notified Energy Secretary Rick Perry of their plan to sue in 60 days for stalling proposed standards for air compressors, commercial boilers, portable air conditioners, power supplies, and walk-in coolers and freezers. The same group, excluding Maryland, on Friday petitioned the federal appeals court in New York to force the administration to implement ceiling fan efficiency standards that were to have taken effect two weeks ago, but have been delayed to Sept. 30. Implementation was delayed after White House Chief of Staff Reince Priebus on Jan. 20 directed federal agencies to put new regulations on hold until their new leaders could review them. The Obama administration issued a similar directive in 2009. The Energy Department said it does not comment on pending litigation. New York Attorney General Eric Schneiderman said adopting the "common-sense" efficiency standards would dramatically reduce air pollution, including from carbon dioxide, mercury and methane.

Trump picks Bush veteran to be Rick Perry's deputy | TheHill: President Trump will nominate Dan Brouillette, a former Energy Department official under former President George W. Bush, to be the department’s deputy secretary. The White House announced Trump’s intent to nominate Brouillette to the post late Monday. The department oversees a network of national laboratories conducting a wide variety of research and development. It also maintains the nation’s nuclear arsenal and nuclear reactors for the Navy. If confirmed by the Senate, Brouillette would become the second Senate-confirmed senior official at Energy, following Rick Perry, who started as secretary last month. Brouillette would bring years of energy policy experience to the department, the kind of credentials that Perry, Texas’s former governor, lacks. Brouillette served at the Energy Department from 2001 to 2003, where he was assistant secretary for congressional and intergovernmental affairs. He was also a member of Louisiana’s State Mineral and Energy Board from 2013 to 2016. After his work in the Bush administration, he went on to work at the House Energy and Commerce Committee as its chief of staff under then-Rep. Billy Tauzin (R-La.), who was the panel’s chairman at the time. Brouillette then worked as a vice president at Ford Motor Co., leading its policy and government affairs activities, from 2004 to 2006. He is now an executive at USAA, a banking and financial services firm.

U.S. coal companies ask Trump to stick with Paris climate deal | Reuters: Some big American coal companies have advised President Donald Trump's administration to break his promise to pull the United States out of the Paris Climate Agreement – arguing that the accord could provide their best forum for protecting their global interests. Remaining in the global deal to combat climate change will give U.S. negotiators a chance to advocate for coal in the future of the global energy mix, coal companies like Cloud Peak Energy Inc and Peabody Energy Corp told White House officials over the past few weeks, according to executives and a U.S. official familiar with the discussions. "The future is foreign markets, so the last thing you want to do if you are a coal company is to give up a U.S. seat in the international climate discussions and let the Europeans control the agenda," said the official, who asked not to be named because he was not authorized to speak publicly on the issue. "They can’t afford for the most powerful advocate for fossil fuels to be away from the table," the official said. Cloud Peak and Peabody officials confirmed the discussions. In Cloud Peak's view, staying in the agreement and trying to encourage "a more balanced, reasonable and appropriate path forward" on fossil fuel technologies among signatories to the accord seems like a reasonable stance, said Cloud Peak's vice president of government affairs, Richard Reavey.

How Donald Trump Is Making It Easier for the Coal Industry to Cheat - Trump is making good on his promise to deregulate coal, even if the only beneficiaries will be a handful of coal executives and investors. Following his executive order last Tuesday that will reverse President Obama’s major efforts to combat climate change, President Trump is going even further on behalf of the coal industry with a series of attacks on Obama’s legacy at the Department of Interior.  Last Wednesday, Interior Secretary Ryan Zinke signed an order scrapping his predecessor Sally Jewell’s review of a program that leases coal on federal land. And on Monday, DOI began unwinding a new rule that would have closed loopholes used by coal companies to cheat the government out of royalty payments.  This directly contradicts Zinke’s pledge at Monday’s White House press conference to “[make] sure the taxpayers that own the public lands are getting fair value.” Instead of fair value, he’s giving taxpayers the shaft. Trump’s campaign donors in the coal industry will get corporate welfare and everyone else will breathe in more sulfur dioxide.  The biggest loophole works like this: Coal companies often mitigate paying royalties they owe the federal government by, for example, selling the coal to their own subsidiary at a low price. The subsidiary company then resells it at a much higher price, but royalties are only paid on the below-market self-dealing. As the Center for American Progress noted in a 2015 report, the result of these exploits is coal companies pay a much lower effective royalty of 4.9 percent, instead of the official 12.5 percent rate. Obama’s Interior Department attempted to put an end to the shenanigans just before leaving office with the “2017 Valuation Rule,” which calculates the royalty rate by ignoring sales to affiliates and cracks down on other tax maneuvering, like taking inflated deductions for expenses. In February, Trump’s DOI quietly suspended the rule and on Monday DOI proposed to revise or repeal it.

 U.S. land agency website drops hiking photo to give coal top billing | Reuters: The U.S. government's public lands website has revealed a new face, a wall of coal, as the Trump administration underscores its promotion of an industry that has seen its hardest times since the Bee Gees topped music charts. The Bureau of Land Management, charged with overseeing programs on vast swathes of public lands, including cattle grazing, coal leasing and recreation, changed the banner photo on its home page sometime Wednesday or on Thursday by mid-afternoon, web archives show. The banner of the agency, an arm of the Interior Department, is now dominated by a photo of a man and his truck dwarfed by a coal vein in Wyoming, the country's top coal-producing state. (www.blm.gov) Previously, the main photo featured two backpackers - a man and a boy - on a vast mountain range gazing into the sunset. (bit.ly/2oO0H12) The image switch, first reported by Mashable.com, came after President Donald Trump signed an order last week to dismantle former President Barack Obama's climate policies. The order included a reversal of a ban on coal leasing on public lands, where 40 percent of the country's coal is produced. On Friday, the banner will be switched to a photo of a recreation theme, BLM said, and it will be rotated with photos that reflect the uses public lands have to offer. The BLM said it changed the photo on March 31, though web archives indicate it was switched either on Wednesday or Thursday. The Interior Department, which oversees the U.S. National Park Service, applauded BLM's "creativity" in getting its message of balancing resource development with conservation and public access, spokesman Paul Ross said.

While Trump promotes coal, other countries are turning to cheap solar power  -- President Trump ordered U.S. regulators this week to reverse Obama-era policies aimed at curbing greenhouse gas emissions, and he has promised to “bring back” the U.S. coal industry. But construction of coal-fired power plants dropped 62 percent over the past year worldwide, according to a survey by the Sierra Club and other activist groups. In China last year, the number of new permits for coal-fired plants fell by 85 percent.More worldwide generating capacity is now being added from clean sources than coal and natural gas combined, according to a December report by Bloomberg New Energy Finance, which closely tracks investment in renewables.An investor in Chile wanting to build a hydroelectric dam or coal-fired plant potentially faces years of costly political battles and fierce resistance from nearby communities. In contrast, a solar company can lay out acres of automated sun-tracking panels across an isolated stretch of desert and have them firing quiet, clean electricity in less than a year, with no worries about fluctuating fuel prices or droughts. The sunlight is free and shows up for work on time, every morning.Long dependent on energy imports, Chilean officials now envision their country turning into a “solar Saudi Arabia.” Chile’s solar energy production has increased sixfold since 2014, and last year it was the top-scoring clean-energy producer in the Americas, and second in the world to China, according to the Bloomberg rankings. (China is the world’s largest producer of greenhouse gases but also the leading investor in renewable energy.) Driving the global shift to cheap sun power is a dramatic decline in the cost of the photovoltaic (PV) panels that can be used to create giant desert solar farms or rooftop home installations. China produces more than two-thirds of the world’s PV panels, and their price has fallen more than 80 percent since 2008.

Trump declares end to 'war on coal,' but utilities aren't listening | Reuters: When President Donald Trump signed an executive order last week to sweep away Obama-era climate change regulations, he said it would end America's "war on coal", usher in a new era of energy production and put miners back to work. But the biggest consumers of U.S. coal - power generating companies - remain unconvinced. Reuters surveyed 32 utilities with operations in the 26 states that sued former President Barack Obama's administration to block its Clean Power Plan, the main target of Trump's executive order. The bulk of them have no plans to alter their multi-billion dollar, years-long shift away from coal, suggesting demand for the fuel will keep falling despite Trump's efforts. The utilities gave many reasons, mainly economic: Natural gas - coal’s top competitor - is cheap and abundant; solar and wind power costs are falling; state environmental laws remain in place; and Trump's regulatory rollback may not survive legal challenges. Meanwhile, big investors aligned with the global push to fight climate change – such as the Norwegian Sovereign Wealth Fund – have been pressuring U.S. utilities in which they own stakes to cut coal use. "I’m not going to build new coal plants in today’s environment," said Ben Fowke, CEO of Xcel Energy, which operates in eight states and uses coal for about 36 percent of its electricity production. "And if I’m not going to build new ones, eventually there won’t be any."

Trump cannot turn back time for ageing coal-fired power plants: Kemp (Reuters) - U.S. President Donald Trump has promised to end "the war on coal" waged by the previous administration and help put coal miners back to work. In practice, coal production and employment have been victims of the shale gas revolution rather than government regulation.Coal-fired power generation has been steadily losing market share to natural gas since 1988, according to data from the U.S. Energy Information Administration.Coal accounted for 57 percent of electricity generation in 1988 but that share fell to 53 percent in 1998 and 50 percent in 2008 (http://tmsnrt.rs/2o3nRSL)Gas has been the main beneficiary with its share of generation climbing from 9 percent in 1988 and 13 percent in 1998 to 20 percent in 2008.For much of that period, coal's relative decline was cushioned by growing demand for electricity which provided an expanding market for all fuels.Coal consumption by power producers peaked at 1.05 billion short tons in 2007, up from 758 million tons in 1988 (http://tmsnrt.rs/2nE69Sv).But since then the coal industry has been hit a perfect storm of stagnating electricity demand, a sharp fall in the price of gas, and a record warm winter in 2015/16.Coal has continued to lose out to gas in the generation system but since 2008 the decline has been absolute as well as relative terms because demand for electricity is no longer growing.Gas prices have fallen sharply thanks to the shale revolution, encouraging power producers to build more gas-fired power plants and run them for more hours each year.And the unusually mild winter of 2015/16 resulted in an enormous build up of coal stockpiles at power plants and a sharp reduction in new shipments from the mines (http://tmsnrt.rs/2nDS2fR).The resulting wave of bankruptcies, mine closures, and job losses and layoffs crashed over the coal industry during 2015/16. But mine closures and job losses were the result of market forces rather than job-killing government regulations introduced by the Obama administration.

U.S. coal set for an upturn in 2017/18: Kemp (Reuters) - U.S. coal producers can look forward to an increase in production and jobs during 2017/18 as the industry recovers from the depression of 2015/16. The medium-term outlook remains challenging but some of the short-term problems that tipped the industry into crisis over the last two years are abating. Coal production slumped from 1 billion tons in 2014 to just 739 million tons in 2016, according to the U.S. Mine Safety and Health Administration. The average number of operators and contractors employed at the coal mines (excluding office staff) fell from 111,000 in 2014 to just 78,000 in 2016. But production increased by almost 35 million tons in the third quarter of 2016, around 22 percent, according to the latest data from the U.S. Energy Information Administration. And production is likely to have increased further in the fourth quarter, when the figures are published next month. The increase in output should start to boost employment, with at least some of the 33,000 employees and contractors laid off between 2014 and 2016 likely to be rehired.Coal producers were hit by a perfect storm of warm weather and a huge oversupply of natural gas during 2015/16. The three months between December 2015 and February 2016 were the warmest winter on record, according to the National Oceanic and Atmospheric Administration. Electricity generation fell by 4 percent compared with the same period a year earlier as warm temperatures cut heating demand. But natural gas production was more than 2 percent higher than the previous winter as a result of the shale revolution.After a terrible 2015 and start to 2016, coal producers have good reasons to expect the worst of the industry's recession is over. Natural gas production has been falling year-on-year since May 2016 and gas prices have been on an upward trend since March 2016. Gas has become steadily more expensive than coal. The delivered cost of gas moved above coal in July 2016 and by January 2017 gas was almost twice as expensive. Power producers have responded by switching back from gas toward coal.

States are misusing funds earmarked for cleaning up coal mines -- Coal mines are not meant to last forever. When a mine’s natural resources are exhausted, or a coal company deems the mine no longer profitable, they close, often leaving behind scars of environmental degradation like disturbed land and polluted water. Today, there are more than five thousand abandoned coal mines that have yet to be cleaned up across the United States. In 1977, Congress passed the Surface Mining Control and Reclamation Act, which, among other things, sought to regulate the way abandoned mines were cleaned up. Part of the act gave states money to clean up mines that had been abandoned before 1977, through the creation of the Abandon Mine Land fund. According to the law, the money could be used for other projects, but coal reclamation projects were to be given priority, and the Office of Surface Mining, Reclamation, and Enforcement — part of the Department of the Interior — was directed to make certain the funds were being properly used. That, according to a new report from the Interior Department’s Office of Inspector General, is not happening. In some cases, OSMRE has failed to ensure that states prioritize coal-reclamation projects above other reclamation projects. In other cases, the office has failed to ensure that states use Abandoned Mine Land reclamation program for reclamation projects altogether — meaning communities living near abandoned mines are left to contend with environmental pollution while money earmarked for cleanup is spent on things like highways and public universities.  Wyoming — which is the top coal producing state in the nation, and therefore the state that contributes most to the ALM fund — has used ALM funds to pay for highway maintenance, hospital additions, and wildlife trusts.

Dems want crackdown on coal mine cleanup funding | TheHill: Two Democrats introduced legislation Friday to crack down on what they see as a risky financial practice some coal mining companies use to comply with federal cleanup rules. The bill, from Sen. Maria Cantwell (D-Wash.) and Rep. Matt Cartwright (D-Pa.), would end the practice of self-bonding, in which a mining company can comply with federal law by certifying that it can clean up its mines in the future using its own financial returns. Instead, a company would be limited to buying a traditional bond when it submits a mining application, or to reserve the entire amount of money it would need for cleanup. ADVERTISEMENTIt’s the latest attempt by Cantwell and Cartwright to crack down on self-bonding. For years, the two have fought the practice, citing a recent rash of bankruptcies in the mining industry to show that self-bonds cannot be trusted. “As coal companies emerge from bankruptcy, we should act now to avoid the mistakes of the past,” Cantwell, the top Democrat on the Senate Energy and Natural Resources Committee, said in a statement. “That means coal companies need to set aside real resources for cleanup, not so-called ‘self-bonds’ that risk taxpayer dollars to clean up the mess these companies can leave behind.” Cartwright said the bill “would ensure coal companies have assets available to pay for cleaning up their messes,” so that taxpayers wouldn’t be left to foot the bill.

Coal's Last Kick: Here in the capital of the state that depends on coal more than any other, the hope of a rebound is understandable. In 2006, burning coal provided 49% of the country’s electricity, but by last year that figure had declined to just 30%, according to the Energy Information Administration (EIA). Over that same period, annual production in West Virginia declined from 150 million tons to less than 90 million. Much of that is the result of the boom in natural gas, which has become cheap and plentiful thanks to fracking and other new extraction technologies. Last year, for the first time, natural gas unseated coal as the top source of U.S. electricity. Coal also has an environmental problem, accounting for the most carbon emissions of any fossil fuel used for electricity. At the same time, the cost of renewable power sources like wind and solar have become increasingly competitive with coal, further eroding its market share.Nowhere have these trends hit harder than in West Virginia. More than a century of mining has depleted the state’s most accessible reserves, forcing companies to spend more money to dig deeper into the earth. As demand for coal dwindles, many have decided it’s just not worth it. Between 2011 and 2016, U.S. coal producers lost more than 92% of their market value. The state’s fortunes have stagnated in stride. Today West Virginia ranks 49th in per capita income, 50th in educational attainment and 49th in life expectancy.

Mountain size trouble for Australian coal lines | Reuters: Global coking coal supplies have been drastically interrupted by a small stretch of rail that wraps around a modest-sized Australian mountain range – and repair crews are unable to find a quick fix. Australian rail operator Aurizon Holdings Ltd said on Friday it would take another four weeks to repair the Goonyella line, which transported 118 million tonnes of mainly coking coal in 2016 and has been hit by landslides. The company said that its cyclone-damaged Blackwater coal haulage line - the second major rail corridor after Goonyella - would reopen on Monday at reduced capacity. "Recovery and repairs are being undertaken at multiple sites along the Goonyella corridor, including at Black Mountain which experienced significant landslides," Aurizon said. Multiple landslides and flooding knocked out the rail network when Cyclone Debbie ripped through the state of Queensland, a major coking coal region, last week. The cutoff in exports of the key steelmaking ingredient, has left steelmakers in China, the world's biggest producer, scrambling for supplies, even looking as far as the United States, and pushed up prices. Queensland accounts for more than 50 percent of the global seaborne coking coal market, which hit 314 million tonnes in 2016, according to Australia's Department of Industry.

The Clean Carbon Bad Joke - Yves here. Even though the analysis focuses on Australia, the underlying tech and tradeoffs are germane to the US. I doubt the enthusiasm for carbon sequestration is warranted. It looks to be a hope for a magic bullet. My understanding is that the approaches so far haven’t worked out as well as hoped, that the carbon leeches out or has bad effects where it is stashed. But this is one area where a big breakthrough would be hugely beneficial, and perhaps readers know of more promising approaches under development.

• ‘Clean coal’ and CCS take the stage: Lately a key strain in our national policy conversation has involved the promotion of ‘clean coal’ – the idea that some coal-fired technologies might allow coal-fired power to be part of a low-emissions generation portfolio. Carbon Capture and Storage (CCS) is occasionally thrown into the discussion when decarbonisation targets are raised.
• Taking a look at clean coal in more depth: In this note we assess both ultrasupercritical coal technologies (USC) and CCS in order to interrogate these claims a little. We review existing CCS for coal-fired power projects around the world (three, two operational), as well as other CCS projects, and survey existing research on USC and CCS, including cost forecasts and emissions intensity.
• ‘Clean coal’ a misnomer, CCS far from a done deal: We note that USC plants are only low emissions compared to sub-critical coal – the most emissions intensive option on the NEM. As such, ‘clean coal’ is a misnomer for USC. Furthermore, we note that although CCS technology is often presented as an available option, this technology is presently far from proven for sequestration and storage following power production, and is also far from viable at present. No commercial project to date has captured and stored CO2 emitted from power production. In Australia we have conducted some surveys, some desktop research, and some sequestration trials, but are otherwise in the Dark ages as far as CCS implementation goes.
• Let’s talk about emissions reductions, rather than getting caught on coal: In our view, the conversation is currently obsessively stuck on coal/no coal, a narrative reflective of our role as an energy exporter. Recent Australian work on CCS has been laser focused on CCS for use in power production. However, we think the conversation needs to move away from this obsession, and consider our least cost emissions reduction options.
• Consider critical CCS, rather than CCS for those who complain loudest: Broadening this focus a little leads immediately to the fact that CCS will be most critical for industry – much of which has no other emissions reduction option, and a much higher cost of abatement. We make suggestions that CCS apparently more viable for industry, and more critical, Australia’s CCS development efforts should be more effectively allocated. Presently, our CCS policy looks very much like an effort to preserve the assets and resources of a particular industry, rather than an effort to develop CCS as a useful option and deploy it where most needed.

 Here’s how Europe ranks in the race against climate change -- A climate action watchdog group is calling on European leaders to pull their socks up on climate change, after a damning new report found that only three European countries are actually on track to keep global warming below two degrees this century.   On Tuesday, the Belgium-based Carbon Market Watch released a study revealing that Sweden, Germany and France are the only countries within the European Union that are pursuing environmental policies that line up with commitments made at the COP21 climate conference in Paris. Even then, the report found that those three countries aren’t passing with flying colours — they only scored 67, 54, and 53 out 100, respectively, on a ranked scale of “compatibility” with the Paris Agreement. Poland, Spain, Italy, and the Czech Republic trail at the bottom of the pack with scores between two and nine. “EU politicians portraying themselves as climate leaders should put their money where their mouth is by closing loopholes in the EU’s key climate law and pushing for more ambition,” said Femke de Jong, EU policy director for Carbon Market Watch in a Tuesday press release. “Only with determined climate action will lawmakers ensure that European citizens can enjoy the significant benefits of a decarbonized society.”

The Debate Over Norway’s Ability to Become a Hydro Battery for Europe -- Norwegian academics have countered research by Dr. Björn Peters, reported in GTM, that claimed Norway’s pumped hydro capacity could not serve as a “European battery.” “Norway can become a substantial part of Europe’s energy pack, given political will and action,” said Kaspar Vereide, adjunct associate professor at the Department of Civil and Environmental Engineering of the Norwegian University of Science and Technology (NTNU). Vereide and four other academics claimed that “several arguments and facts presented are inaccurate” in a GTM article about Dr. Peters’ claims about the availability of Norway’s hydro capacity for other European nations.” Whereas Dr. Peters claimed nearly all of Norway’s 82 terawatt-hours of storage was used by Norwegians, the Norwegian team said that balancing European wind and solar power would require weekly storage irrelevant to the seasonal or annual needs of the country. It is possible to cover these different needs for storage using the same reservoir capacity, with limited conflict of interest, the Norwegian team maintained.

Britain must uphold climate standards to secure EU trade deal -- The UK will have to abide by EU environmental and climate change standards in order to conclude a future trading agreement with the rest of the trading bloc, according to a leaked European Parliament paper. A draft resolution, setting out the parliament’s parameters for EU-UK negotiations on the latter’s withdrawal from the union, identifies the environment and climate change as two areas where common benchmarks must continue to apply. Regarding future EU-UK relationships, the document stresses that “any future agreement between the European Union and the United Kingdom is conditional on the United Kingdom’s continued adherence to the standards provided by the Union’s legislation and polices, in among others the fields of environment, climate change, the fight against tax evasion and avoidance, fair competition, trade and social policy”.

UK’s coal, wind, solar and hydro output fell in 2016 - The UK’s coal, wind, solar and natural flow hydropower all decreased in output through 2016. That’s according to a new report from the Department for Business, Energy and Industrial Strategy (BEIS), which breaks down a range of provisional energy data from last year. The report says final energy consumption was 1.1% higher than the year before, with rises in the domestic, transport and services sectors offsetting a decrease in the industrial sector. Gas accounted for 42.4% of power generated in the UK through the year (up 13%), coal accounted for 9.1% (down 13%) and nuclear’s share of generation marginally increased by 0.4% to 21.2%. Renewable electricity generation was 82.8TWh, 1% less than the 83.6TWh seen in 2015 – wind production alone fell a significant 7%. Although the green share of electricity generation decreased by 0.2% to 24.4% in 2016, renewable electricity capacity was actually 13.7% higher than a year earlier.

National Grid prepares for ‘summer excess’ with calls to use more power -- National Grid is gearing up for summer with the start of a scheme which pays companies to use more electricity when wind and solar power surges past demand. For the power system operator the return of longer, brighter days during British Summer Time flips the winter-time challenge of securing enough supply to meet demand. Instead, it will face periods when grid demand falls and there is more wind and solar power than Britain needs. The boom in solar panels in recent years, fuelled by subsidies, has far exceeded expectations. These panels feed the power they produce directly into homes or the local electricity grid, cutting demand on the national system to what is expected to be a record low this year. From Monday the so-called ‘demand turn up’ scheme will pay six successful businesses who were selected through an auction and are able to commit to using more power when there is an excess in the system. A National Grid spokesman said its figures show it will save consumers £500,000 over the summer.

Scottish solar power sector being unfairly punished -- Rooftop solar provides an exceptionally cost-effective, popular, community-based solution with the potential for a staggering 40GW of rooftop capacity across Scotland. However, solar deployment on Scottish rooftops lags far behind both national and European deployment. One of the reasons for this is the particularly harsh tax treatment of rooftop solar on Scottish businesses and public sector buildings, including schools and hospitals. Indeed business rates in Scotland for these larger solar roofs are currently 10 times those south of the Border (although Westminster threatens similar treatment) and these taxes do not apply in Europe. This is an own goal that needlessly puts the Scottish solar industry at a competitive disadvantage and denies Scottish business an important opportunity to invest for energy and carbon savings.  The Scottish Government has the power to lay simple secondary legislation to exempt rooftop solar cells and panels from business rates and it should not hesitate to do so. The abrupt loss of national support for solar means the economics is now fragile, but decisive action on business rates would go a very long way to enabling new solar jobs and solar rooftops to blossom across Scotland. We urge ministers to now use their powers.

Myanmar’s energy plan projects a sharp rise in coal’s share of electricity output by 2030 - Myanmar’s energy consumption is among the lowest in the world. One Burmese person, on average, consumes around 160 kilowatt hours (kWh) annually – 20 times less than the world average of 3,000 kWh per capita. But this is changing, with peak load demand growing at an average 14 percent per year in the past five years. Around two-thirds of Myanmar’s 4.6 gigawatt power capacity comes from hydroelectric dams. Natural gas accounts for 29 percent and coal-fired power 3 percent. Due to heavy reliance on hydropower, the system cannot meet peak demand during the dry season, leading to frequent and prolonged blackouts. The Myanmar Energy Master Plan projects an increase in coal’s share of electricity output to almost 30 percent in 2030, up from less than 2 percent in 2015. Hydropower is projected to drop from 65 percent to 57 percent but remains the largest generator. Solar, by comparison, sees a modest rise from 0 to 5 percent.

World’s First Coal-To-Ethanol Plant Up And Running In China - The world’s first plant capable of producing ethanol from coal has been stably operating in China for the last two months, according to an announcement by the Chinese Academy of Sciences. The plant, launched by Dalian Institute of Chemical Physics (DICP) of the Chinese Academy of Sciences and Shaanxi Yanchang Petroleum Group, began production in January with capacity of 100,000 metric tons of anhydrous ethanol per year. Based on this plant, a factory with capacity of one million metric tons per year would be built by 2020, said Professor Liu Zhongmin, deputy director of the DICP. Scientists have until now been unable to synthesize ethanol from fossil fuels. The new method uses cheap catalysts to combine dimethyl ether and methyl acetate into anhydrous ethanol, but no further details were given.

No changes for New Mexico coal-fired plant with Trump order— Part of a coal-fired power plant in northwestern New Mexico is still scheduled for retirement despite President Donald Trump's executive order Tuesday to roll back measures aimed at tackling global warming. And the state's largest electric provider has no plans to shift gears when it comes to promoting cleaner energy, a spokesman said.Trump made good on a campaign promise to unravel the previous administration's efforts to restrict coal use. Several of the mandates could be suspended, rescinded or flagged for review to boost domestic energy production in the form of fossil fuels.The president argued his order would revive the coal industry and create a level playing field for workers."It will take time to see how the president's actions may or may not impact our business going forward," said Pahl Shipley, a spokesman for Public Service Co. of New Mexico.Pressure to limit regional haze-causing pollution and other emissions from coal-fired power plants resulted in an agreement between the utility and federal and state regulators to close two units at the utility's San Juan Generating Station by the end of 2017.The agreement was years in the making, and Shipley said the utility doesn't expect Trump's order to change the planned retirement or the company's efforts to continue to integrate cleaner resources into its portfolio. The utility already has invested nearly $270 million in solar farms across the state in recent years.The u tility is also determining the future of the remaining units at the San Juan plant and whether they will operate beyond 2022. A preliminary analysis showed closing the plant could provide long-term benefits to customers. Affordability and environmental responsibility are among the factors the utility will consider before making a final decision.

Navajo leaders look for way to keep coal mine, power plant open -Navajo Nation political leaders are planning to ask the federal government for subsidies to keep a mine and generating station in northern Arizona open. The current owners of the coal-fired Navajo Generating Station say it is not profitable and voted recently to run it until the end of 2019 and then give up ownership, The Arizona Republic reported Thursday. Most people on the reservation want the plant and mine to run at least until 2029. In order to achieve that, two power plant employees, one of whom serves as chairman of a local Navajo political chapter, have written a plan. That plan would have the federal government subsidize the price of coal sold from the mine to the power plant so the plant can be as cost-effective as natural gas. The amount of the subsidy would vary depending on the price of natural gas. “We looked back at the auto industry, the banking industry, even some solar companies that were subsidized with millions and millions of dollars,” said Jerry Williams, president of the Lechee Chapter House and a 36-year employee of the power plant.

U.S. Nuclear: From Hope to Despair -- A decade ago, the annual Platts nuclear energy conference in Washington was brimming with optimism over a coming “nuclear renaissance,” as licensing requests poured into the Nuclear Regulatory Commission and companies announced ambitious plans for new nuclear construction. Ten years later, the not-so-under-the-surface theme of the conference was nuclear survival. “The question is survival,” former Entergy nuclear executive Bill Mohl told attendees at the annual Platts nuclear energy conference in Washington, D.C., in early February. Mohl, who led Entergy’s merchant power business and retired February 28, went on to explain that Entergy’s long-term strategy of buying up single-unit nuclear plants at bargain-basement prices and bidding them into the regional transmission operator (RTO) and independent system operator (ISO) competitive wholesale markets was a miserable failure.It seemed like a really good idea at the outset, but a combination of factors undercut the strategy, and Entergy is now exiting merchant nuclear power in as big a way as it entered. Vermont Yankee is shuttered. It has agreed to sell FitzPatrick (Figure 1) in New York to Exelon. Palisades in Michigan will close in the fall of 2018. Pilgrim on Cape Cod will close in the fall of 2019. The two Indian Point units on the Hudson River 35 miles north of New York City will shut down in 2020 and 2021. It’s a sad state of affairs for the company and the industry. The U.S. has seen nine GW of nuclear plant closures announced over the past few years, nearly 10% of national nuclear generating capacity. Mohl (Figure 2) noted that “it would have been worse” if Exelon, the nation’s largest nuclear generator, had not been able to save two Illinois facilities (Quad Cities and Clinton) and four upstate New York units (FitzPatrick, Ginna, and two Nine Mile Point reactors). All were rescued by state-orchestrated bailouts designed to assign a value to the avoided carbon dioxide emissions from the plants.  Independent generators are challenging the Illinois and New York subsidies for the nuclear units in court and at the Federal Energy Regulatory Commission. They argue that the state plans distort the competitive wholesale auctions. Those challenges could upset the Illinois and New York plans to save the nuclear units in competitive markets.

Perry pushes for opening Yucca Mountain - U.S. Energy Secretary Rick Perry pushed for opening Nevada’s Yucca Mountain nuclear waste site in a meeting with the state’s governor on Monday, but the local leader said he remains staunchly opposed to the project. The multi-billion-dollar nuclear storage project, which was rejected by former President Barack Obama, has been championed by the Trump administration. Most of Nevada’s politicians question the long-term safety of the site and the transportation of radioactive waste through the state. “I stressed the need for Nevada to maintain its key role as we seek sensible, stable, and long-term solutions to fulfilling our responsibility to safely manage spent nuclear fuel,” Perry said in a release about his conversation with Sandoval. But Sandoval was not swayed. “The storage of high-level waste at Yucca Mountain is not something I am willing to consider,” Sandoval said. The meeting with Perry “was not the beginning of a negotiation with regard to Yucca,” he said. The U.S. government has studied Yucca since the 1970s as a potential dump for the nuclear waste from power plants and the military. Currently the waste is stored at nuclear power plants and other sites in pools and in casks. Nuclear power opponents say waste at power plants is vulnerable to attacks and natural disasters, though many nuclear power backers say it can be held there safely for decades or more. Some lawmakers refuse to support legislation for innovation in nuclear power until waste solutions are found.

Foreign companies flock to build nuclear plants in the UK - Potential investors have been drawn by the UK government’s enthusiasm and a nuclear standstill elsewhere, amid lingering safety fears in the wake of the Fukushima disaster and cost overruns at the Flamanville site in France which is using a new reactor design. As a result, South Korea has joined Japan, China and France in showing interest in British nuclear. “It’s pretty simple. We are the only people building new nuclear power stations and we have by far the biggest new nuclear programme outside China for the next 10 years,” said Peter Atherton, an analyst at consultancy Cornwall Energy. One expert, Mycle Schneider, called the UK the “last hope” for the nuclear construction giants of the world. The Paris-based nuclear consultant said: “In Korea the political situation will dramatically change after the upcoming elections, [probably] not in favour of the nuclear industry. Success overseas will help survival at home. The Japanese industry clearly has no future at home and little prospects abroad [because of Fukushima.”

Risk of another Chernobyl disaster in Ukraine - Pravda: The risk for another nuclear disaster, similar to the one that occurred at Chernobyl, remains high in Ukraine due to the deplorable condition in the Ukrainian nuclear industry, an article in The Washington Times said. Predictably, corruption is the main problem. “Ukraine’s nuclear power plants are supposed to be regulated by the State Nuclear Regulatory Inspectorate of Ukraine (SNRIU), which by law is an independent regulatory body. In recent years, however, it has become standard practice for the leaders of SNRIU to be appointed by the state nuclear power plant operator, Energoatom, instead of through a rigorous, independent selection process,” the article in The Washington Times runs. As a result, the regulator finds itself under the control of the operator. “If Energoatom cannot meet certain safety standards or deadlines, its bosses simply inform the regulator of such, and the deadlines are extended or eliminated, public safety be damned,” the article continues. The article also says that the West was pushing dangerous nuclear fuel of Westinghouse for Ukraine as replacement for Russian nuclear fuel. In fact, Westinghouse uranium rods were of poorer quality in comparison with Russian nuclear fuel. At the same time, the foreign nuclear products were much more expensive than those from Russia. To crown it all, experts found that foreign nuclear fuel could be highly dangerous if used at Soviet-made nuclear power plants.

Real cost of Fukushima disaster will reach ¥70 trillion, or triple government's estimate: think tank | The Japan Times: A private think tank says the total cost of the Fukushima disaster could reach ¥70 trillion ($626 billion), or more than three times the government’s latest estimate. In a study Saturday, the Japan Center for Economic Research said costs of dealing with the heavily damaged Fukushima No. 1 nuclear plant run by Tokyo Electric Power Company Holdings Inc. could rise to between ¥50 trillion and ¥70 trillion. In December, the government estimated the costs would reach roughly ¥22 trillion. “If costs rise, the public burden could greatly increase. The country’s nuclear policy needs to be reviewed,” JCER said. The government’s initial expectations pegged the costs at ¥11 trillion. But a study by the Ministry of Economy, Trade and Industry said that the final figure could turn out to be double the sum estimated in 2013. Following that, the government decided to raise electricity rates to secure the money needed to cover compensation payments to the evacuees. According to METI’s estimates, the bill for compensation payments will be ¥8 trillion, a figure the JCER decided to adopt. The JCER, however, estimates the cost of the decontamination work will hit ¥30 trillion, or five times more than the government’s estimate of ¥6 trillion. The think tank based this calculation on a presumption that radioactive substances will be disposed of at a nuclear facility in the village of Rokkasho in Aomori Prefecture.The government is seeking a way to treat radioactive soil and other waste in Fukushima Prefecture that could grow to roughly 22 million cu. meters, but where and how to dispose of it has yet to be decided. Costs related to this procedure are not included in the government’s calculations.

Report raises questions about Ohio utilities’ renewable credit deals | Midwest Energy News: Shortcomings in the way that regulators report on compliance with Ohio’s clean energy standards make it difficult to determine why utilities paid average prices that were about 70 percent more for each renewable energy credit than competitive suppliers spent in 2015. The Sierra Club lodged that complaint and other concerns with the Public Utilities Commission of Ohio late last month after the regulators invited comments on their draft report on the state’s compliance with the renewable portfolio standards. “It’s not clear what happened here,” because much of the information is not available for review in public reports, noted Dan Sawmiller of the Sierra Club. “But we can say this looks suspicious, and it warrants further exploration by the Commission to find out who did this.” Under Ohio’s renewable portfolio standard, the state’s utilities and competitive electric suppliers must provide or obtain credits representing a specific portion of their electricity from renewable sources. In turn, they must report compliance and purchase data to the PUCO. Under state law, the PUCO then submits a report summarizing all of that information to the state’s lawmakers. Information in the PUCO’s draft filing shows that in 2015 Ohio utilities paid an average price of $15.47 for each renewable energy credit, or REC. In contrast, competitive suppliers paid an average price of just $9.07.Moreover, the state’s electric utilities accounted for about 30 percent of the total compliance obligation for the non-solar renewable standard. Those electric utilities are Duke Energy, Dayton Power & Light, American Electric Power’s Ohio Power Company and FirstEnergy’s three Ohio utility subsidiaries. Competitive suppliers are responsible for the remaining 70 percent.

Ohio lawmakers introduce bill to support FirstEnergy's nuclear plants - Ohio is the latest state to catch ZEC fever. Zero emission credits are designed to aid nuclear plants at risk of early closure in the nation's wholesale markets by paying them for their zero-carbon generation. But critics, ranging from consumer advocates to gas generators, have opposed them, saying they threaten price formation in organized power markets. In a recent filing, the PJM Interconnection’s market monitor wrote that “subsidies are contagious."Connecticut late last month introduced legislation that would create a solicitation that could provide a power purchase agreement for the state’s sole nuclear plant, Dominion Energy’s Millstone station.New Jersey is also considering a ZEC proposal. Prior to that, New York’s Public Service Commission and Illinois’ legislature passed ZECs aimed at keeping nuclear plants in their states operating. Both efforts are being contested. The bill that is soon to be introduced in Ohio uses a different name, ZEN, but it is similar in many respects to the efforts in other states. SB 128 would create a Zero Emission Nuclear Resource (ZEN) program to compensate the FirstEnergy’s nuclear plants for the “clean, reliable and secure power they generate.” A press release from Sen. John Eklund (R), the bill’s sponsor, said customers with a nuclear plant in their service territory would see a “small increase” in their monthly electric bills.

 Our limited public forests should be protected, not industrialized | Letters | athensnews.com - The federal Bureau of Land Management (BLM) and the Forest Service want to open 40,000 acres of the Wayne to oil and gas development. This is a terrible idea, and it puts nearly two-thirds of the Wayne’s Marietta Unit at risk. This is a massive chunk of Ohio’s only national forest. Large-scale shale operations and their associated well pads, pipelines, compressor stations and frack-water impoundments remove significant amounts of tree cover, break up forests into small patches that can’t support wildlife, and release substantial amounts of pollution. Ohio ranks 47th in the nation in public land available per person. Additionally, the BLM’s lease sales are unlawful. The BLM and the Forest Service are duty-bound by federal law to closely review the environmental consequences of leasing the Wayne. The agencies failed, and in some cases, evidently refused to do the legally required homework prior to leasing. For example, it’s widely acknowledged that pipeline construction is the single largest source of ground disturbance associated with oil and gas development. Nevertheless, the agencies simply shrugged off the pipeline issue in their environmental reviews. We can say with absolute certainty that air pollution, forest fragmentation, degradation of aesthetic and recreational values, and harm to wildlife will occur if shale operations come to the Wayne. It’s sad to say, but serious accidents are a very real risk, too. Case in point: the June-July 2014 “Eisenbarth” well-pad fire that poisoned a waterway near the Wayne and blackened parts of the Monroe County skyline for days. Having these risks near our public forests is bad enough. Inviting them in is the last thing we should want to do.

Harrison County, Ohio, residents concerned about speeding oil and gas trucks— The Harrison County Sheriff's Office held its monthly oil and gas meeting on Monday. One of the concerns expressed not only by a county resident in attendance but the mayor of Deersville to Sheriff Ronald Myers was speeding on county roads by oil and gas company trucks, specifically County Road 2. Myers says it's a problem everybody has to work on. “We have to drive defensively because you never know when that truck’s going to come around that turn and that trailer could be swinging wide,” Myers said. “They’re out of the lane of travel and we understand that, but we only have so many guys throughout the day, at night, afternoon that can be out there, and try to be out there. Safety is the No. 1 priority.”

 Earthquake Strikes Wayne National Forest Near Fracking Operations - The U.S. Geological Survey reported an earthquake Sunday in Monroe County with the epicenter located at 39.6663º N, 81.244º W. The 3.0 magnitude earthquake was located in the Marietta Unit of the Wayne National Forest. Approximately 40,000 acres of the forest are slated for fracking by the Bureau of Land Management.  Earthquakes in the area are fairly unusual, especially at such a magnitude. The U.S. Geological Survey has linked induced seismicity to wastewater injection facilities and active oil and gas fracking wells. There are four wastewater injection sites located within 20 miles of the epicenter. In 2016, these injection wells accepted 8.3 million barrels of wastewater polluted with a dangerous mix of salt water, hazardous chemicals and radioactive compounds and approximately 90 percent of this waste is trucked in from out of state. Additionally, seven utica shale fracking sites are within five miles of the epicenter.  The science is clear, cradle-to-grave fracking is risky and dangerous to our air, water and communities. Yet, fracking activity continues near two of our state's most precious resources—the Wayne National Forest and the Ohio River and, if the Bureau of Land Management has its way, will expand.  We call upon the U.S. Forest Service and the Bureau of Land Management to cease and withdraw all plans for fracking in Ohio's only national forest.  We ask the Ohio Department of Natural Resources and Gov. Kasich to work with federal authorities to fully investigate its causes and to protect the public from any serious risks that fracking in the area could cause.  Furthermore, we ask the governor to keep our clean energy progress going, because energy efficiency renewable energy are clean, safe and cheap.

Ohio investigates cause of weekend earthquake in drilling region - State officials are investigating whether a magnitude 3.0 earthquake in the Wayne National Forest was caused by nearby oil and gas operations.  It wouldn’t be the first time: Hundreds of temblors have been linked to drilling operations and injection wells in Ohio and other states. The Ohio quake occurred about 8 a.m. Sunday near Graysville in Monroe County in the national forest’s Marietta Unit. Activity at nearby wells was halted within an hour after the quake, according to the Ohio Department of Natural Resources, whose seismologists are investigating the quake’s potential sources. According to the state, eight permitted Utica shale well sites are within 5 miles of the epicenter of Sunday’s earthquake, which is about 120 miles southeast of Columbus; the quake was not related to Monroe County’s sole, inactive injection well. Fracking involves pumping a mixture of water, sand and chemicals deep underground to fracture rock formations and release trapped oil and gas. The wastewater that comes up with the oil and gas can be reused, but disposal eventually is necessary. Frequently, that wastewater is injected deep underground. “Review of the seismic data placed the event ... in proximity to ongoing oil- and gas-well completion operations,” Department of Natural Resources spokesman Steve Irwin said in an email. “The division continues to evaluate seismic data and completion operations in the area.” It’s too soon to connect regional hydraulic fracturing with Sunday’s quake, said Miami University seismologist Mike Brudzinski. “I think it’s natural to think of this as a potential relationship. The next step is trying to do the science to make sure that’s true,” he said. Brudzinski said Ohio typically experiences earthquakes of this magnitude a couple of times a year. Still, he noted that the state’s southeastern region is not one with a long history of seismic activity.

3.0-Magnitude Earthquake Strikes Wayne National Forest, Fracking Operations Temporarily Halted - The eyes of the seismological and environmental worlds have focused on Wayne National Forest this week, the sight of a 3.0-magnitude earthquake on Sunday. For now, fracking operations in the forest have stopped. The earthquake's epicenter was not within any of the forest's recently leased parcels, but it was located in and near parcels that have been requested for future lease opportunities by private drilling companies. (See the map below.)  Within 20 miles of the epicenter, four wastewater injection wells thrust high-pressure fracking wastewater into the ground. In 2016, those wells injected 350 million gallons of fracking wastewater — most coming from out of state. Multiple fracking sites are set up within five miles of the Sunday earthquakes's epicenter.  In all, some 40,000 acres of the forest have been earmarked for private natural gas drilling — some of which was formerly federal land sold off by the Federal Bureau of Land Management. “This earthquake is a clear example of the risks involved in fracking,” said Melanie Houston, the director of the Ohio Environmental Council's oil and gas team, in a public statement this week.  Highly fracked eastern Ohio counties, like the Wayne's Monroe County, are increasingly affected by earthquakes — in alarming contrast to the rest of the state. FracTracker maps seismological data, and the correlation is hard to ignore.

ODNR: Was earthquake connected to fracking? - Athens NEWS - Anti-fracking activists are linking a 3.0 magnitude earthquake that shook the earth early Sunday in Monroe County to nearby oil and gas horizontal fracturing operations and waste-injection wells. They claim that such hazards will only increase if and when oil and gas development begins on the surrounding national forest. Within an hour of the earthquake, the Ohio Department of Natural Resources ordered fracking operations close to the quake’s epicenter, near the county seat of Woodsfield, to stop temporarily, according to ODNR spokesperson Stephanie Leis. She said the agency’s seismologists are investigating the quake’s possible links to oil and gas development in the nearby area, where eight permitted deep-shale oil-gas wells are operating. Links between earthquakes and oil-and-gas extraction and waste-injection wells have been established in other arts of Ohio and the nation. Monroe County Commissioner Carl Davis, who lives near Woodsfield, was quoted in the Wheeling Intelligencer as saying he didn’t notice the earthquake, and that nobody had reported damages to the local Sheriff’s Office. The U.S. Geological Survey likewise said no damage had been reported after the quake, the newspaper reported. Monroe County is two counties northeast of Athens County, just north of Washington County, the county where Marietta is located. In the article, ODNR’s Leis said, “As is ODNR protocol in regards to seismic occurrences, operations were halted. Ohio has some of the most comprehensive seismic monitoring operations and requirements in the country, which helped detect this unfelt event, and ODNR seismologists quickly began investigating potential sources. The division continues to evaluate seismic data and completion operations in the area. While Leis initially was quoted as saying only one oil-and-gas fracking operation was sufficiently near the earthquake epicenter to require being shut down, environmentalists claimed that seven fracking operations are located within five miles of the quake location. Leis, in an article in Tuesday’s Columbus Dispatch, acknowledged that eight permitted extraction wells had been operating within five miles of the earthquake site. The article, however, reported the ODNR as stating that the quake was not connected to Monroe County’s “lone, inactive injection well.”

Ohio, Monroe County Officials Comment on Sunday Earthquake   --The Ohio Department of Natural Resources halted fracking operations in the vicinity of the site of the 3.0 magnitude earthquake that took place near Woodsfield early Sunday.The U.S. Geological Survey and the Monroe County Board of Commissioners both said no damage was reported from the quake. Commissioner Carl Davis, who lives in Woodsfield, said he felt nothing.“I didn’t notice the quake, and I haven’t talked with anyone so far who has. There were no reports of any damage to the sheriff’s department,” Davis said.However, Ohio Department of Natural Resources spokeswoman Stephanie Leis said fracking operations near the earthquake site “were halted within an hour of the seismic occurrence.” “As is ODNR protocol in regards to seismic occurrences, operations were halted. Ohio has some of the most comprehensive seismic monitoring operations and requirements in the country, which helped detect this unfelt event, and ODNR seismologists quickly began investigating potential sources. The division continues to evaluate seismic data and completion operations in the area. Leis said she believed only one fracking operation was close enough to the earthquake site to require a shutdown. However, Melanie Houston, director of Oil and Gas for the Ohio Environmental Council advocacy group, said she believes there are seven fracking operations within five miles of the earthquake site.  “This earthquake is a clear example of the risks involved in fracking,” she said. “Instead of charging ahead with leasing in the Wayne National Forest, the Bureau of Land Management and the U.S. Forest Service should be considering what dangers we’re inviting into Ohio’s only national forest.”

Investigation Continues Into Earthquake Near Wayne National Forest Fracking Sites – WOSU  - Oil and gas drilling operations in southeastern Ohio were shut down on Sunday after a 3.0 magnitude earthquake hit the Wayne National Forest, according to the Ohio Environmental Council. The state continues to investigate the causes. "Earthquakes in the area are uncommon, especially at such a magnitude," the release read. Ohio's Department of Natural Resources said that the earthquake was not felt but the department immediately went to work to determine the source. Spokesperson Steven Irwin said once the investigation is complete, drilling operations near the epicenter might be modified."We will evaluate the geography of the area, and then create a plan, likely with reduced pressure, reduced volume, reduced activity, on those horizontal wells," Irwin says. A map from FracTracker shows several hydraulic fracturing - or fracking - sites within miles of the epicenter, in the Sycamore Valley area of Monroe County: [see map] “This earthquake is a clear example of the risks involved in fracking,” said Melanie Houston, OEC's director of oil and gas, in the release.  In 2016, around 719 acres of Wayne National Forest were made available for lease by oil and gas drilling companies despite opposition from environmental advocates.

While cause remains unclear, earthquake prompts new look at Ohio fracking | Midwest Energy News: Regardless of how regulators resolve their investigation into an April 2 earthquake in southeastern Ohio, drilling and well operators in the area will almost certainly need to do more careful monitoring and reporting in the future, now that there’s a known seismic risk. “Any time an earthquake occurs, that’s an indication that there’s a fault there,” said geologist Michael Brudzinski at Miami University in Oxford. The magnitude 3.0 quake on April 2 took place at 7:58 a.m. in the Marietta unit of Wayne National Forest in southeastern Ohio. “We hadn’t really seen [an earthquake] in the area where this one occurred” in April, with the exception of the two events of magnitudes of 2.3 and 1.8 on December 12, 2016, Brudzinski noted. Nearby oil and gas activities are on hold pending further investigation by the Ohio Department of Natural Resources. “Review of the seismic data placed the event in Monroe County in proximity to ongoing oil and gas well completion operations,” ODNR spokesperson Steve Irwin said. “Those activities were halted within an hour of the seismic occurrence.” The April 2 earthquake “is a concern because it shows we don’t have a handle on all of the risks involved in this industry,” said Melanie Houston of the Ohio Environmental Council. That worry is heightened by the fact that the federal government wants to open up more of the Wayne National Forest area for oil and gas development. “We’re inviting it into our only national forest, and it is really a concern and a problem for us,” Houston said.

 $5.2 million fracking bid sets its sights on Wayne National Forest -  New drilling wells may dot the landscape of Monroe County following a $5.2 million bid in March for the rights to explore and drill for oil and gas on 1,180 acres of land in the Wayne National Forest.The Wayne National Forest, which covers over a quarter million acres of Appalachia, has seen such bids before; the U.S. Bureau of Land Management previously leased more than 1,600 acres of the forest to private oil and gas companies in December 2016. The move comes amidst a boom for fracking across the U.S., which now accounts for about half of the current domestic crude oil production.Although the recent bids have been for access to subterranean mineral rights on federally-owned land, almost 60 percent of the subterranean mineral rights below the forest are privately owned. Nearly 65 percent of active wells are found on these areas.Wayne National Forest Supervisor Tony Scardina stressed the guidelines companies must follow when pursuing oil and natural gas leases.  “All requirements are based on the best available science, extensive knowledge and experience of our staff and multiple layers of environmental study,” Scardina said. “At every stage of the oil and gas-leasing process, we apply these requirements, and once drilling is approved, we monitor ongoing operations to ensure requirements are properly implemented.”

Trump’s failure to fill key government posts is stalling key pipeline projects -  Without a quorum, the Federal Energy Regulatory Commission can’t approve energy-infrastructure projects expected to create thousands of high-paying blue-collar jobs.   The Federal Energy Regulatory Commission is not the country’s most well-known or controversial government agency. But if you care about building natural gas and oil pipelines or expanding the American power grid, it’s pretty important. FERC consists of five members who can approve or reject plans for major energy-infrastructure projects. The Trump administration has been slow to nominate candidates to some of the 600 or so significant positions in the executive branch, including the three empty spots on FERC, which has been short of a quorum since President Obama’s appointed chairman, Norman Bay, resigned on February 3. This doesn’t mean FERC shuts down entirely; inspections, safety reviews, audits, and all the traditional duties of its staff continue even when it lacks enough commissioners for a quorum. The legalese determining what staff may do is complicated, but the upshot is simple: The less controversial a decision, the more likely that the staff can legally make it. FERC does need a quorum of commissioners to vote on bigger matters, however, including new rules, applications for infrastructure projects such as natural-gas pipelines and liquid natural-gas facilities, petitions for rehearing or appeal of previous commission orders, and appeal of initial decisions by an administrative law judge. The lack of a quorum thus puts an indefinite delay on some vital projects as they await the final green light from FERC.For example, Enbridge Energy wants to build a new pipeline to transport Appalachian shale gas to high-demand markets in Canada and the Midwest, including Ohio, Michigan, Illinois, and Ontario. In addition to 255 miles of pipeline that is three feet in diameter, the project would involve the construction of “four new compressor stations, six new metering and regulating stations, and 17 new mainline valves in Ohio and Michigan.” Once completed, it would be capable of transporting 1.5 billion cubic feet of natural gas per day.

Pipeline plans heat up in W.Va. - herald-dispatch.com: - With growth of natural gas in West Virginia, there are a number of new pipeline projects proposed for the state, raising a range of debates about the benefits and the risks. In recent years, the shale revolution has opened access to abundant gas supplies within the state and the region, which has created the need for more infrastructure, according to industry officials. "Marcellus and Utica gas has been a game-changer for this region," said Scott Castleman, communication manager for TransCanada, which now owns Columbia Pipeline Group. "We have 31,000 miles of pipeline, with 15,000 miles on the East Coast that is at capacity," he said. "We need to increase that capacity." The United States already has a massive system of pipelines built over the past 100 years, and they carry various types of oil and gas products. "Nationwide, some 300,000 miles of natural gas transmission pipelines provide a vital link between producers and consumers," Castleman said. "Many people are unaware of the presence of this large pipeline network that is operating safely and reliably underground." "Pipelines have been transporting hydrocarbons all over the world for nearly 100 years, including across the Ohio River," said Anne Blankenship, executive director of the West Virginia Oil & Natural Gas Association. Dramatic gains in crude oil and natural gas production in the U.S. and Western Canada in the past decade has reshaped energy markets and increased demand for pipelines. "Natural gas has an important role to play in complementing low-carbon energy solutions by providing flexibility needed to support a growing renewables component in power generation," the International Energy Agency said in a recent report. The West Virginia Chamber of Commerce says building new, highly efficient pipelines will increase the use of West Virginia's natural resource and greatly increase its value.

Economic impact, safety drive pipeline debate -  herald-dispatch.com: Oil and gas industry officials say the newly proposed pipelines for West Virginia are safe and essential to economic growth, but environmental groups contend the benefits do not outweigh the costs and the risks. Scott Castleman, TransCanada/Columbia Gas Group communications manager, said according to an economic impact study conducted by Witt Economic, LLC, close to 9,000 jobs will be created during the length of just the Mountaineer Xpress Pipeline project alone and it will also create additional tax revenue for the state and counties. "The overall economic investment is $2.1 billion and the MXP projected expenditures will have a direct economic impact on the counties crossed by the pipeline," he said. "These counties will benefit from increased property tax revenues both during construction and after the pipeline is place in service. Upon completion of the project, these counties will have a permanent increase in their property tax revenues, which can be used to support county services and local education." Despite the positive economic impacts, the Ohio Valley Environmental Coalition says the public health and environmental impacts of these proposed pipelines far outweigh any benefits. "As of now, the plans are to pipe all of that through the Huntington Tri-State area, and link with other pipelines near the Marathon Petroleum Refinery on the West Virginia and Kentucky border," said Dianne Bady, OVEC's founder. "Imagine the large area that the gas would come from as the wide end of a funnel. So the wide area of the funnel would narrow dramatically as it would pipe massive volumes of gas and liquids through our immediate areas. This seems dangerous and downright stupid for those of us who make our lives in what could become a very concentrated transport region for explosive and dangerous natural gas products." Castleman says pipelines are the best way to transport energy. "Studies show that transporting energy via pipeline is 4.5 times safer than moving the same volume across the same distance by other means, like truck or rail, and 99.999 percent of resources moved through pipelines safely reach their destination," he said.

Joint development law needs updated to help West Virginia -- With an unemployment rate stuck stubbornly higher than the national average, opportunities are hard to come by for West Virginia families. And it’s no secret that we lag behind just about every other state in the nation, ranking last or near the bottom on key economic measures. This is a tough reality facing families who understandably feel forgotten. The good news is that our state has opportunities to create good-paying, family-sustaining jobs. Thanks to natural gas development, West Virginia — which sits atop the Marcellus Shale — is the nation’s eighth largest natural gas producing state. In fact, West Virginia produced more than 1 trillion cubic feet of natural gas last year, or nearly four times as much gas produced in 2008. The Senate this week passed a crucial update in the law that allows for joint development and increased job growth and we need the House to act quickly on this bill. Our leaders in Charleston can work together to modernize West Virginia’s outdated, decades-old oil and gas law. Updating our existing gas production law — as countless other energy-producing states have done — to reflect current drilling technologies is a winner for the state, our workforce and our environment. Joint development is a commonsense policy that reduces aboveground land disturbance by allowing more efficient natural gas development of existing leases. This shale revolution couldn’t have come at a better time as it was the natural gas industry that lifted us through the Great Recession’s financially painful depths. Employing the hard-working West Virginians who build well pads, safely lay pipe and transport fluids, our companies have begun to realize the economic opportunity that natural gas development can deliver.

It's Official: Republican Governor Bans Fracking in Maryland - Maryland's fracking ban is the latest milestone in a strong and growing movement to resist fossil fuels throughout the country. This is a huge victory for public health, common-sense environmental protection, climate stability and, not least, the power of grassroots organizing. This bold turn will reverberate nationally at a time when the Trump administration seeks to decimate environmental protections for the sake of corporate polluter profits. Gov. Hogan's opposition to fracking demonstrates that matters of public health and our environment need not be partisan. Hogan has suddenly joined the ranks of national environmental leaders, vaulting ahead of many pro-fracking Democrats in the process.  With Gov. Hogan's signature, Marylanders can feel safe knowing their air, their water and their health will now be protected from the inherent dangers of fracking . We are confident that as scientific analysis and public opinion continue to move decisively against fracking, victories of this scale will be emulated in many more states in the coming years.

Bowen: Push for fracking ban is no joke | Tampa Bay Times: It's not easy being a mayor or any locally elected officeholder these days. The contempt from Tallahassee is never-ending. There are bills to restrict community redevelopment agencies, curb future revenue for local governments via larger property tax exemptions, gut home rule authority and even to take away the local ability to regulate vacation rentals. Remember when the Republican mantra was local control? Not anymore. Against that backdrop of undermining local governments, Dade City Mayor Camille Hernandez joined Dr. Lynn Ringenberg, immediate past president of Physicians for Social Responsibility, and Brooke Errett of Food & Water Watch at City Hall in Dade City last week to talk about a local environmental worry. Specifically, they want House Speaker Richard Corcoran, R-Land O'Lakes, to let the House address a proposed fracking ban before the end of the state legislative session. More than 90 communities across the state support the ban. Uh oh. If the locals like it, what will they think in Tallahassee? One of the standard pro-fracking arguments is that the controversial process can be controlled by the state's environmental regulators. "Bottom line is, fracking just can't be done safely. It can't be regulated,'' Ringenberg told about a dozen environmental activists and a handful of reporters last week. Ringenberg will tell you no more studies are needed. She'll point to the peer-reviewed medical articles that say fracking is a serious public health threat because of chemical contamination to water supplies. It is an imperative point locally, said Hernandez, because Tampa Bay Water's underground wells in Pasco help provide drinking water to more than 2 million people in the region.

Sabal Trail: Pipeline brings natural gas and protests - A pipe as big around as a semi-truck tire is on the verge of pumping natural gas under high pressure from Alabama, across a corner of Georgia, through Florida’s swamps, ranches, suburbia and a tourist strip to the heart of Central Florida. To big utility companies, the 515-mile, $3.2 billion Sabal Trail pipeline is an essential artery, the cleanest, cheapest and safest way to guarantee around-the-clock electricity for more than a million homes in Florida. For environmentalists who have staged weekly protests, the steel pipe armored in green plastic is a threat to the planet’s health on par with the reviled Keystone XL and Dakota Access oil pipelines in the works. And safety advocates warn that pipes can fail, and when they do, gas leaks can injure or even kill. Then there are people like Jorge Rosario, who isn't as caught up in the pipeline politics as he is with the rumbling that shook the walls of his house as workers constructed Sabal Trail just feet from his backyard. He and his neighbors wondered what the noisy construction was about. New apartments? Another road?   He learned from a reporter that it was a natural gas pipeline. “No one informed anyone of anything at all,” he said. “Natural gas can cause a very substantial-sized explosion if something goes wrong. It just takes a small mistake and people can get hurt.”   Sabal Trail joins more than 5,000 miles of large natural gas transmission lines already underground in Florida. Those end in hubs that spur a network of some 40,000 miles of smaller underground pipes that deliver gas to homes and businesses throughout the state; 500 miles of buried pipe in Florida are dedicated to hazardous liquids such as jet fuel or other petroleum products. With the petroleum industry’s embrace of hydraulic fracturing, or fracking, natural gas has become the nation’s and, far and away, Florida’s top choice for generating electricity. The new Sabal line, starting this summer, each day will import as much as 1.1 billion cubic feet of natural gas, or enough to fill the Superdome in New Orleans nearly 10 times with the gaseous fossil fuel, to feed Duke Energy Florida and Florida Power & Light Co. electric plants. Pumping all that gas through a pipe 36 inches wide will require a network of factory-like compressor stations to maintain a pressure of as much as 1,456 pounds per square inch. Even without a spark of ignition, that tremendous pressure alone is capable of blowing a pipe apart.

Thirteen gigawatts of natural gas-fired power generating capacity to be added in 2017 -- In 2017, 13 gigawatts (GW) of natural gas-fired generating capacity is scheduled to come online in the United States, adding to total end-of-2016 natural gas-fired capacity of 431 GW. More than 90% of these capacity additions are coming from combined-cycle power plants, which offer improved efficiency over simple-cycle combustion turbines or steam turbines alone. So far in 2017, two combined-cycle facilities—over 1 GW in total—have been completed and put into service:

• In a March 14 press release, Competitive Power Ventures announced that the St. Charles Energy Center in Charles County, Maryland, began commercial operations. The new facility can generate 725 megawatts (MW) of power using two gas turbines (205 MW each) and one steam turbine (316 MW).
• The Polk Power Station near Tampa, Florida, completed a 460 MW expansion on January 16, converting four natural gas-fired combustion turbines into a combined-cycle unit.
• The 1100 MW Paradise combined-cycle plant in Drakesboro, Kentucky, is expected to be completed in April and will replace two of the three older Paradise Fossil coal-fired units.
• The 1000 MW Wildcat Point combined-cycle generating facility in Cecil County, Maryland, is expected to be in service by June 2017. The facility is adjacent to the Rock Springs Generation Facility, a 672 MW natural gas peaking facility.

Total planned retirements of natural gas-fired generating capacity for 2017 are less than 2 GW, with 1.7 GW coming from older steam turbines. In 2016, 8.9 GW of natural gas-fired generating capacity was added, and 4.3 GW was retired (4.1 GW steam turbine), with a net gain of 4.6 GW. The amount of natural gas consumed for electricity generation has generally increased year over year, while total U.S. net generation across all fuels has remained relatively flat. However, in the fourth quarter 2016, consumption decreased below 2015 levels for the same period as natural gas prices for electricity generators rose. According to the Short Term Energy Outlook, EIA expects the share of U.S. electricity generation from natural gas to decrease from an average of 34% in 2016 to 32% in 2017 because of an expected 23% increase in the average annual natural gas price for electric generators. In 2018, the natural gas share of generation is expected to rise to 33%.

U.S. natural gas storage capacity increased slightly in 2016 – EIA - For the past three years, underground natural gas storage capacity in the Lower 48 states has changed by relatively small increments compared to the changes in 2012 and 2013. No new storage facilities have entered service since 2013, so recent annual changes in both storage design capacities and demonstrated maximum working gas volumes reflect the aggregate effect of small changes at existing facilities. The relatively small change in natural gas storage capacity over the past three years is likely a reflection of long-term trends, such as higher levels of natural gas production, the proximity of production to consuming markets in the Northeast and Midwest, and the lower price premium for natural gas during the winter. These trends may reduce reliance on storage as a source of supply during periods of elevated demand, such as during cold winter months. EIA has published updated estimates of storage capacity based on data for the end of November, which is approximately when storage levels have reached their highest points for the year. EIA uses two distinct measures of natural gas storage capacity: design capacity and demonstrated working natural gas volume. Design capacity is the sum of the 385 active storage fields’ working gas design capacity, as of November 2016, as reported in EIA’s Underground Natural Gas Working Storage Capacity. Design capacity is based on the physical characteristics of the reservoir, installed equipment, and operating procedures particular to the site that are often certified by federal or state regulators. Design capacity increased slightly, growing 0.7%, from 4,658 billion cubic feet (Bcf) in November 2015 to 4,688 Bcf in November 2016. This increase resulted from a combination of expansions at existing facilities, reclassifications from base gas to working gas, and the restoration of an inactive facility to service.

US natural gas storage injection and inventory scenarios for 2017 -  At this time last year, the U.S. natural gas market was exiting an extremely bearish winter, the gas storage inventory was nearly 500 Bcf higher, and prompt month prices for the CME/NYMEX Henry Hub natural gas futures contract were more than $1.00/MMBtu lower. The question on our minds then was how far would production have to decline or how much demand was likely to show up to prevent storage capacity constraints by fall. In either case, the overarching sentiment was that prices would have to remain relatively low to balance the market. Now we’re exiting an almost equally mild winter, but a combination of lower production and higher exports has drawn down storage to well below year-ago levels, and the question occupying the market is more along the lines of, just how bullish could the market get this year? Today, we wrap up our look at injection season storage scenarios for the next seven months. To understand how natural gas storage and prices could play out later this year, we started in the last episode of “You Keep Me Hangin’ On” by looking at some plausible supply/demand balance scenarios for the 2017 injection season (April through October). Since the relative strength or weakness of the market compared to history can tell us a good deal about storage and price direction, we compared those possible scenarios to the same period in 2016 to get the year-on-year changes in the balance. For the first set of scenarios, we assumed gas production—the biggest driver on the supply side—imports and exports remain flat, either to the recent 30-day average, as in the case of production and exports (given they are less seasonal), or to the same period in 2016 in the case of imports, since those volumes are seasonal. We then applied these assumptions against different scenarios for U.S. demand (i.e. power generation, industrial and residential/commercial usage). Since these demand sectors are highly susceptible to weather and weather will always be the big natural gas wildcard, we used recent historical data to represent a spectrum of possible demand outcomes, including: last year, 3-year average, 3-year high and 3-year low.  You can see the details of each scenario in that last episode, but in short what we found is that if production and exports remain flat to recent levels through injection season, and imports are flat to the same period in 2016, it would only take U.S. demand coming in slightly above the 3-year average to result in a tighter gas market balance in 2017 versus 2016.

Inside FERC Henry Hub April index up 56 cents to $3.18/MMBtu - The Inside FERC's Gas Market Report April bidweek national average natural gas price rose 48 cents to $2.93/MMBtu, S&P Global Platts data show, as the market rallied from first quarter of 2017 lows, bolstered by more supportive fundamentals and a strong end the storage withdrawal season. The April bidweek price at the benchmark Henry Hub point rose 56 cents to $3.18/MMBtu, a more than 20% increase from the March price. The price rally came as the NYMEX April natural gas futures contract settled at $3.175/MMBtu, up almost 55 cents from the March contract's settlement. The increase of 55 cents by the futures contract came as the second half of March saw a string of strong weekly storage withdrawals, with the US Energy Information Administration's final two reports of the month both showing storage pulls exceeding both the prior year and five-year average. In the Northeast producing regions, the bidweek price at Dominion Appalachia jumped 65 cents, or almost 32% compared with its March counterpart, to $2.71/MMBtu.However, the year-on-year comparison saw a more than 127% increase as pipeline capacity has come online this past winter, providing a much needed outlet for regional production. According to Platts Analytics' Bentek Energy unit, roughly 1.5 Bcf/d of new takeaway capacity has entered service in the Northeast since October. The increase in takeaway capacity has pushed Dominion April basis down to around minus 47 cents/MMBtu, a nearly 25 cents/MMBtu improvement from the same month last year. Meanwhile, in premium downstream markets in the Northeast, Algonquin city-gates had one of the few bidweek declines, slipping 3 cents to $3.23/MMBtu as the market priced in milder weather and lower demand expectations for April.

Cheniere Energy exports 100th LNG cargo | Fuel Fix: Cheniere Energy said Monday it exported its 100th cargo of liquefied natural gas, even as the Houston company remains the nation’s sole exporter of LNG. Cheniere recently completely and began operating a third LNG liquefaction unit at its Sabine Pass terminal near the Texas-Louisiana border. A fourth unit, called an LNG train, is expected to come online this fall. In February 2016, Cheniere became the first company to ship LNG from the contiguous United States in more than 50 years. Other companies are developing LNG export projects, but they’re yet to come online. In just more than a year, Cheniere has delivered cargoes to 18 countries on five continents. At the Sabine Pass terminal, a fifth train is expected to be finished in 2019, while the sixth doesn’t yet have a timeline. Each train has the capacity to process 4.5 million metric tons of LNG. Cheniere also is building a Corpus Christi LNG export terminal that’s expected to start operations in 2019. The first two Corpus trains are about 50 percent complete, while a third is the next project the company expects to announce. Cheniere officially became profitable for the first time at the end of last year, turning a $110 million net gain in the fourth quarter.

 As US LNG volumes increase, trading optionality expands -- The optionality of US LNG, combined with a growing trend for more LNG to be traded on a shorter term basis, has presented an opportunity for the market to expand the way LNG is traded. In response to these market trends and growing US LNG exports volumes, the Intercontinental Exchange will list a US Gulf Coast LNG futures contract for trading beginning on trade date May 4, subject to the completion of necessary regulatory processes. So what incentivized ICE to launch a futures contract for US LNG? To answer this question, it’s important to take a look at how the US LNG industry has evolved over the past 15 months. While the US exported its first commercial cargo of LNG last February, the market is still trying to gauge how big of an impact US LNG it will have on the global market. Since February 2016, the nation’s sole LNG export terminal, Sabine Pass, has managed to export LNG to 17 different countries, about half of the total number of countries that are capable of importing commercial levels of LNG. Over the next three years, four more projects are expected to begin operations, increasing global capacity by 25%. By 2020, the US will be the third largest LNG exporter, behind Australia and Qatar. While the sheer volume of new LNG supplies coming out of the US is impressive, the real story in the global LNG market is how unique US LNG is compared to today’s global supply. US LNG has distinct attributes: It has no destination restrictions and there is much more flexibility in terms of offtake volumes. The LNG market is dominated by long-term take-or-pay contracts with destination restrictions, making US LNG even more attractive to trade. Put simply, the US will rival Qatar as the producer with the most flexible gas. Looking at the companies that have signed long-term contracts with US LNG projects, the destination and offtake flexibility complements the overall objectives of most offtakers. Shell/BG and Gas Natural, two currently active long-term offtakers of US LNG, are utilizing the flexibility of their US LNG supply to strategically optimize their global LNG portfolio.

LNG producers turn to trading, risk taking to maintain market share | Reuters -- Producers of liquefied natural gas (LNG) have shot themselves in the foot with oversupply, and face calls for flexibility and greater competition from other fuels that may force them to take more risks and start trading just like other commodity dealers. That's a big change for a market long dominated by large producers such as Royal Dutch Shell and BP who provide major importers with fixed volumes under multi-decade contracts linked to the price of oil LCOc1. Under the protection of these lucrative locked-in deals, producers in Australia, Qatar, Russia and elsewhere went on an investment spree that left them with a huge supply overhang when demand in China and India developed more slowly than expected. That, together with rising fuel competition from coal and renewables, contributed to a more than 70 percent crash in spot Asian LNG prices LNG-AS to under $6 per million British thermal units (mmBtu), increasing the pressure to grant more flexible contracts and better pricing options. "The LNG market is changing rapidly, (and) the large volume long-term contracts that traditionally underpinned the development of the industry are today much more difficult to obtain," said Steve Hill, executive vice president of Shell Eastern Trading, during a gas conference in Japan on Wednesday. "LNG projects ... need to take more market risks," he said. In a sign of what might be ahead, Japan's JERA - the biggest single importer of LNG - and France's Total are set to strike its first deal soon with flexible volumes that are based on Asia LNG spot prices. JERA's chief fuel transactions officer, Hiroki Sato, confirmed the imminent deal to Reuters on Wednesday in an interview at the Gastech conference. "There is no price war, but there is clearly competition under way to create a structure that answers the varying buyer needs," he said. Total did not respond to queries for comment on the deal. Another thing about to change is that trading specialists - who buy commodities from producers to sell on to importers at a profit and who have so far played a smaller role in LNG than they do in oil or coal - are jumping into the game. "People need to sit in the middle of the chain (to) provide the flexibility and meet the different customer needs," said Mike Utsler, chief operations officers for Australia's Woodside Petroleum.

Several US gas export projects delay planned start dates - Several US gas export projects have pushed back the expected start of their commercial operations, according to company updates that began posting this week on the US Department of Energy's website. LNG terminal developers must provide semiannual progress reports for their facilities in April and October, as required by the department. Not all projects have posted April reports yet. LNG projects must secure numerous regulatory approvals before they can begin exports, and progress is often held up by regulatory or commercial issues. April updates published on the department's website showed later dates for six projects: SCT&E LNG's export terminal in Cameron Parish, Louisiana; SeaOne Gulfport's CGL terminal at Gulfport, Mississippi; Texas LNG Brownsville's terminal in Brownsville, Texas; Gulf LNG Liquefaction's terminal at Pascagoula, Mississippi; Freeport-McMoRan's Main Pass Energy Hub Deepwater facility off the Louisiana coast; and the Venture Global Calcasieu Pass export project in Cameron Parish, Louisiana. SCT&E LNG anticipates it will begin full operations at its 12 million mt/year Monkey Island facility in 2023-2024, after approvals are secured. In October, it said it expected full operations by 2022. SeaOne Gulfport expects it will start operations at its compressed gas liquids export facility in the second quarter of 2020. In October, it reported a commercial date of 2019. Texas LNG Brownsville has pushed the operations start date at its 4 million mt/year facility to 2022. In October, it listed a 2020-2021 date. Gulf LNG Liquefaction said it plans to place phase one and two of its total 11.5 million mt/year facility in service before the end of 2022 and 2023, respectively. In October, it listed dates of 2021 and 2022 for the phases. Freeport-McMoRan now expects its first floating liquefaction storage and offloading vessel to begin exporting LNG during 2022. In the October filing, it said it expected exports to begin in 2021. And Venture Global Calcasieu Pass anticipates it will begin full operations in late 2020 at its 10 million mt/year facility. In October, it said it expects full operations in the first half of 2020. 

Jones Act change could dip Gulf of Mexico supply 500,000 b/d: study - A pending US Customs and Border Protection action to reverse longstanding Jones Act exemptions could reduce oil and natural gas production in the Gulf of Mexico by about 500,000 b/d over the next 13 years, according to a study paid for by the American Petroleum Institute. The study, which was conducted by energy advisory firm Calash, claims that if the exemptions are dropped, offshore oil and gas spending in the Gulf will decrease by about $5.4 billion per year between 2017 and 2030 while production will fall by 500,000 b/d over that time period. "The [Jones Act] proposal would likely negatively influence development, as projects that are under development or have not been installed are delayed, and project economics and risk profiles are negatively impacted," the report states. "The largest impact of the proposed changes is likely to be due to the inability to use foreign flagged subsea construction, reel lay, and heavy lift vessels to develop US offshore oil and natural gas projects." Less than two days before the end of the Obama administration unveiled a proposal that would revoke Jones Act waivers, some dating back four decades.These Jones Act waivers allowed foreign-built vessels to transport certain equipment, including heavy lift crane equipment, between a port and an offshore drilling operation. The Jones Act, which is nearly 100 years old and has broad bipartisan support, requires vessels transporting goods between US ports to be US-flagged, US-built and majority US-owned.

New US Gulf fields add to oil production; operators eye exploration - It may be more than a year before US Gulf of Mexico oil exploration begins to ramp up in any noticeable way, but several new deepwater fields are adding to production and there seems to be sparks of interest in developing recent offshore finds. Platts Analytics Bentek Energy is forecasting a rise in US offshore production to 1.868 million b/d by year-end and to 2.296 million b/d by end-2022 from 1.669 million b/d at end-December 2016. The reason? Several new fields are slated to come online this year, including Barataria and South Santa Cruz, operated by small privately held Deep Gulf Energy, and Crown and Anchor by LLOG Exploration. Those will bring a combined 15,000 b/d of oil equivalent production. But the Tornado Field, at around 9,000 boe/d, came onstream in November and other large fields that came on in 2016 such as Anadarko Petroleum's Heidelberg, Shell's Stones, ExxonMobil's Julia and Noble Energy's Gunflint, are still ramping up, sources said. Also, new wells are expected this year from Anadarko's Lucius Field (online since early 2015), and Hess' Tubular Bells (online since late 2014).Even though sanctioning of large projects are few in number these days, some are still being advanced. For instance, Chevron's long-awaited Big Foot development will come online in late 2018. And Shell's Appomattox field is set to come online in 2020. Shell's Kaikias Field, to be tied back to its Ursa production hub, comes on in 2019. RigData shows just six semisubmersible rigs and 22 drill ships under contract in the US Gulf of Mexico as of the end of March, down from 10 and 29, respectively, year on year.

Offshore wells are what’s really behind the recent US oil production boom - When OPEC points at U.S. oil producers, it always blames the shale drillers for oversupplying the world market. But while shale is in resurgence, the real source of recent growth has been the offshore drillers in the Gulf of Mexico. According to Bank of America Merrill Lynch, U.S. oil production growth between September and December was almost entirely the result of offshore wells, which increased production by 220,000 barrels a day in that period. Bank of America points out that offshore rigs — Royal Dutch Shell’s Stones field and Noble Energy’s Gunflint — began production in the second half of last year. BP also started the Thunder Horse expansion project in January, adding 50,000 barrels a day of capacity to the existing field. Bank of America said offshore production should remain above 1.7 million barrels a day through 2017, in line with record levels in the third quarter of 2009. BofA analysts said shale production stopped declining in the fourth quarter, but the fact that shale has not broken out of its current range suggests it has not yet recovered. It said the EIA forecasts a 110,000 barrel-a-day increase in April, but that is mostly seen coming from the Permian Basin, while output from the three other main shale regions is expected to decrease or remain steady.

Deepwater Will Soon Challenge Shale -- Just when the focus in oil seemed to be firmly fixed on shale as the cheapest kind of crude, Wood Mackenzie went and ruined it for shale producers with a report claiming that deepwater developments are turning increasingly competitive. According to the report, Big Oil, which seems to be the only kind of oil remaining in deepwater exploration, has done some impressive work regarding costs, such as improving project designs and well performance, aiming for fewer wells and more subsea tiebacks. Thanks to this, output may be lower than it would otherwise be, but costs are also lower—in some cases falling below $50 a barrel. According to Wood Mac’s upstream oil and gas research director Angus Rodger, this shift is essentially a shift in the mindset of Big Oil rather than a shift in innovation, with producers foregoing maximum profits for a more stable revenue stream. Still, innovation has its part to play when it comes to deepwater developments. Two engineering majors, Siemens and ABB, are working on a new type of offshore platform that is entirely built on the seafloor. These self-sufficient oil and gas extraction factories, as Siemens calls them, will have no crew and will not be subject to weather changes, which is expected to save a lot of money that would normally be paid out in wages and on maintenance, not to mention the savings on safety expenses. This would be on top of boosting well yields. Shell is boasting future profitability at $15 a barrel from its Mars platform in the Gulf of Mexico. The company is adopting drilling techniques from smaller, independent energy firms, which have left the Gulf after finding themselves unable to withstand the investment pressure, and is also transforming its corporate structure, which has already borne fruit.  Meanwhile, shale-patch costs are rising, and Rodger expects an even playing field for deepwater and shale projects soon. Oilfield service providers have seen their chance in the recovering market with a huge demand for their services and are raising their prices in a not-too-subtle way, after years of being forced to discount everything in order to stay in business.

Trump Preparing Order to Expand Offshore Oil Drilling - President Donald Trump is preparing to issue an executive order with the goal of giving oil companies more opportunities to drill offshore, reversing Obama-era policies that restricted the activity. The offshore drilling directive is set to be issued soon, Interior Secretary Ryan Zinke told an industry conference in Washington on Thursday, according to three attendees who spoke on condition of anonymity to discuss a session closed to the press. Zinke did not provide specific details on the executive order during his presentation to the National Ocean Industries Association.The coming order is set to push the Interior Department to schedule sales of new offshore oil and natural gas rights in U.S. Atlantic and Arctic waters, amending a five-year Obama administration leasing plan that left out auctions there, according to an industry representative who has discussed it with officials. The order is also expected to begin the process of revoking former President Barack Obama’s decision to indefinitely withdraw most U.S. Arctic waters and some Atlantic Ocean acreage from future leasing. Environmentalists say it would be unprecedented for any president to rescind such a designation, and the reversal would almost certainly be challenged in court. Spokesmen for the Interior Department and White House did not respond to emailed requests seeking comment.

US government website that used to warn about the risks of oil and gas drilling was changed to promote their economic benefits - Until recently, the US Government Accountability Office’s website described oil and gas drilling on federal lands as posing an “inherent risk” to human health and the environment. Now, that language has been replaced with wording about the economic benefits of oil and gas activity. The edits—made between midday on Feb 15 and midday Feb 16, 2017—were spotted by the Environmental Data & Governance Initiative (EDGI), a group of programmers and researchers who are tracking changes to federal websites since president Donald Trump took office. They are the latest in a litany of similar modifications, many of which have involved public-health or climate-change science. The edited page is part the Government Accountability Office’s “High Risk List,” updated every two years with federal agencies or programs the GAO believes are vulnerable to “fraud, waste, abuse, and mismanagement, or are most in need of transformation.” Oil and gas resources on federal lands were part of that list under the Obama administration—and remain on it, but without mention of the environmental and public health risks that originally drove their placement there. The GAO says the change in language was not to de-emphasize the health and environmental risks of oil and gas drilling, which the GAO described in a 2012 report, but rather to point to a more recent set of reports that emphasize weaknesses in the government’s oversight of the industry—like, for example, the inability to ensure that companies that use federal land have paid royalties completely.

Chevron pivots to Permian shale as mega-project era fades | Reuters: Nearly a century after Chevron Corp amassed the No. 2 stake in America's largest oilfield, Chief Executive John Watson is hitting the accelerator on developing the company's vast Permian Basin holdings. In an interview, Watson made clear his desire to put the West Texas to New Mexico expanse in the ranks of Chevron's biggest ventures. That is a stark change from just five years ago, when Chevron executives rarely mentioned the shale basin. But with low oil prices, the company is now spending more than it makes to cover its prized dividend and find new reserves. Now, those 2 million Permian acres have emerged as to way to help fund both goals. "Some of the best things we have in our portfolio are the shales," Watson said during an interview on the 48th floor of the company's Houston office tower. "My employees in the Permian know I'm featuring it as something very important." Gone, for the next few years at least, are plans for any new multi-billion-dollar mega-projects, he said. To survive and grow, San Ramon, California-based Chevron is turning to acreage it has always controlled and that largely is free of royalties to landowners. "We're just in a period now where markets are weak and everyone is focused on controlling costs," Watson said. Within a decade, Watson expects Chevron's production in the Permian to grow eightfold to more than 700,000 barrels of oil per day. By the end of next year, nine drilling rigs will join the 11 that Chevron already has poking holes into Permian land. It is all part of Watson's plan to methodically pump Chevron's more than 9 billion barrels of Permian oil, most of it owned outright by the company. That gives Chevron a cost advantage over rival Permian producers as the region in the past year has become the epicenter for the U.S. shale resurgence.

Stiff Competition - The Race to Build More Permian-to-Corpus Gas Pipeline Capacity -- The combination of rising production of “associated” natural gas in the Permian Basin and rising exports of pipeline gas to Mexico—and soon, LNG on ships out of planned South Texas export terminals—is driving the need for new gas pipelines from the Permian to the Corpus Christi area, including the all-important Agua Dulce gas hub in Nueces County, TX. Yesterday (Monday, April 3), NAmerico Partners unveiled plans for Pecos Trail, a proposed 468-mile, 1.85-billion-cubic-feet-a-day pipeline aimed squarely at linking emerging gas supply with emerging gas demand. Pecos Trail joins two other projects announced within the past few weeks that target the same opportunity. Today we look at the gas side of the need for new takeaway pipelines out of the U.S.’s hottest shale play, and NAmerico’s newly announced plan to address it. Two of the hottest energy stories of the past several months (and maybe for the next few years as well!) are 1) the crude oil production boom in the Permian Basin in West Texas and southeastern New Mexico, and 2) the boom in U.S. exports of natural gas—pipeline exports to Mexico and LNG exports by ship. In fact, there is a real connection between these two headline-grabbers; that is, growing crude production in the Permian will lead to the production of vast quantities of associated gas, and the proximity of the Permian to export markets (Mexico and planned LNG terminals along Texas’s Gulf Coast) make the Permian a logical supplier of a substantial portion of the billions of cubic feet a day of gas that will be needed to keep pace with export demand. The Permian has been a frequent topic in the RBN blogosphere. Last week, in Back in the Saddle Again (our preview of RBN’s upcoming School of Energy in Houston on April 25-26), we discussed the likely need for additional crude pipeline takeaway capacity out of the Permian (beyond the four projects already scheduled to come online later this year and in 2018). Before that, in our Still the One blog series, we discussed rising production of associated gas (and natural gas liquids, or NGLs) in the Permian and all the gas processing capacity being developed in the play.’

How new Permian-to-Corpus gas pipelines will affect coastal flows. Rising natural gas exports from South Texas and increasing production of “associated” gas in the Permian Basin are driving the development of several new gas pipelines from West Texas to the Agua Dulce gas hub and nearby Corpus Christi. The age-old questions apply: How much new pipeline capacity will be needed, and how soon? The construction of these new pipelines also raises the question of how a potential flood of new gas supply from the Permian to the South Texas coast might affect plans by others to flow gas down the coast from Houston. Today we continue our look at proposed gas pipelines from the Permian to Agua Dulce and Corpus Christi with a review of two more projects and their potential impact.  In Part 1 of this series we discussed the fact that two of today’s hottest energy stories—the crude oil production boom in the Permian and the boom in U.S. exports of natural gas (pipeline exports to Mexico and LNG exports by ship) —have, in a way, converged. The production economics in parts of the Permian are so favorable that significant crude production growth is likely under even pessimistic oil-price scenarios, and with that incremental crude output will come big volumes of associated gas and natural gas liquids (NGLs). Due to the Permian’s long history as a major producing area, there is sufficient gas pipeline takeaway capacity for now, but probably not for long—and, with South Texas demand for export gas growing, the logical direction to move incremental Permian-sourced gas is southeast to the Agua Dulce gas trading hub in Nueces County, TX and to Corpus Christi, about 30 miles east of the hub.

Dakota Access Campaign Seen as a Model for Pipeline Resistance Nationally - The tactics used in North Dakota – resistance camps, prominent use of social media, online fundraising – are now being used against several projects. They include the Sabal Trail pipeline that will move natural gas from Alabama to Florida; the Trans-Pecos natural gas pipeline in Texas; the Diamond pipeline that will carry oil from Oklahoma to Tennessee; and the Atlantic Sunrise pipeline that will move natural gas from Pennsylvania to Virginia. They’re also being used against projects that are still in the planning stages, including the proposed Pilgrim oil pipeline in New York and New Jersey and the proposed Bayou Bridge Pipeline in Louisiana. Dakota Access opponents have also vowed to fight against the resurgent Keystone XL pipeline, which would move crude oil from Canada to Nebraska and on to Texas Gulf Coast refineries. The influence of the Dakota Access protest is evident in various forms. For example, some who protested in North Dakota have gone to Texas and Florida to help with those demonstrations, according to Goldtooth. The Red Warrior Society, a pipeline protest group that advocated aggressive tactics in North Dakota, is promoting resistance in other states via social media. There are nearly a dozen accounts on the GoFundMe crowdfunding site seeking money to battle the Sabal Trail and Trans-Pecos pipelines. The Society of Native Nations, which is fighting the Trans-Pecos, used the protest camp model from North Dakota to set up a camp in Texas, according to Executive Director Frankie Orona.

The Rough Waters of Western North Dakota -- The first in a 5-part series on the controversial water industry of western North Dakota. The state of North Dakota is now experiencing a serious crossroads situation regarding the Western Area Water Supply Authority (WAWSA) and its future path.  Uncertainty is nothing new to WAWSA and its project as controversy, a questionable business plan and forceful government politics have followed this project since its very beginning. According to WAWSA website, the domestic water project utilizes Missouri River water that is treated partially at the Williston plant to meet municipal, rural and industrial water needs for Burke, Divide, McKenzie, Mountrail and Williams counties. Residential water services include the cities of Williston, Watford City, Ray, Tioga, Stanley, Wildrose, Crosby, Fortuna, Noonan, Columbus and Ross. The idea was to provide affordable water to the residents of western North Dakota.  In order to offset costs to the residents, WAWSA would sell water to the oil industry. The WAWSA website also states that currently the project is providing water to over 70,000 people and are estimating 160,000 people will received water by 2038. So how did WAWSA go from a water infrastructure concept everyone seemed to support to questioning and changing its business plan? Let’s start from the beginning and find out how WAWSA’s original projection of $150 million in 2011 became a current reality of $292 million and a new completion projection of $400 million, according to public records.    According to Wirtz, the decision to move ahead with WAWSA wasn’t fleshed out completely due to the speed of the Bakken in 2011. “The business model they proposed was that the infrastructure would be paid for largely by selling industrial water to the oil industry,” Harms said. “Then the water industry was mature, well developed.  Six years ago 80% of the water that was provided to the oil industry was private with the other 20% was provided by communities like Watford City, Williston,Tioga, Stanley, Crosby, they all sold the balance to the oil industry.”

Small California Towns Are Facing Off Against Oil Companies — And Winning -- Last fall, as presidential candidate Donald Trump promised America more oil and coal production, a small refinery town in Northern California stood up against its biggest employer and taxpayer. Valero, the Texas-based petroleum giant, had sought routine approval for a huge crude-by-rail project. The city council of Benicia, however, decisively rejected Valero’s proposal. The project proposed to take crude oil from what is described in an environmental impact report as “sites in North America” — a possible euphemism for Bakken crude — and roll it in rail cars to Benicia. But the project proved so unpopular among the city’s nearly 27,000 residents that three of the five city council members who had started out backing the project joined in a unanimous vote against it. An energized group of local administrators and activists had managed to derail a project that national policy makers couldn’t touch. But Benicia wasn’t the only place this happened last November. Across California, new organizing efforts zeroed in on small-town elections as a strategy to thwart big fossil-fuel infrastructure projects. Oxnard officials, for example, are battling California Energy Commission plans to site a huge gas-fired power plant on a local beach, and opponents to the plan were overwhelmingly favored in the fall elections. In the Kern County town of Arvin, which 10 years ago won the dubious distinction of having the smoggiest air of any U.S. city, a 23-year-old city councilman was elected mayor on a promise to regulate the oil industry and protect the city’s water and air — a huge task in California’s biggest oil-producing county. And on March 14, the San Luis Obispo County Board of Supervisors shut down a Phillips 66 crude-by-rail plan to bring oil into its Nipomo Mesa refinery. The 3-to-1 vote (with one recusal) against the proposal represented a huge change in a county that for years had supported refinery projects.

 Owner of leaking Alaska gas pipeline now dealing with oil spill in same area - Hilcorp Alaska, owner of an underwater pipeline leaking natural gas into Alaska's Cook Inlet, is now responding to a second pipeline spill in the same vicinity. That one was spewing oil. The pipeline, which connects two oil platforms, released an unknown amount of crude oil into the inlet before the flow of oil was halted Sunday. Oil sheens appeared as far as three-and-a-half miles away from the source of the spill. The leak was discovered and reported to the state Department of Environmental Conservation (DEC) midday Saturday. The two oil platforms, called the Anna and Bruce platforms, are on the western side of Upper Cook Inlet. The natural gas leak is on the eastern side of Upper Cook Inlet, where the company owns two pipelines and four oil platforms. The gas pipeline has been leaking almost pure methane since late December. The two leaks are unrelated. The gas leak has raised concerns for regulators and environmentalists, particularly because the area is home to an endangered population of beluga whales. The first water samples showed levels of methane high enough to be dangerous to fish. Oil carries an even bigger environmental threat. Hilcorp personnel aboard the Anna platform reported the oil spill on Saturday after they felt an impact around 11:20 a.m., according to a report released by the DEC. When they looked over the edge of the platform, they saw an oil sheen and bubbles surfacing near one of the platform legs, where the pipeline is located. The cause of the impact isn't yet known. In response to the oil leak, Hilcorp shut down oil production on both platforms, and reduced pressure on the line from 70 psi to 5 psi. The company also conducted flights around the area. On a flight at 12:30 p.m. Saturday, an hour after the spill was first observed, Hilcorp reported seeing six oil sheens. The largest was 10 feet by 12 feet. Two others were three to four feet by 20 to 25 feet, according to the DEC. An oil spill response ship arrived to the Anna Platform to look for sheens at 12:45 p.m., but did not find any. On Sunday, response crews sent a "pig" through the pipeline to push the remaining oil in the line past the spot where it was believed to be leaking, and then out of the line. "The crude oil pipeline between the Anna and Bruce platforms has been shut-in and the pressure to the line has been reduced to zero pounds per square inch," the DEC said in a report released at 4.30 p.m. Sunday. The 8-inch pipeline's capacity is 461 barrels of oil. It sits roughly 75 feet below the surface of Cook Inlet. Both leaking pipelines were built in the 1960s.

340 Beluga Whales Threatened by Another Pipeline Leak in Alaska's Cook Inlet -- Hilcorp Alaska reported Saturday an oil leak from a pipeline in Alaska's Cook Inlet. The oil spilled from the offshore pipeline south of Tyonek is in a critical habitat for the gravely endangered Cook Inlet beluga whales , whose numbers have dwindled to 340 individuals. This leak is unrelated to the gas leak from another one of its pipelines that has been ongoing since December .  "At first, I hoped that news of this latest oil leak was an April fool's joke because it seemed like Hilcorp couldn't spring another leak so soon," said Miyoko Sakashita, oceans program director for the Center for Biological Diversity . We're really worried about what this means for Cook Inlet belugas with the double whammy of an oil spill and gas leak in the same season."  The cause of the leak is unknown and oil sheens have been reported in the area. The company said it has shut-in production at the platforms, known as Anna and Bruce, that are connected by the leaking pipeline. Reports this morning confirm that the leak has stopped, but the risk to wildlife is unknown. These platforms were installed in 1966 and aging infrastructure and severe tides in the Cook Inlet make them vulnerable to incidents. The Alaska Oil and Gas Conservation Commission has also repeatedly cited Hilcorp for violating safety regulations for its oil and gas operations in the state.  "It's clear that there's no safe way to drill for oil in the ocean. This is the same company that plans to drill for oil in the Arctic Ocean, a place that is much more dangerous for oil drilling with severe storms and ice," Sakashita said. "Hilcorp keeps springing leaks in Cook Inlet and it should certainly not be allowed to build the Liberty project in the Beaufort Sea." The Center for Biological Diversity has sent Hilcorp a 60-day notice of its intent to sue for the ongoing gas leak and it is monitoring the new oil leak to determine whether legal action is warranted.

Potentially explosive methane gas mobile in groundwater, poses safety risk: study -- Potentially explosive methane gas leaking from energy wells may travel extensively through groundwater and pose a safety risk, according to a new study by University of Guelph researchers. Researchers at the U of G-based G360 Institute for Groundwater Research found the gas is highly mobile in groundwater, travelling far beyond the shale wells where it is drilled and changing the water chemistry. It will also escape into the atmosphere as a powerful greenhouse gas. The findings were published recently in the journal Nature Geoscience. Besides posing an explosion risk and degrading groundwater quality, methane can contribute to climate change when released to the atmosphere, said G360 director and principal investigator Beth Parker. The researchers injected methane over 72 days into a shallow sand aquifer and monitored it for more than eight months at Canadian Forces Base Borden in Ontario. They found the gas travelled through the ground, was sometimes released into the atmosphere and dissolved extensively into the groundwater, where it changed water chemistry. "If this water is extracted, say, by a farmer, the dissolved gas can be released and form an explosion risk or change the taste of the water," Parker said. "Depending on conditions of groundwater and aquifer minerals, microbes can 'eat' the methane and generate undesirable by-products such as hydrogen sulphide, and induce the release of trace metals into the water."

U.S. oil producers increased investment in fourth quarter of 2016 -- Capital expenditure for 44 U.S. onshore-focused oil production companies increased $4.9 billion (72%) between the fourth quarter of 2016 and the fourth quarter of 2015 based on their public quarterly financial statements. This increase in investment spending was the largest year-over-year increase for any quarter by these 44 companies since at least the first quarter of 2012.  Higher oil prices are contributing to an increase in upstream earnings for U.S. producers, prompting some companies to increase their investment budgets. Company announcements and increases in the number of active oil rigs suggest U.S. oil production companies are continuing investment growth in the first quarter of 2017. The U.S. active oil-directed rig count reached 662 on March 31, 2017, up from 525 at the end of 2016. Lower investment levels over the previous two years likely contributed to a reduction in cash from operations for these 44 companies despite an increase in crude oil prices. The reduction in cash from operations for these 44 companies totaled $475 million year-over-year in the fourth quarter of 2016. Significant reductions in exploration and development spending in 2015–16 led to less drilling, which reduced oil production in the fourth quarter of 2016, offsetting increased revenue that came from higher prices. Cash from operations lags capital expenditure for these companies because they invest to develop reserves that will increase oil production and cash flow in the future.  Many of these companies use oil futures and options to hedge their investment in production into the future. Financial hedging for producers reduces the effect of a fall in revenue if prices were to decline. A measure for the amount of future production oil companies have hedged is the number of short positions, or future sales into these markets. These short positions consist of futures and option contracts held by producers and merchants. Producers have begun using them more since crude oil prices rose above $50 per barrel in the fourth quarter of 2016. In mid-February 2017, the number of short positions in U.S.-based futures and options reached 756,000 contracts, close to the 10-year high of 802,000 contracts.

US exploration and production companies budget strong rebound in 2017 -  In connection with 2016 earnings releases, U.S. exploration and production companies (E&Ps) have announced a surge in capital spending for 2017 after slashing investment by an average 70% from 2014-16.  Our “Piranha” universe of 43 E&Ps is budgeting a 42% gain in organic capital outlays with a strong focus on the major U.S. resource plays. Despite crude prices languishing at an average of ~$47/bbl since January 2015, most of the upstream industry has weathered the crisis remarkably well, primarily through the “high-grading” of portfolios, impressive capital discipline, and an intense focus on operational efficiencies. Today we review the overall outlook for 2017 upstream capital spending and oil and natural gas production, and take an initial look at expectations for our group of companies. A year ago, E&Ps were still in full retreat, announcing an average 50% reduction in investment from 2015, as we documented in It’s An Uphill Climb To The Bottom. But oil prices rose steadily from early-2016 lows as companies continued to slash costs and increase output per well. Mid-year announcements contained harbingers of change, as we reported in Been Down So Long. Next, we drilled down to look at spending aggregated into three peer groups: oil-weighted, gas-weighted and diversified E&Ps. We noted substantial increases in activity and rising production forecasts for Permian producers in You’ll Go Your Way, I’ll Go Mine. In Different Strokes by Different Folks, we illustrated how the Diversified E&Ps who were targeting the hot Permian and SCOOP/STACK plays had more positive capital spending and production profiles than the rest of that peer group. Finally, we found a more positive outlook for gas prices and found that demand was rekindling activity in the Gas-Weighted E&P peer group in Back in the Saddle Again. 

Oil Majors Are Struggling to Break Even - -- Despite billions of dollars in spending cuts and a modest oil-price rebound, Exxon Mobil Corp. , Royal Dutch Shell PLC, Chevron Corp. and BP PLC didn’t make enough money in 2016 to cover their costs, according to a Wall Street Journal analysis. To calculate each companies’ free cash flow—the excess cash remaining after costs—the Journal deducted the firm’s dividends and capital expenditures from its cash from operations. All four firms fell short of cash flow for the year, although Exxon said it broke even by its own metrics, which exclude dividends. The analysis also showed that the four companies ended last year with more debt than they began it. For companies once known as profit machines—whose executives were hauled before Congress in 2005 to explain their enormous earnings—their cash problems demonstrate just how unprepared they were for a historic crash and tepid recovery in oil prices. They have maintained the same large dividends they had when oil prices were over $100 a barrel, piling on debt and selling off assets to prioritize shareholders above all else. The result is that spending on dividends and capital investments has ballooned above cash generated from their businesses. The issue has worried investors who expect those steady dividends because oil giants don’t have the capacity to grow much. Exxon, Shell and their competitors are under pressure to show they can drum up cash to keep shelling out dividends. Exxon, Shell and their peers spent much of the past three years scrambling to reassure investors that their dividends were safe amid the oil-price crash. These companies were already struggling to live within their means at elevated oil prices.

Glencore to sell 51 percent of oil products storage business | Reuters: Swiss-based trading and mining giant Glencore has agreed to sell a 51 percent stake in its oil products and logistics business for $775 million to China's HNA Innovation Finance Group Ltd, the company said on Friday. Reuters earlier exclusively reported that Glencore was in talks to sell a bundle of its global oil storage stakes, following similar moves by rivals as a boom period for storage shows signs of nearing to an end. Glencore said the deal was expected to close in the second half of 2017 and that the transaction would result in a new company called HG Storage International Ltd with a presence across Europe, Africa and the Americas. Dutch bank ING was the sell-side adviser to the deal, a spokeswoman for the bank said.

Big Oil could be ready for a big comeback - Oil prices are down so far this year -- and so are energy stocks. But some experts think that won't last for long. President Trump is clearly a fan of the traditional oil and gas sector. His secretary of state, Rex Tillerson, used to be the CEO of ExxonMobil. Trump also just rolled back some of President Obama's climate control rules, which should be a gift to Big Oil. And Trump has also declared an end to Obama's "war on coal." Still, the S&P Energy Sector ETF (XLE) is down more than 6% in 2017, while the S&P 500 is up 5%. That's despite the fact that earnings for oil companies are expected to be solid in the first quarter. Analysts are predicting that sales at Exxon (XOM), for example, will be up 40% from a year ago and that profits will nearly double. Why? Even though crude prices are down year-to-date, a barrel of oil is around $50 -- and that's nearly double the price from a year ago. Oil hit a 13-year low of just above $26 a barrel in February 2016. So it's a lot more profitable to pump now than this time last year. Despite this, Exxon shares are down 9% in 2017, making it the worst performer in the Dow. Rival Chevron, also a Dow component, is down more than 8%.

Oil Production Vital Statistics March 2017 - In February OPEC remained largely compliant with the production cuts with OPEC 12 production (ex Gabon) down 1.11 Mbpd compared to October 16 according to IEA data. Oman has offered solid support with a production cut of 50,000 bpd from a production base of ~ 1 Mbpd. Russia + FSU has done little (yet) with a 50,000 bpd reduction from a level ~15* larger than Oman. Russia + FSU were supposed to cut >300,000 bpd. The IEA has a somewhat different view that can be read in the OMR on page 24.  Global total liquids remain up 20,000 bpd YOY. The oil price stepped down in March to ~$50 / bbl, confronted with a continuing glut and growing uncertainty but has since recovered to ~ $55. OPEC drilling remains close to a cyclical high while US drilling continues to recover. Total US rigs were up 68 to 824 for the month to the end of March. The Canadian rig count is sharply lower marking a seasonal cycle. Drilling in Mexico and throughout the rest of the world remains at rock bottom. The following totals compare February 2016 with Februray 2017:

• World Total Liquids 96.48/96.50/ +20,000 bpd
• OPEC 12: 31.83/31.81/-20,000 bpd
• Russia + FSU 14.21/14.46/ +250,000 bpd
• Europe OECD  3.61/3.59/ +20,000
• Asia 7.64/7.43/ -210,000
• North America 19.84/19.60/ -240,000 bpd

The following totals compare October 2016 with February 2017 and monitor compliance with the OPEC + others production cuts.

• OPEC 12: 32.92/31.81/ – 1,110,000 bpd
• Russia + FSU 14.51/14.46/ -50,000 bpd
• Oman 1.02/0.97/ -50,000 bpd

Down 10%, Mexico Oil Reserves Gone In 9 Years Without New Finds -- Mexico’s existing oil reserves are dwindling so fast the country could go dry within nine years without new discoveries. That’s the message from the National Hydrocarbons Commission, which said Friday that the reserves fell 10.6 percent to 9.16 billion barrels in 2016, from 10.24 billion barrels a year earlier. Once the world’s third largest crude producer, Mexico’s proven reserves have declined 34 percent since 2013. The decline in proven reserves is driven by record-low drilling activity the last three years, according to CNH Commissioner Hector Acosta. State-owned producer Petroleos Mexicanos drilled 21 wells last year, a record low, after averaging 31 per year since 2010. “If there isn’t drilling, it is going to be difficult to incorporate new finds,” Acosta said. “The production figures and indicators that we are observing, tell us that there are flaws in the drilling activities being carried out by Pemex.”  The diminished production comes from a combination of reduced investment and the continued maturation of fields, said Cesar Alejandro Mar, Adjunct Director of Reserves. He set 8.9 years as a time frame for the reserves to run out if no new exploration occurs. Pemex, meanwhile, said in an e-mailed statement that it added 684 million barrels of probable crude to the reserves last year, and “will continue working to increase reserves and restitution rates to higher levels.” Monopoly End Mexico ended Pemex’s production monopoly in 2013 to let private operators develop oil in the country for the first time since the 1930s. Production is set to fall below 2 million daily barrels this year, the lowest levels since 1980, Pemex has said. Overall, crude production has declined every year since 2004. Given increased crude development activity anticipated in the deep waters of the Gulf of Mexico by private producers, the country’s production is forecast to climb to 3.4 million barrels a day by 2040, according to a report by the International Energy Agency.

 Are Mexico’s Oil Reserves Almost Depleted? Mexico’s oil and gas regulator said last week that the country’s proved hydrocarbon reserves will drop by 10.6 percent in 2017. This forecast, coupled with the lower oil production that state company Petroleos Mexicanos (Pemex) reported for yet another year in 2016, is painting a rather bleak picture of Mexico’s reserves.Without resumption in investments and more drilling, and if no significant finds occur, Mexico will be running out of reserves within 9 years, according to an official from the National Hydrocarbons Commission.However, the energy reform that ended Pemex’s monopoly and allowed foreign companies to invest in Mexico’s oil exploration and production is expected to start yielding results by the end of this decade. The deepwater bidding round last December attracted major international oil companies, and Mexico awarded blocks to consortia including Chevron, Exxon, Statoil, BP, Total, and China Offshore Oil Corporation.In addition, the analysts are now largely calling the end of the downturn and expect deepwater investment to pick up in coming years.Mexico’s National Hydrocarbons Commission said last week that as of January 1, 2017, the country’s proved oil and gas reserves are estimated at 9.16 billion barrels of oil equivalent, down by 10.6 percent from the 10.243 billion boe as of the beginning of 2016. Proved oil reserves were down 7.9 percent to 7.037 billion barrels from 7.641 billion barrels estimated as of 2016.In its 2016 results release, Pemex reported crude oil production of 2.154 million bpd last year, down by 5 percent over 2015, mostly due to natural declines of a number of producing fields.  According to the EIA, Mexico’s crude oil production has been steadily dropping since 2005 as a result of natural production declines from Cantarell and other large offshore fields.  Surely, the oil price slump has not helped Mexico’s output either, and has complicated the energy reform that the country started implementing in 2013. But now, steadier prices and new projects involving international oil companies are expected to start offsetting declines after 2020, according to the International Energy Agency (IEA).

Brazil Reports 14.6% Jump In February Oil Output, Exports Almost Double -  Brazilian oil output in February was 14.6 percent higher year-over-year, according to the latest data released by ANP, the South American country’s petroleum regulator. February production touched 2.676 million barrels per day, an ANP statement said, adding that natural gas output also rose 9.2 percent compared to the same month last year. Figures released earlier in March from the nation’s Trade Ministry said that oil exports had jumped 94 percent year-over-year in February at 45.7 million barrels – a figure that topped the January 2017 record by 12 percent. The surge in oil exports was a function of higher production from the offshore areas in Brazilian waters, where huge oil finds were made in the pre-salt and sub-salt layers in the past few years.Brazil – which is not part of the non-OPEC group that signed up to OPEC’s concerted efforts to cut global supply – had said that it planned to increase its oil production in the coming years, even before the cartel decided to commit to cuts.Brazil announced last week that it expected to see its first profits from projects finalized under new profit-sharing agreements (PSAs) in September.The PSAs were introduced by the government of Ignacio Lula da Silva to replace previous royalty payments and to ensure the state gets a bigger portion of the revenues derived from the deposits in Brazil’s presalt layer.The announcement of profits from the new framework comes just as oil prices recover from 2.5 years of volatility. New foreign investment is also a national priority for Brazil’s authority figures. After removing the requirement calling for Petrobras to be operator of all new projects in the presalt layer, last month the government also relaxed local content requirements for foreign energy companies, which they saw as a stumbling block for foreign investors. The move comes in preparation for new oil and gas block tenders scheduled for this year and next.

 Petrobras says Exxon expressed 'strong interest' in pre-salt oil | Reuters: U.S. oil company Exxon Mobil Corp expressed to Brazil's state-controlled company Petrobras "strong interest" in the exploration of deep-water oil fields off the Brazilian coast, Petrobras Chief Executive Pedro Parente said on Tuesday. "Considering movements towards a strategic partnership, we have nothing concrete with Exxon, but they have certainly expressed strong interest in the Brazilian pre-salt exploration," Parente told reporters. Earlier on Tuesday, The Wall Street Journal reported that Exxon was in talks to gain access to Brazil's deep-water oil resources, citing people familiar with the matter. Petroleo Brasileiro Sa Petrobras, familiarly known as Petrobras, and Exxon initially declined to comment on the report, but later Parente briefly spoke about it on his way out of a seminar in Sao Paulo. Exxon is one of the few major oil companies still with no presence in the exploration of the recently discovered large fields off the coast of Brazil. Royal Dutch Shell Plc (RDSa.L) sharply increased its operations in the area after acquiring BG Group last year. French oil major Total SA (TOTF.PA) did the same recently by closing a strategic partnership with Petrobras. Norway's Statoil has also bought stakes in the oil region. Petrobras is looking for partners for some of its projects. Earlier on Tuesday Parente said pre-salt yields have been above the company's expectations, boosting Petrobras cash generation and helping the company to cut its debt load, still one of the highest in the global oil industry at slightly below $100 billion.

Fracking giant Ineos buys North Sea pipeline in £199m deal - Yorkshire Post: Energy giant Ineos has struck a deal to acquire the Forties Pipeline System in the North Sea from BP for 250 million US dollars (£199 million). The transaction, which also includes the Kinneil Terminal, will see Ineos take control of a system that delivers almost 40% of the UK’s North Sea oil and gas.The Forties pipeline was opened in 1975 by BP and today consists of more than 100 miles (161km) of pipes with the capacity to transport 575,000 barrels of oil a day from fields in the North Sea and several Norwegian fields. Ineos chairman and founder Jim Ratcliffe said: “The North Sea continues to present new opportunities for Ineos. “The Forties Pipeline System is a UK strategic asset and was originally designed to work together to feed the Grangemouth refinery and petrochemical facilities. “We have a strong track record of acquiring non-core assets and improving their efficiency and reliability, securing long-term employment and investment.” Under the terms of the deal, Ineos will pay BP 125 million US dollars (£99.5 million) on completion and an earn-out arrangement over seven years that totals up to a further 125 million US dollars. BP chief executive Bob Dudley said: “While the Forties pipeline had great significance in BP’s history, our business here is now centred around our major offshore interests west of Shetland and in the Central North Sea.” Forties employs around 300 BP staff at Kinneil, Falkirk, Dalmeny, Aberdeen and offshore. Ineos is best known in Britain for its shale gas fracking operations.

It Is Now Or Never To Stop Fracking In Its Tracks -- This week I will take direct action to target the fracking industry. I'll put my body on the line to obstruct, protest and oppose shale gas extraction. I will be joining others from grassroots network Reclaim the Power in the Break the Chain fortnight of action to expose and disrupt the fracking supply chain. I have better things to do than this; a life to live, ends to meet, commitments to honour. Taking direct action can be stressful, risky, and I wish it was not necessary. But I believe it is. The UK has been frack free for nearly six years since earthquakes caused by fracking in the Lancashire Fylde prompted a moratorium. British public opinion has remained set against fracking since then, preventing the industry from gaining a toehold in this country.  Lately, however, the government has disregarded this national opposition and set about instead creating as attractive an environment as possible for the fracking industry. New laws have removed important legislative checks and balances. Tax incentives have created "the most generous [tax regime] for fracking in the world." Most damagingly for democracy , planning regulations have been changed which enable government to overrule regional planning decisions. This has already happened in Lancashire. There the County Council rejected Cuadrilla's application to frack near the Fylde resort of Blackpool only for Secretary of State Sajid Javid to reverse that decision last autumn.  As a result, the Fylde has become a fracking frontline once more. My grandfather laboured on the Fylde's farms, my great uncle dug its ditches, my great grandfather was a salt miner here. They lived hard lives, but loved this land and respected its limits. They would have had no truck with fracking's extreme physical intrusion, chemical meddling, reckless risks and drastic industrialisation of the landscape. Evidence of the dangers posed to our environment and health has persistently emerged in from countries such as the USA and Australia where it is practised commercially. There, sickness and pollution have followed close on the trail of the frackers. In the far more densely populated UK those impacts stand to be amplified.

Second Northern Territory gas pipeline not viable without fracking, APPEA says - - A second gas pipeline connecting the Northern Territory to South Australia would not be viable without fracking, the oil and gas peak body has said.The Federal Government backed a feasibility study into a north-south gas pipeline in exchange for independent senator Nick Xenophon's support for company tax cut changes.The NT currently has a moratorium on hydraulic fracturing while an inquiry into the technique is underway.But the NT and SA branch of the Australian Petroleum Production and Exploration Association (APPEA) said it would not be realistic to have a new pipeline without fracking."The identified new resources of natural gas in the Northern Territory are predominantly in shale rock, very deep below the surface that cannot be produced without fracking," NT-SA APPEA director Matthew Doman said."That's why this inquiry is so important, that's why it's also important we keep a balanced discussion around something that's part-and-parcel for safe and sustainable natural gas."Construction for the Jemena Northern Gas Pipeline connecting the NT gas fields from Tennant Creek with the east-coast gas market at Mount Isa in Queensland, is expected to get underway in mid-2017.Mr Doman said even though offshore gas could be made available to that pipeline, as well as sources of g as in Central Australia, fracking would still be required to sustain it.

Did the U.S. Just Pull Out of a Global Anti-Corruption Group? - There is a mystery unfolding in the U.S. Department of the Interior. Officials there seem to have removed the United States from a singularly successful anti-corruption effort. This has happened largely in secret, aside from a few public statements in legalese that are nearly impossible to parse. At times, bureaucrats in the department have behaved in ways that—it’s hard to think of another word—seem un-American, literally silencing dissent in open forums and abruptly cutting off contact with the public.The controversy centers on the Extractive Industries Transparency Initiative, a remarkable global project with a very boring name that has become a model for the fight against some of the worst forms of corruption. Countries where economies are built on oil, gas, diamonds, or other natural resources are frequently subject to what is known as the “resource curse.” Those countries are often run by autocrats who use the wealth in the ground to enrich themselves and crush opposition. This is not merely a local concern. There is a well-established link between global terrorism and the regions of the world—the Middle East, Nigeria—most susceptible to extractive-industry corruption. Money from oil-and-gas wealth has flowed into Saudi Arabia, Iraq, Iran, Libya, Nigeria, and other nations. Imagine the past few decades if those nations had been well-governed democracies, instead of places that breed resentment, funnel money to bad actors, attack neighbors, and in other ways destabilize their regions and the world.The first step to ending this age-old problem is fairly simple: a bit more information. Typically, a private company, such as ExxonMobil or BP, will pay a huge and secret amount of money to a government for access to fossil fuels or minerals. Nobody, aside from insiders, will ever know how much money the government received and how that money was spent. The E.I.T.I. changed that.

 Asian arbitrage becomes dominant driver for Atlantic Basin crudes - The landmark agreement between OPEC and non-OPEC producers to coordinate a six-month crude production cut had ramifications for crude markets through the first quarter, with tighter sour crude supply in the Middle East helping to boost the value of Dubai relative to Dated Brent and consequently encouraging arbitrage flows from across the Atlantic Basin to Asia. The front-month Brent/Dubai Exchange of Futures for Swaps -- which is used to price arbitrage opportunities for Brent-related crude grades to the Far East -- narrowed rapidly as the production cuts got underway in January, dropping to an 18-month low of $1.11/b on March 22 from $2.60/b on December 1, shortly before the agreement was signed. The EFS looks set to remain narrow moving into the second quarter, with OPEC's current production cut due to remain in place until the end of June. The subsequent direction of the spread between Brent and Dubai will be largely determined by whether OPEC decides to maintain, or even extend, the production cut at its Vienna meeting on May 25. Price volatility in the North Sea physical crude oil market has been relatively restrained so far in 2017, in contrast to the large swings in differentials that were a feature of 2016. The complex's performance through the first quarter was closely linked to the arbitrage of Forties crude to Asia, with differentials rising during periods of heavy outflows and dropping when the medium sweet grade had to find homes in the local Northwest European market, where demand was largely tepid. Differentials traded within a fairly narrow band of Dated Brent minus 61 cents and plus 4 cents over Q1, having ranged between minus 95 cents and plus 33.5 cents in 2016.

Did fracking in Botswana cause Johannesburg to tremble? - In 2015 Mira Dutschke and I released our film The High Cost of Cheap Gas about the secret roll-out of gas developments in Southern Africa.  The film and it’s revelations published in the UK Guardian outlined a new drilling plan in Botswana.  Companies had been hydraulic fracturing, or fracking, in protected areas like the Central Kalahari Game Reserve for years, exploring for good gas returns from Botswana’s coal layers.It was denied by the government at the time. We had on-the-ground interviews, photographs from the companies' own websites and reports that you can download here, all clearly showing an ongoing gas exploration programme that included fracking with water and chemicals. The government finally conceded it may have happened and later went further, saying companies there had also used explosive charges to frack, as reported in Mining Weekly. Apparently Botswana has stopped fracking for natural gas (if it was ever officially allowed) after our follow-up story in the UK Guardian about possible drilling in the nearby Kgalagadi Transfrontier Park, according to regional drillers we spoke to last month.This sent companies like Botswana-based DeWet Drilling to more unregulated places like Mozambique, where they have recently been drilling as many as 76 gas wells for Sasol on-shore near Inhassoro, which their workers say will be fracked by French oil services company Schlumberger. According to our team’s research, today there is only one current working operation in Botswana producing gas from the original drilling plan. Outlined in their own corporate report from 2015, it is Australia’s Tlou Energy. On page 24 of this publicly available document it shows their ongoing gas project in the lower south-eastern corner inside and outside the Central Kalahari Game Reserve, (CKGR) called the Lesedi and Mamba areas, where they are apparently currently operating their ongoing gas project. Their 2013 report shows the position better, and we overlaid it onto the Botswana map here, so you can see where in the lower right of the CKGR. At the US Government Survey, they map exact earthquake locations worldwide with precision. According to their latest calculation, the tremor which shook much of the subregion this week is underneath the gas well drill sites where Tlou has been operating for at least the last five years.

 Nigerian oil output slumps to 1.676 mil b/d in March: ministry - Oil | Platts News Article & Story: Nigeria's crude oil and condensate production averaged 1.676 million b/d in March, a fall of over 200,000 b/d from the previous month, the country's petroleum ministry said Tuesday. The ministry said the country's oil output was 1,676,045 b/d in March, down from around 1.9 million b/d in February, but it did not provide the reason for the sharp month-on-month fall. However, sources close to the matter said output was down mainly due to maintenance at the Bonga field, which averages around 150,000-200,000 b/d. Shell said in early-March that Bonga production would be shut in for about four to five weeks due to turnaround maintenance and engineering upgrades at the Bonga floating, production, storage and offloading (FPSO) vessel. Nigerian oil production still remains sharply below its capacity of 2.2 million b/d, with the main export grade Forcados still shut in. But Nigerian oil output has recovered gradually this year as militant attacks have fallen substantially since early January after the government stepped up peace talks with leaders and youths in the Niger Delta to end militancy in the region.

Qatar restarts development of world's biggest gas field after 12-year freeze | Reuters: Qatar has lifted a self-imposed ban on development of the world's biggest natural gas field, the chief executive of Qatar Petroleum said on Monday, as the world's top LNG exporter looks to see off an expected rise in competition. Qatar declared a moratorium in 2005 on the development of the North Field, which it shares with Iran, to give Doha time to study the impact on the reservoir from a rapid rise in output. The vast offshore gas field, which Doha calls the North Field and Iran calls South Pars, accounts for nearly all of Qatar's gas production and around 60 percent of its export revenue. "We have completed most of our projects and now is a good time to lift the moratorium," QP Chief Executive Saad al-Kaabi told reporters Monday at Qatar Petroleum's headquarters in Doha. "For oil there are people who see peak demand in 2030, others in 2042, but for gas demand is always growing." The development in the southern section of the North Field will have a capacity of 2 billion cubic feet per day, or 400,000 barrels of oil equivalent, and increase production of the field by about 10 percent, when it starts production in five to seven years, he said. Qatar is expected to lose its top exporter position this year to Australia, where new production is due to come on line. The LNG market is undergoing huge changes as the biggest ever flood of new supply is hitting the market, with volumes coming mainly from the United States and Australia. President Vladimir Putin said on Thursday Russia aimed to become the world's largest LNG producer. The flurry of LNG production has resulted in global installed LNG capacity of over 300 million tonnes a year, while only around 268 million tonnes of LNG were traded in 2016, Thomson Reuters data shows. That has helped pull down Asian spot LNG prices by more than 70 percent from their 2014 peaks to $5.65 per million British thermal units (mmBtu). Qatar's decision to lift the moratorium on new gas development now could help the tiny Gulf monarchy maintain a competitive edge after 2020, when the global LNG market is expected to tighten.

Gas giants share OPEC's shale pain as US supply flows east -- OPEC isn’t the only decades-old energy hegemony being turned on its head by U.S. shale.Liquefied natural gas sellers from Qatar to Malaysia that dominated gas sales to Asia for years are facing the prospect of rising American exports. While less than 30 U.S. cargoes have landed in Asia, their effect was felt even before they arrived. LNG trade in 2016 jumped the most in five years, contract lengths were sliced in half in the past decade, and spot prices slumped more than 60 percent in the past three years.That means the global LNG titans gathering in Tokyo this week for Gastech are in the midst of the biggest shakeup since the industry was founded in the 1960s. Just as American crude is increasingly making its way to Asia, the world’s biggest oil market, the burgeoning armada of gas cargoes from the U.S. and elsewhere are poking holes in the financial system on which the industry’s multi-billion plants are funded.“As U.S. exports ramp up, we’re going to see even more flexibility with more people trying to buy and trade volumes. The old models of stable long-term contracts will really have to change,” said Zhi Xin Chong, a gas analyst for Wood Mackenzie Ltd. in Singapore. “We’ve already seen the impact of U.S. LNG on contract trends, with more destination flexibility coming into play.”Since the 1960s, when projects in Algeria and Alaska started chilling natural gas to temperatures colder than the dark side of the moon, the LNG trade was as simple as the industry’s engineering was complex. Energy companies borrowed heavily to develop gas fields and build liquefaction plants, and to pay off the debt they signed decades-long contracts with electric utilities to buy the fuel at a fraction of the price of oil. Now, with hydraulic fracturing lowering production costs, U.S. exporters are setting the price of LNG based on natural gas trades at Henry Hub in Louisiana. They’re also eliminating destination restrictions that require ships arrive at a specific port, which most previous contracts included, meaning traders can buy cargoes and flip them to whatever market needs them the most.

Global LNG trade reaches record 258 million mt in 2016: IGU -  Global LNG trade in 2016 reached a record 258 million mt, up 5% from 2015, according to the International Gas Union's 2017 World LNG Report published Wednesday. LNG trade expanded by an average of only 0.5% a year over the previous four years, the IGU said. Short- and medium-term LNG trade grew by only 0.56% in 2016 to 72.3 million mt, accounting for 28% of total trade. The report said: "the share of LNG traded without a long-term contract as a percentage of the global market has tapered off since 2013. Short and medium-term trade, as a share of total traded LNG, fell by 4%." This reflects partly the existence of long-term contracts for the new LNG capacity that has come on stream in the last 12 months, as well as the spike caused in short- and medium-term LNG trade in the aftermath of the 2011 Fukushima nuclear disaster in Japan and the later onset of drought conditions in Latin America. The increase in overall LNG trade can be attributed to a significant rise in new supply, said the IGU, owing to the start of exports from the US Gulf of Mexico and Australia Pacific LNG, among other projects. The report also notes significant rises in demand, most notably from Asian markets; China's LNG consumption rose by roughly 35% to 27 million mt in 2016, the report said.However, it also notes that some markets, including Japan and South Korea as the two largest, may have passed peak LNG demand as other forms of energy come to the fore. Total liquefaction capacity was put at 339.7 million mt/year in 2016, an addition of 35 million mt. The IGU estimates that 114.6 million mt of new capacity was under construction as of January 2017, indicating LNG supply will continue to rise rapidly in coming years.

LNG bunkering set to witness steady growth despite odds - As the marine industry gears up for stricter environmental regulations, particularly the upcoming 2020 global sulfur cap, attention turned once again to prospects for LNG as a marine fuel, with attendees of an LNG bunkering symposium in Japan assessing the merits and impediments in its uptake. Most LNG has no detectable sulfur, and LNG-fueled vessels' emission of particles and nitrogen oxide are considerably lower than that of vessels using other marine fuels. "I believe this momentum [for LNG-fueled vessels] is set to increase in the coming years," Michael Chia Hock Chye, managing director of marine and technology at Singapore's Keppel Offshore & Marine, said at the event. As of January 24, 99 LNG-fueled vessels operated globally, with 93 more in the order book and approximately 70 "LNG-ready" vessels on order, according to DNV-GL data shared at the event by a panelist. "These statistics are encouraging, as they show that ship-owners are beginning to adopt, or are considering adopting, LNG as their preferred fuel. As you know, it has been a chicken-and-egg situation, [with people pondering] which comes first, LNG ships or LNG bunkering [facilities]," he said. As ports in Europe and the US are embracing LNG as a marine fuel, Asian ports too are doing the same. Japan, for its part, has already done a feasibility study for the development of an LNG-bunkering hub at Yokohama port, located on the Pacific side.

LNG suppliers propose non-traditional contract ideas to improve flexibility - LNG suppliers Tuesday floated proposals for innovative supply contracts, including fixed-price term contracts and smaller-scale deliveries, to facilitate deal-making and to keep up with evolving market requirements. Tellurian Chairman Charif Souki, speaking at the Gastech conference in Tokyo, said his company planned to offer 7 million mt of LNG for five years, for deliveries starting in 2023, at a fixed-price of $8/MMBtu. The volumes would be supplied by the Tellurian's planned Driftwood LNG project in Louisiana and delivered into Japan. Souki claimed his proposal will "take the volatility out of the market." Regarding evolving structures that are non-price related, Woodside CEO Peter Coleman focused on reduced LNG contractual quantities. Coleman said this could include delivering to into "a small-scale market that will be serviced by smaller vessels," such as within Indonesia's archipelago.Alternatively, LNG deliveries into India could be in conventional-sized cargoes, which would then be broken down "almost at the port" and delivered to customers, he said. In turn, new liquefaction trains could become smaller scale and more commoditized, helping reduce their capital intensity, Coleman said. For example, he said, the next expansion train at Woodside LNG's Pluto LNG in Western Australia could be 1.5 million mt, a significant reduction from the original Pluto train's capacity of around 4 million mt/year.

LNG swap trades in Japan: A question of when, not if? -- Gone are the days when LNG procurement was relatively straightforward for Japanese utilities and security of supply concerns dominated everything else. Now the Japanese domestic gas and power retail markets are deregulating and global LNG demand and supply dynamics are shifting, with more focus placed on managing risks and ensuring profitability. The listing of Platts JKM™ swaps on the Tokyo Commodity Exchange (TOCOM), through the Japan OTC Exchange, JOE, from April 3 comes when price risk is at the forefront of Japanese minds.The question then may become how fast Japanese needs for LNG hedging will grow.The deregulation of Japan’s electricity and gas markets is slowly but surely progressing. Since April 2016 when Japan’s retail electricity market began opening up, new suppliers have gained about 3% of the market share as of October 2016, according to the Ministry of Economy, Trade and Industry (METI). For the power market for large-scale factories or commercial buildings, the first sector that was liberalized in 2000, new suppliers hold more than 10% of market share, according to the METI.Trading electricity is also gaining currency. Annual trade volume on Japan’s Electric Power Exchange (JEPX) from April 1 2016 to March 25, 2017, stood at 2.25 billion kWh, on its way to a record high since its inception in 2005. In the previous fiscal year 2015-2016 (Apr-Mar),  the annual volume was 1.54 billion kWh, according to JEPX.  Still, trading on the JEPX currently only accounts for 3% of the country’s overall power sales. METI plans to introduce a gross bidding system whereby Japanese incumbent power utilities are obliged to trade certain volume on the exchange starting from April 2017, as the METI tries to boost liquidity and aims for trade on the JEPX to represent 20% to 30% of overall sales volumes in the next  few years.

Seeking higher revenues, Saudi sets out stall for light crude | Reuters: Despite OPEC's oil output curbs, Saudi Arabia has been offering its customers more light crudes while cutting heavy grades, a trend that could increase as the kingdom wants to maximise revenue and needs more heavy oil to power its own refineries. This trend, if sustained, will impact refining margins particularly in Asia, and narrow the spread between light and heavy crude globally, industry sources and analysts said. That would be bad news for sophisticated refiners, which value heavy grades because the lower cost of such oil results in higher margins, and good news for older, simpler plants that generally need light, sweet crude. Saudi Arabia cut the April prices of light crude it sells to Asia for the first time in three months in an effort to shore up demand. The spread between Arab Light and Heavy was at $2.45 a barrel, the narrowest since September. Before the OPEC output pact, in mid-November 2016, Brent futures for delivery in June 2017 were trading at a premium of around $4 per barrel over Oman futures. That has since narrowed to around $1.25. The Organization of the Petroleum Exporting Countries, Russia and a number of other producers pledged to cut output by about 1.8 million barrels per day (bpd) from Jan. 1, the first curb in eight years, to boost prices and erode a glut. Saudi Arabia, the world's top oil exporter, accounts for some 40 percent of the pledged OPEC curbs and has reduced output by more than 500,000 bpd to slightly below 10 million bpd, with cuts concentrated mainly in medium and heavy grades.

Saudi Aramco Cuts Oil Pricing for Europe Where Russia Dominates -- Saudi Arabia lowered oil pricing for European customers, a sign the world’s biggest crude exporter is seeking to expand market share in the region dominated by Russia.State-owned Saudi Arabian Oil Co. lowered its official selling pricing for all grades to northwest Europe for the second straight month, along with all prices to the Mediterranean and some to Asia, against regional benchmarks. It raised the pricing of all sales to the U.S., it said Wednesday in an emailed statement.European oil demand posted two consecutive years of growth in 2015-16, something last seen in the mid 1990s, the International Energy Agency said in a March report. Saudi Arabia supplied 42.5 million metric tons of crude, natural gas liquids and refinery feedstocks to European nations in the Organisation for Economic Cooperation and Development last year, ranking fourth after the former Soviet Union, Norway and Iraq, according to IEA data.“European markets had been written off for a couple of years but now are seeing a decent size of demand growth,” Edward Bell, commodities analyst at Emirates NBD, said by phone from Dubai. “Holding on to that at the expense of pushing Russian barrels out will be quite important” to Saudi Arabia.Saudi Arabia’s pricing in Europe caught Russia’s attention less than two years ago before the two nations started talks to curb crude output. State-run Rosneft PJSC, Russia’s biggest crude supplier, in 2015 said the Saudis were “ dumping’’ in Europe to expand market share. There is a risk price wars may resume in Europe, raising the possibility the output cut agreement won’t be extended to the second half of this year, Rosneft said last month.Aramco cut the May pricing of Arab Light crude to northwest Europe by 45 cents a barrel from April, to a $4.35 discount to the benchmark. It cut Arab Light to Asia by 30 cents, to a 45-cent discount. The company was forecast to cut the Asia pricing by 35 cents a barrel, according to the median estimate in a Bloomberg survey of five refiners and traders.

Russian Siberian Light at lowest in over six months on low demand -  Russia's Siberian Light shed 30 cents/b over the past week to its lowest in over six months as a downturn in demand met an increasing length in the Siberian Light program in 2017. Siberian Light was assessed at Dated Brent minus 70 cents/b Tuesday, a level not seen since September 30 when the grade was last assessed lower at Dated Brent minus 90 cents/b. One cause of the price fall was the continuous rise in Mediterranean sweet crude supply with KazTransOil starting to ship Kashagan crude in the form of Siberian Light from the Russian port of Novorossiisk while, at the same time, demand for the grade was sluggish. Further, weakness in Urals loading out of the Black Sea port of Novorossiisk was said by one trading source to be a reason for the drop in differentials. "Chinese demand is not there for Urals in April and hence differentials for the heavier Russian crude slid. [That] also impacted buyers' willingness to pay for Siberian Light," the trading source said. Since December, the Siberian Light program has consistently been showing over 130,000 b/d being loaded onto Aframax vessels, up around 25,000 b/d from the average in 2016. According to trading sources, there are currently still four cargoes available to trade in April with the first three cargoes of the program having traded.

Iran struggles to expand oil exports as sea storage cleared | Reuters: Iran has sold all the oil it had stored for years at sea and Tehran is now struggling to keep exports growing as it grapples with production constraints, shipping and oil sources say. Since the easing of international sanctions in January 2016, Iran tried to make up for lost sales by releasing millions of barrels parked on tankers offshore. Tanker tracking and oil sources said Iran had sold its last stocks from the floating storage in the past two weeks. Much of the oil stored was condensate, a very light grade of crude. With no more stocks at sea, Iran has lost a vital resource that had propped up exports. "We do think that (floating storage) has been the primary cause of the boost in exports," Energy Aspects analyst Richard Mallinson said, adding that now floating storage had ended total exports of crude and condensate were likely to slip. "We see a very difficult path for Iran to raise crude output until it can get the Western expertise and investment back into the upstream, which has been notably slow to materialize," he added. After Western sanctions were eased, Iran's output jumped from about 2.9 million barrels per day (bpd) to about 3.6 million bpd in June. But it has barely risen since - fluctuating between 3.6 million and 3.7 million bpd - even though Iran fought hard with fellow OPEC members to be excluded from production cuts that came into effect on Jan. 1 and will last till June. The Organization of the Petroleum Exporting Countries pledged to reduce output by about 1.2 million bpd, but Iran was allowed a small increase to compensate for years of isolation. Yet it has produced less in the past three months than it was allowed.

More Chinese crude oil imports coming from non-OPEC countries -- China, the world’s largest crude oil net importer, increased the share of its crude oil imports from countries outside the Organization of the Petroleum Exporting Countries (OPEC) in 2016. Of the country’s 7.6 million barrels per day (b/d) of 2016 crude oil imports, 57% came from OPEC countries, led by Saudi Arabia (13% of total imports), Angola (11%), Iraq (10%), and Iran (8%). Leading non-OPEC suppliers included Russia (14% of total imports), Oman (9%), and Brazil (5%). While total crude oil imports from OPEC exceed those from non-OPEC sources, crude oil from non-OPEC countries made up 65% of the growth in China’s imports between 2012 and 2016. Recent Chinese import data, crude oil price spreads, and non-OPEC production trends suggest continued growth in non-OPEC countries’ share of China’s growing crude oil imports. China’s crude oil imports increased by 2.2 million b/d between 2012 and 2016, with the non-OPEC countries’ share increasing from 34% to 43% over the period (Figure 1). Since the beginning of 2012 through February 2017 (the latest month for which data are available), the market shares of three of the top four OPEC suppliers to China (Saudi Arabia, Angola, and Iran) fell when measured using rolling 12-month averages. Over the same period, however, market shares for China’s top four non-OPEC suppliers (Russia, Oman, Brazil, and the United Kingdom), increased. 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, while imports from the United Kingdom reached their all-time high of 0.2 million b/d in February 2017.

The End of OPEC is near - OPEC, which has far exceeded the average life of cartels, is on the brink of failure. Though cracks have been developing in the cartel since the start of the current oil crisis, the group has managed to stay together so far. Nevertheless, the success of the current OPEC deal for production cuts will decide its future as a cartel. A cartel is a group of like-minded producers, who act in concert—or collusion—to achieve a shared goal of increasing their profits by means of restricting supply, fixing prices, or destroying their competition by illegal means. The average life of the 20th Century cartels has been 3.7 to 7.5 years, according to various studies by Margaret Levenstein and Valerie Suslow. In the past two centuries, cartels have been able to influence prices by an average of 25 percent.Since its inception, OPEC has been fairly successful in boosting prices by various means. A few of the price increases, however, were due to reasons other than direct OPEC action, nevertheless benefitting their members. A cartel is able to hold its members only when it fulfills their objective of higher prices, which has not been the case with OPEC. The member nations will now look to fulfill their objective by cheating and acting individually, according to their requirement.Saudi Arabia, which was the leader of OPEC and the price setter of the world, is losing its clout in OPEC. Even in the current round of production cuts, most of the work is being done by Saudi Arabia, whereas the other members are shying away from their designated quotas.OPEC has far outlived the average lifespan of a cartel, but if the OPEC members don’t regroup and act together, chances are that the cartel will come to an end very soon.

Oil’s seaborne picture suggests Opec cuts taking effect --For traders trying to decipher if Opec’s output cuts are finally tightening the oil market, the evidence may lie out at sea.  Data provided to the Financial Times show that crude oil being shipped over the oceans or stored on supertankers has dropped by as much as 16 per cent since the beginning of the year, in a signal that supplies could be dropping faster than many in the market believe. Vortexa, an oil tracking start-up founded by BP’s former head of trading technology and a one-time JPMorgan commodity executive, says its numbers indicate Opec’s cuts with big producers like Russia have been clouded by a surge in US production that is not reflective of supplies in the rest of the world.“Water is where the market changes first,” said Fabio Kuhn, Vortexa chief executive and co-founder, who ran BP’s trading technology programme until 2015. “We think this is some of the first evidence that supply cuts are having a major effect.”Vortexa says its data show seaborne oil shipments on April 3 totalled 759.6m barrels of crude in transit from producers to refineries or storage farms, with an additional 52m barrels still held at sea on supertankers globally.That is down from 899.4m barrels in seaborne transit on January 1 when 78.4m barrels was also held in floating storage. The combined total from April 3 is also down by 17 per cent from the same day a year ago, suggesting the supply drop is more than just a seasonal fall, despite many refineries carrying out maintenance in the spring months.For the data analysis, Vortexa defined floating storage as any laden tanker stationary for seven days or more.While seaborne shipments and storage do not capture the entirety of the 98m-barrel-a-day oil market, as it excludes pipeline flows and production that goes straight from the wellhead to refineries or on land storage, it does cover a significant percentage.Although the supply cuts agreed last November only total 1.8m b/d, or about 2 per cent of global supplies, the producers taking part are some of the world’s biggest exporters, with the majority of their crude sent by sea. Saudi Arabia, Opec’s largest producer, ships roughly three-quarters of its near 10m b/d oil supplies by tanker.

Hedge funds square up most of their former record bullish position in oil: Kemp (Reuters) - Hedge funds have continued liquidating their large bullish position in crude amid doubts about the pace and timing of any rebalancing in the oil market.Hedge funds’ net position in Brent and WTI has been cut to 642 million barrels, down from a record 951 million barrels on Feb. 21 (http://tmsnrt.rs/2nvXl0M).The spread of risks between further long liquidation and new short covering now looks more balanced than at any point since OPEC’s production deal was announced at the end of November.Hedge funds and other money managers cut their net long position in the three major futures and options contracts linked to Brent and WTI by a further 41 million barrels in the week to March 28.Fund managers have cut their net long position for five consecutive weeks by the equivalent of 309 million barrels, according to an analysis of records published by exchanges and regulators (http://tmsnrt.rs/2nvXjWI).Managers have reversed more than half of the extra 529 million barrels of net long positions accumulated between the middle of November and the middle of February.Hedge funds have cut long positions by 170 million barrels over the last five weeks while adding 139 million barrels of extra short ones.The result is that the ratio of long to short positions in Brent and WTI has fallen to 3.7:1, down from a recent high of 10.3:1 on Feb. 21 (http://tmsnrt.rs/2nvHjUK).The build up of a record concentration of hedge fund long positions prior to Feb. 21 became a major downside risk to oil prices in January and February (“Hedge fund positioning in oil looks stretched”, Reuters, Feb. 7). The liquidation of long positions and establishment of fresh shorts likely contributed to the sharp drop in oil prices starting on March 8.But by the end of March 28, the previous congestion of hedge fund long positions in the oil market seems to have dissipated.The squaring up of positions coincided with an easing of persistent selling pressure, with Brent and WTI prices staging a modest recovery from March 28 through March 31 (http://tmsnrt.rs/2n3ZlCa).With most but not all long positions liquidated, and a moderate number of short positions already in the market, the outlook for oil prices now appears more balanced than at any time in the last three months.

One of the world's best-known oil traders is predicting oil will recover to $70 a barrel -- Oil prices are not capped around $55 as is widely assumed but rather are on track to hit $70 per barrel later this year, according to Pierre Andurand, managing partner at Andurand Capital Management. We're currently at a crossroads from where oil prices should significantly rebound, Andurand told CNBC on the sidelines of an event Thursday evening where he was crowned the winner of the EMEA Investor's Choice Awards for 2017. "I think oil prices are likely to recover to around $70 … I think the market will switch to backwardation – sustainable backwardation – by late summer and that will bring the next wave in oil prices," he said, referring to the situation where nearer-term spot price oil contracts are more expensive than longer-dated forward contracts. Andurand is widely known for his bearish call on oil prices in the mid-2000s, delivered ahead of the drastic sell-off which saw WTI prices plummet from close to $150 in July 2008 to trade in the $30s a mere five months later. Hence why his switch from oil bear to oil bull has particularly caught the market's attention. Andurand worked up his position last year and said that while he has been surprised by the somewhat rangebound nature of trade so far in 2017 – indeed, during the first two months of this year his fund position suffered from being caught off-guard by this dynamic - he believes there is a solid explanation for why it will not persist. "U.S. shale producers have been hedging a lot of their production, capping prices, so the improvements in fundamentals were not priced in at all, but I believe that now when people will really see that inventories are going down fast, that eventually the fundamentals will win and prices will go higher," he suggested.

Is Gasoline Demand On The Rise? -- A common refrain one hears these days from market bulls and reads in long-term analyses is that by 2020, the current glut in supply and decline in prices will be reversed: that the current drought in exploration and capital investment in new production will send available supply plummeting, with a complimentary spike in prices. This was the prediction of a recent IEA report, which guessed that oil prices would reach $70 by 2020.Whether this reversal in the market occurs or not will depend in large part on global demand. In the United States, around 40 percent of crude is refined into motor fuel and gasoline, to feed the American people’s favorite gas-guzzlers.Crude prices picked up this week, rising above $50 thanks to signs that U.S. demand for refined products is strengthening. Higher-than-expected inventory drops, together with outages in Libya, pushed the oil price up. But can the American consumer, who is the single largest consumer of gasoline on the planet, keep the momentum going?According to numbers compiled by Bloomberg, U .S. gasoline demand is down from 2016 and consumption has fallen by 1.7 percent from last year, when prices cratered in January-February 2016 and gasoline could be had for $1.70 per gallon. Today gasoline prices are up in every US region according to the EIA by 20-30 percent, with diesel up as much as 50 percent.   Gasoline inventories hit their all-time high in February, topping out at 259.1 million barrels, according to EIA data. They’ve since declined about 8 percent, and are currently set to maintain the high levels reached in 2016. When crude oil stocks surged in early March, gasoline inventories went the other direction, posting the largest single draw-down in six years.Some are worried that gasoline demand may have peaked in 2016, where a record of 9.33 million barrels a day was hit, the highest level since 2007, followed by the sharp decline in January and February. Goldman sounded an alarm bell in February, when US inventories reached their record level and expected American gasoline demand dropped to its lowest point since 2012. The Goldman prognosis was chilling: “A 6 percent fall in US demand would require a US recession.”

Oil Traders Drain Hidden Caribbean Hoards as OPEC Cuts Bite --  During the oil price rout, islands in the Caribbean were exhibit A for the longest-lasting glut in three decades, with millions of barrels stored there. Now, that oil is flowing again, a sign the market is rebalancing. Since mid-February, between 10 million and 20 million barrels have left the Caribbean, according to estimates from traders who asked not to be named because their data is proprietary. The draw, hardly noticed by most in the market, reflects the impact of the output cuts orchestrated by OPEC and Russia. Low taxes and the Caribbean’s proximity to U.S. and Latin America oil centers have made it into one of the world’s largest oil storage centers, holding as much as 140 million barrels. While a lack of official data can make the area invisible to some, the information is key in framing a full picture of global supply and demand at a time of market uncertainty. "Caribbean and other storage has drawn down rapidly over the past weeks," said Amrita Sen, chief oil analyst at Energy Aspects Ltd., in a note to clients. "The first indications that the rebalancing has begun are here." On Sunday, Mohammad Barkindo, OPEC’s Secretary-General, said he remained "cautiously optimistic” the gap between supply and demand was starting to tighten. The Organization of Petroleum Exporting Countries and the 11 countries that agreed to trim production in the first half of the year are now weighing whether to extend the cutbacks to the end of 2017. West Texas Intermediate oil fell 0.7 percent to $50.24 a barrel in New York on Monday. Oil prices have fallen about 10 percent this year as crude stockpiles in the U.S. have since December grown by almost 55 million barrels to 534 million barrels, the highest since 1929.

Oil Jumps On Growing Support For OPEC Deal Extension -  Oil prices showed gains in recent days and held onto them to start off the week. There is growing confidence in an OPEC extension and also there are finally some signs that the market is tightening. The head of OPEC says that the production cuts from the cartel are starting to bear fruit. “I remain cautiously optimistic that the market is already rebalancing," OPEC’s Secretary-General Mohammad Barkindo told reporters Sunday in Baghdad. “We have started seeing stock levels coming down.” Investment bank UBS said in a recent report that the oil market is heading towards balance even after taking into account rising U.S. output. UBS says demand will soak up the excess supply, and as a result of a tighter market, oil could be heading towards $60 within three months. BNP Paribas also made a bullish call, expecting inventory drawdowns every quarter of this year. The bank says Brent could average $60 per barrel this year.  Pierre Andurand of Andurand Capital Management expects oil to hit $70 before the end of the year. "I think oil prices are likely to recover to around $70 … I think the market will switch to backwardation – sustainable backwardation – by late summer and that will bring the next wave in oil prices," he said on CNBC. His switch from bearishness to bullishness is notable, given his track record at successfully predicting some previous swings in the market.   The FT reports that the volume of oil moving on tankers at sea has declined by 16 percent so far this year compared to a year earlier, a sign that the OPEC cuts are having a tangible effect. The rise of U.S. shale output could be distracting from a tighter market in the rest of the world. “Water is where the market changes first,” Fabio Kuhn, CEO of Vortexa, an oil tracking company. “We think this is some of the first evidence that supply cuts are having a major effect.”   U.S. crude inventories are at record levels, but that is not reflective of global conditions. Bloomberg reports that oil storage in the Caribbean has seen inventories decline by between 10 and 20 million barrels since mid-February. This can be interpreted as another sign of a tightening market.  Iraq said that it cut production to 4.46 million barrels per day in March, taking output down closer to its promised target. The reduction puts Iraq close to 98 percent compliant with the 4.351 mb/d it pledged to reach over the course of the six-month deal. The cuts made by Iraq – one of the biggest laggards on the OPEC deal – will boost confidence in the group’s cooperation. It could also build trust in the run up to negotiations over a six-month extension.  The unexpected outage of 252,000 bpd of Libyan oil production last week sent a jolt through the oil market, providing some unanticipated bullishness. But one of the disrupted fields brought 120,000 bpd back online by Monday, deflating some of the confidence around prices.

WTI/RBOB Slide Despite Biggest Crude Draw Since 2016 -- With oil surging back above $51 on hopes of a seasonal inventory drawdown, tonight's API data showed a bigger than expected draw in crude (biggest since 2016 and gasoline. The reaction was a kneejerk higher in WTI as RBOB slipped lower, but amid a big build at Cushing (+1.3mm), WTI also slipped. API:

• Crude -1.8mm (-150k exp)
• Cushing +1.3mm
• Gasoline -2.6mm (-1.75mm exp)
• Distillates -2mm

Biggest draw of 2017 for crude but Cushing saw a notable build...

Tanker Traffic Points At Much Tighter Oil Markets - Oil prices have rallied more than 6 percent since last week, which has largely been attributed to growing confidence in a six-month extension from OPEC combined with a temporary outage in Libya and slightly better numbers from the EIA regarding refined product inventories. It still seems that the oil market is woefully oversupplied, but there are growing bits of evidence that when stitched together, start to resemble a market on the mend.For example, the Financial Times reported that seaborne oil tanker traffic is down this year by 16 percent, a sign that the OPEC cuts are showing up at sea. Not all oil is traded at sea, obviously – some is shipped via pipeline or moved directly from the wellhead to refineries, processing facilities or storage. But such a drop off in the volume of oil moved at sea suggests that the supply cuts are being felt in the market.It may seem curious then that oil investors are not picking up on this fact but Vortexa, an oil tracking firm, told the FT that the record high levels of inventories in the U.S. are probably disguising tightening conditions elsewhere. That is compounded by the fact that the U.S. provides the most thorough and timely data, while data tracking is much trickier elsewhere. That results in the U.S. having an outsized impact on the market narrative.Vortexa says their data suggests that a fall in maritime trade this year is evidence of a tightening market. “Water is where the market changes first,” Fabio Kuhn, Vortexa CEO, said in an interview the FT. “We think this is some of the first evidence that supply cuts are having a major effect.” Another small piece of evidence of a tightening global market can be found in the Caribbean, where oil inventories have already declined substantially. Bloomberg reports that crude inventories at Caribbean storage facilities have dropped by 10 to 20 million barrels over the past month and a half, a development that oil traders attribute to the OPEC cuts. Overlooked by the market until now, the drawdown suggests global supplies are moving closer to balance. "Caribbean and other storage has drawn down rapidly over the past weeks," Amrita Sen, chief oil analyst at Energy Aspects Ltd., wrote in a research note. "The first indications that the rebalancing has begun are here."

 WTI/RBOB Tumble After Surprise Inventory Build Sends Crude Glut Back To Record High -- Following last night's API-reported unexpected draw in crude, the energy complex was on a tear heading into the DOE data... but that ended quickly with a surprise build in crude and smaller than expeccted draws in gasoline and distillates. WTI/RBOB are notably lower on the data. Another rise in production further stressed markets. DOE

• Crude +1.566mm (-150k exp)
• Cushing +1.413mm
• Gasoline  -618k (-1.975mm exp)
• Distillates -536k

Product stocks have been falling consistently since the beginning of February, but the surprise crude buuld shocked markets after last night's API print.

 Oil eases off one-month high on surprise rise in US crude stockpiles: Oil prices eased from one-month highs on Wednesday, as a surprise increase in U.S. crude inventories to a record high offset support from an outage at the largest UK North Sea oilfield. Prices rose early, then turned negative after the U.S. government reported a weekly rise in crude inventories of 1.6 million barrels. Analyst had expected a decrease of 435,000 barrels, and the build reported by the Energy Information Administration came as a double surprise after an industry group had reported a draw. "The crude build caught the market leaning the wrong way. Crude exports dropped to 575,000 bpd this week, versus over 1 million bpd last week," said David Thompson, executive vice-president at Powerhouse, a commodities-focused broker in Washington. "The selling most likely includes a fair number of sell stops being hit." Brent crude had risen 22 cents to $54.39 a barrel by 2:34 p.m. ET (1834 GMT), having earlier risen to $55.09, its highest level since March 8. U.S. crude settled Wednesday's session 12 cents higher at $51.15, after hitting a session peak of $51.88. U.S. gasoline prices fell into negative territory and heating oil futures pared gains as EIA reported less-than-expected decreases in gas and distillate fuel oil inventories. Oil prices had risen early after the American Petroleum Institute reported late on Tuesday that inventories fell by a more-than-expected 1.8 million barrels last week. "Yesterday's API report gave the market a bullish head-fake via three chunky draws, hence a build to crude stocks and minor draws to the products is causing a tempering of bullish optimism,"

Information asymmetry bedevils the oil market - Reliable and timely data on US oil inventories contrasts with patchy information elsewhere. - Opec’s biggest problem is that in its tug of war with US shale no one really knows for certain which is winning. The oil cartel last year appeared to capture a major victory by corralling some of the world’s biggest producers to join it in cutting output to finally end a near three-year-old oil glut. But four months on, despite trumpeting figures suggesting the group has adhered more rigidly to its cuts than ever before, the crude price is still stuck near $50 a barrel. The issue for the cartel is not just one of a resurgent shale industry propelling US crude inventories to record levels, but an information asymmetry that gives the US an outsized importance to traders beyond its status as the world’s largest oil consumer. The US is the only country where close to real-time information is freely available on the state of oil inventories, due to the government’s decision to fund the Energy Information Administration after the first Arab oil embargo of the 1970s. Weekly and monthly reports published by the EIA have for years been a lodestar for traders navigating an otherwise opaque market. But as surging US production has made the country less reliant on oil imports — and fast-expanding emerging markets such as China and India become the dominant centres of oil demand growth — the focus on the gold standard data of the US may mask the reality of what is happening to the oil market beyond its shores. US stockpiles may be rising as supplies there grow, with cheap and abundant land-based storage also luring international customers. Elsewhere the market is starting to tighten, many traders believe. Now, short of every major oil importer outside the US deciding they have the money to fund an EIA equivalent, from cash-strapped European nations to transparency phobic states in Asia, the issue is not easily resolved.

 Saudi crude price cut to add to Asia light oil glut: Russell | Reuters: Saudi Aramco's decision to cut prices for lighter grades of oil for customers in Asia is a sign of just how seriously the world's top crude exporter is taking its battle with U.S. shale and other producers outside last year's move to cut output. The Saudi Arabian state oil company lowered the official selling price (OSP) of its benchmark Arab Light grade by 30 cents a barrel for May cargoes destined for Asia, which buys about two-thirds of the kingdom's exports. This took the OSP to a discount of 45 cents a barrel to the regional benchmark Oman-Dubai. It was the second straight month that Aramco cut the price, even though the Saudis are the major player in the agreement between producer group OPEC and its allies to cut output by 1.8 million barrels per day (bpd) in the first six months of the year. Aramco also reduced the OSP for its Arab Extra Light grade by 35 cents a barrel to a premium of 60 cents over Oman-Dubai for May-loading cargoes for Asian customers, and for Super Light by 20 cents. In contrast, the OSPs for Arab Medium and Heavy were left unchanged. It's worth noting that Arab Light isn't actually a light crude in the mould of global benchmark Brent, as its API gravity of 32-33 degrees makes it a medium grade, compared with Brent's light 38.3 degrees. But Arab Extra Light and Super Light are more directly comparable to Brent, and they both saw price reductions. It's appears that Aramco, mainly a producer of medium to heavy grades, is responding to the light grades of crude swamping Asian markets as U.S. producers ramp up shale output and West Africa increases production.

 Oil, gold jump as missile attacks on Syria trigger safe-haven rush - Crude oil prices surged more than 2% in Asian trade Friday as jittery investors, fearing potential supply disruptions, stepped up purchases after the US launched missile attacks on Syria, while gold surged more than 1% with investors queueing up for safe-haven assets. The US fired a barrage of cruise missiles at Syria following this week's chemical weapons attack in the country as Washington intensified its efforts to mobilize a coalition to remove Syrian leader Bashar al-Assad. "In the short term, oil prices could spike due to potential short squeezes from geopolitical risks, especially ahead of Friday's US non-farm payroll data," Gordon Kwan, head of oil and gas research at Nomura, said in a research note.About 60 US Tomahawk missiles, fired from warships in the Mediterranean Sea, targeted the airbase in Syria, according to media reports. "Iran and Russia are big supporters of [Syrian President] Bashar al-Assad. There might be retaliation in the form of them cutting off supplies," OANDA senior market analyst Jeffrey Halley said in a report. "There is an implied potential threat to supplies from the Middle East. Most of the crude comes from there. I expect WTI and Brent to remain very well elevated," he added. Following news of the US missile attack, crude futures soared in Asia. At 11:37 am Singapore time (0337 GMT), the ICE June Brent crude futures were up 80 cents/b (1.46%) from Thursday's settle to $55.69/b, while the NYMEX May light sweet crude contract was 86 cents/b (1.66%) higher at $52.56/b. Front-month ICE Brent hit an intra-day high of $56.08/b following the news, while NYMEX light sweet crude contract rose to $52.94/b.

OilPrice Intelligence Report: Geopolitical Risk Is Back: Oil Up On U.S. Airstrikes: The U.S. launched airstrikes on a Syrian airbase late Thursday in response to the alleged use of chemical weapons by the Syrian government. The attacks come despite comments as recently as last week from the Trump administration that removing Syrian President Bashar al-Assad was not a priority. Secretary of State Rex Tillerson is scheduled to meet with his Russian counterpart in Moscow next week amid deteriorating U.S.-Russian relations. Syria produces only marginal volumes of oil, some of which has been under ISIS control. Nevertheless, due to its proximity to Iraq, a widening of the military conflict could induce a higher risk premium on oil prices. If action from the U.S. is limited to these airstrikes, oil prices won’t be affected much, but the upside risk is there if the U.S. gets more involved. WTI and Brent jumped to one-month highs on the news.  Iran will struggle to grow its exports from current levels without large levels of new investment and technology from international companies, according to Reuters. Iran succeeded in ramping up exports last year, but much of those gains came from emptying out storage that had built up after years of sanctions. Iran resorted to stashing oil on tankers in the Persian Gulf when sanctions were tightened in 2012, and had amassed 40 million barrels of oil on the eve of the removal of sanctions. That provided an injection of cash in 2016. Iran was able to boost output from 2.9 mb/d to 3.6 mb/d by last summer but then output flattened out. "Iran needs billions of dollars of investment to boost crude oil production and natural gas capacity," . "Most of the fields were discovered many decades ago and are way beyond their production capacity," he said.  Saudi Arabia has long maintained a fixed currency peg, but low oil prices have forced the government to burn through foreign exchange in order to keep up government spending and keep the currency stable. Cash is down to about $500 billion from a peak of $737 billion in 2014. The rate of decline is worrying although not yet a crisis. 

US oil rig count rises for 12th straight week - US drillers added oil rigs for the 12th consecutive week, taking the number of active oil rigs to 672 — a 90 per cent increase from a year ago and the highest level since August 2015.US oil producers brought 10 oil rigs back online last week, oilfield services company Baker Hughes said on Friday. Drillers have now added oil rigs every week this year barring one.Crude prices — which have been rallying today on supply disruption fears after the US launched a missile strike against Syria — held onto their gains following the report.Brent crude, the global benchmark, is trading 0.6 per cent high at $55.12 a barrel, down slightly from the $55.31 a barrel it was trading at ahead of the release. West Texas Intermediate is u p 0.9 per cent at $52.17 a barrel.

BHI: Seasonal Canadian drilling dive pushed down global rig count in March - Oil & Gas Journal -- The average worldwide rig count for March fell by 42 month-over-month to 1,985, but remained up 434 units compared with the March 2016 total, according to Baker Hughes Inc. data. The first decline in 10 months primarily reflected Canada’s 89-unit month-over-month drop to an average of 253, which is still up 165 year-over-year. The country’s average count went from 42 in May 2016 to 342 in February. The dramatic fluctuations in Canadian drilling throughout the course of a year primarily relate to weather and resulting road closures. During the spring, road restrictions are put into place as snow and ice thaw, limiting movement of rigs, accompanying equipment, and field personnel. Benefitting from a warmer year-round climate, the US continued a steady climb that began in May 2016 with a 45-unit month-over-month increase in March to 789, up 311 year-over-year. Europe was the only other region to shed rigs during March, losing 13 units to 94, down 2 compared with its March 2016 total. Turkey led the way with a 6-unit drop to 23, down 5 year-over-year. Offshore UK relinquished 3 units to 8, down 1 from its year-ago total. The Netherlands lost both of its active rigs. Asia-Pacific gained 2 units during the month to 198, up 15 year-over-year. India rose 2 units to 117, up 14 year-over-year. Africa increased 3 units in March to 80, down 11 year-over-year. Nigeria increased 3 units to 10, up 2 year-over-year. The Middle East climbed 4 units during the month to 386, down 11 year-over-year. Egypt jumped 7 units to 30, down 1 year-over-year. Iraq rose 3 units to 43, down 5 year-over-year. Kuwait, meanwhile, decreased 5 units to 54, still up 13 year-over-year. Latin America led all regions outside the US with a 6-unit March rise to 185, down 33 year-over-year. Argentina gained 4 units to 58, down 10 year-over-year. Mexico rose 2 units to 18, down 9 year-over-year. Brazil increased 2 units to 16, down 12 year-over-year. Colombia, meanwhile, dropped 3 units to 19, still up 15 year-over-year.

BHI: Permian leads 15-unit jump in US rig count - The US drilling rig count’s surge continued during the week ended Apr. 7 with another 15-unit increase, according to Baker Hughes Inc. data. Twelve of those units started up in the Permian basin.The overall count has now risen by double-digits 10 times during its 12-week streak of gains (OGJ Online, Mar. 31, 2017). At 829 rigs working, the count is up 443 units year-over-year and 425 units since the bottom of the drilling downturn on May 20-27, 2016.US oil-directed rigs gained 10 units for the second straight week to 672, up 354 year-over-year and 356 since May 27, 2016. Gas-directed rigs increased 5 units to 165, up 84 since Aug. 26, 2016. Two rigs considered unclassified remained active this week.US crude oil production is climbing alongside the rig count and is now on the cusp of 9.2 million b/d, according to data from the US Energy Information Administration. Output gained 52,000 b/d during the week ended Mar. 31, with 40,000 b/d coming from the Lower 48 and 12,000 b/d from Alaska.All 15 of the rigs added this week are land-based, bringing that tally to 813. Horizontal drilling rigs rose 10 units to 695, up 381 since May 27. Directional rigs edged up a unit to 71. Offshore rigs remain at 22, while the count of rigs drilling in inland waters stood still at 4.  The Permian received yet another boost with a 12-unit increase to 331, up 197 since May 13. Texas, however, gained just 7 units, bringing its tally to 418, up 245 since May 27. The Granite Wash lost 4 units to 10, and the Eagle Ford edged down a unit to 72, still up 43 since June 3.Recently surging Oklahoma added 4 units to bring its count to 122, up 68 since June 24. The Cana Woodford gained 2 units to 50, up 26 since June 24. The Arkoma Woodford edged up a unit to 10. The Mississippian rose 2 units to 8. Wyoming increased 2 units to 18. Louisiana, New Mexico, and West Virginia each edged up 1 unit to reach 60, 51, and 12, respectively. The Marcellus also added 1 unit and now totals 45, up 24 since Aug. 12. Alaska was the only state to post a decline, edging down a single unit to 7.Canada’s dive continued this week by shedding 23 units to 132, up 41 units year-over-year. Oil-directed rigs dropped 13 units to 42, while gas-directed rigs decreased 10 units to 90.

Oil rises after U.S. missile strike in Syria, weekly gain 3 percent | Reuters: Oil prices rose on Friday, trading near a one-month high and closing the week up 3 percent after the United States fired missiles at a Syrian government air base, raising concern that the conflict could spread in the oil-rich region. The toughest U.S. action yet in Syria's six-year-old civil war has heightened geopolitical uncertainty in the Middle East. This supported oil futures, along with signs of higher U.S. demand. "It's back to the old adage of don't go home short the weekend," said Carl Larry, oil and gas consultant at Frost and Sullivan. "There's a lot going on here: Syria and talks with China." Larry noted that many in the market also believe Venezuela could be producing below reported levels. "Venezuela could turn out to be another Iraq where they say they've been pumping 1.5 million bpd and it turns out to be nothing. It could get ugly, and markets could jump quickly." The market shrugged off a report showing U.S. drillers added oil rigs for a 12th straight week to cash in on a recovery in crude prices. Oil drillers increased the number of active oil rigs by 10, according to Baker Hughes. [RIG/U] Although Syria is not a major oil producer, any escalation of the conflict feeds fears about oil supplies due to the country's location and alliances with big oil producers in the region. Brent crude futures settled up 35 cents at $55.24. Brent reached a session high of $56.08, the highest since March 7, shortly after the U.S. missile strike was announced. For the week, Brent was up 4.4 percent. U.S. West Texas Intermediate (WTI) crude futures were up 54 cents at $52.24 a barrel, off the session high of $52.94.

If Saudis Extend Oil Cuts, Will Russia Agree? - Saudi Arabia and some Gulf State oil producer-allies appear likely to extend the six-month oil production cut that expires in June, according to SGH Macro Advisors. But will Russia agree?  SGH writes that Russia appears to be complying with agreed-to production cuts, which have kept prices closer to $50 per barrel, rather than the $60-plus hoped. But Russia is not a member of the Organization of Petroleum Exporting Countries and in February, oil-production cuts among non-OPEC producers including Russia stood at 64% compliance while OPEC members were at 106% compliance. Iraq has also lagged in compliance too, according to SGH. OPEC ministers will meet in Vienna on May 25 to decide what’s next. CEO Sassan Ghahramani and senior analyst Kevin Muehring write:“We understand Saudi oil policy officials have reaffirmed the Kingdom and its key Gulf oil producing allies are highly likely to extend the Vienna agreement on output cuts for another six months, and stand ready to cut output by more in the second half of this year.But the Kingdom is putting the onus for extending the Vienna agreement entirely on Russia: the Saudi and Gulf Cooperation Council commitment is conditional on clear evidence Russia has reached at least 250,000 barrels per day of the promised 300,000 barrels per day in output cuts by the time of the next meeting of the five-nation joint technical committee on April 21 … Riyadh sees its alliance with Moscow on oil policy as a cornerstone to its efforts to stabilize oil prices at a $50 to $60 target range over the medium term. But Saudi officials are nevertheless becoming increasingly frustrated with how Russia seems to be dragging its feet on meeting their commitments … Iran has affirmed it will adhere to a production cap of 3.8 million barrels per day, which the Saudis took as an important statement of intent. Saudi and Iranian cooperation on oil policy seems to be already spilling over into a thaw in diplomatic relations, such as the opening of the hajj to Iranian pilgrims this year …”

Saudi Arabia Vs. Russia: The Next Oil Price War International oil markets could be heading towards a new war, as leading OPEC and non-OPEC producers are vying for increased stakes. The unexpected cooperation between OPEC and non-OPEC countries, instigated by the full support of Saudi Arabia (OPEC) and Russia (non-OPEC) has brought some stabilization to the crude markets for almost half a year. The expected crude oil price crisis has been averted, it seems, leaving enough room when looking at the fundamentals to a bull market in the coming months. As long as Saudi Arabia, Russia and some other major producers (UAE, Kuwait), are supporting a production cut extension, financials will be seeing some light at the end of the tunnel.The effects of the 2nd shale oil revolution, as some have stated, have been mostly mitigated by a reasonably high compliance of OPEC and non-OPEC members to the agreed upon cuts, while geopolitical and security issues have prevented Libya, Iraq, Venezuela and Nigeria, from entering with new volumes. Stabilization in the crude oil market, as always, is not only fundamentals but also geopolitics and national interests. The latter now could also be the main threat to a successful extension of the OPEC production cuts in the coming months.Fears are growing that OPEC’s leading producer, Saudi Arabia, is no longer happy with the overall effects it is generating by taking the brunt of the production cuts, while at the same time, other OPEC members, such as Iran and Iraq, are looking at production increases. Saudi Arabia’s other main rival Russia is also not sitting idle. Even if Moscow is still fully behind the official production cuts, Russian oil companies have been aggressively fighting for additional market share in Saudi Arabia’s main client markets, China, India and even Japan. Iraq and Iran, in contrast to what was expected, have been cutting away share in Europe. Threatened by its own successful agreement, Saudi Arabia is now feeling the heat on all sides.Some analysts are even proponing a doomsday scenario, implying that Riyadh has lost its grip on the largest oil markets. U.S. shale oil is increasing its market share, while addressing European options at the same time. Russia, Iran and Iraq have been pushing for market share in Asia, while taking up Saudi share in Europe. Until now, Saudi officials such as minister of petroleum, Khalid Al Falih, and Aramco’s Nasser, have been keeping quiet. No real hardline stance has been publicized until now by the OPEC leader. This could however change dramatically if recent indicators are correct.

OPEC's No.2 Goes Rogue: Plans 600,000 Bpd Oil Output Increase - Iraq has plans to boost its crude oil production by 600,000 bpd to 5 million bpd by the end of this year, regardless of its participation in OPEC’s production cut deal. Iraq is the cartel’s second-biggest exporter of crude and has been the most disinclined of all parties to the agreement since its inception, with a lot of observers expecting it to be the first one to cheat.Iraq’s first problem is that as much as 95 percent of its budget revenues come from crude oil. There are no viable alternatives in sight for revenues at the moment. The second problem that the country has to contend with is its war with Islamic State, which makes these revenues more important than ever.Amid the final push against IS in Mosul, Iraq is working hard to ensure the sustainable growth of its oil and gas industry—OPEC deal or no OPEC deal. Three months ago, Oil Minister Jabar al-Luaibi said that Baghdad is planning to build five new refineries on an investment basis, in addition to fixing and expanding existing refineries that were damaged in the war with IS.While Al-Luaibi has repeatedly assured media - and indirectly, investors - that Iraq will stick to its OPEC commitment, Iraq is doing whatever it can to boost its returns from its only significant natural resource.As part of these efforts, the government recently started a review of the contracts it has with foreign oil companies operating local fields in a bid to better match its interests to those of the operators. Currently, international oil companies in Iraq are working under the so-called technical service contracts, which a few years ago, forced them to reduce production from some of the country’s biggest fields because Baghdad had no money to pay them for operating the fields.Baghdad is also cooperating with Tehran to make the most of the oil finds that the two neighbors share. Bilateral relations have been uneven historically but now that both Iraq and Iran are scrambling with their respective problems, a partnership has emerged as the mutually beneficial way to proceed. It is also strengthening its ties with other neighbors and farther countries such as Egypt, European Union members, and the U.S. A 600,000-bpd production increase would be substantial, but Al-Luaibi did not disclose the source of this increase. Huge fields such as West Qurna, Rumaila, and Majnoon are nowhere near depletion, so Iraq could significantly boost production in these fields.

The $2tn Saudi Aramco question - Its backers expect a valuation of $2tn. Even a partial slice of its business is likely to add up to the biggest ever initial public offering. And as a byproduct, it offers the prospect of a glimpse into the inner workings of one of the world’s most closed societies. The part privatisation of Saudi Aramco, Saudi Arabia’s national oil company, is causing a huge stir well beyond the energy market and the offices of bankers and lawyers vying for contracts. A $2tn valuation would be equivalent to two-thirds the size of the London Stock Exchange, one of the markets on which Aramco may list. And it would make Aramco more than twice the size of Apple, the world’s biggest company. But that $2tn figure is hard to believe. The company has disclosed very few financial details and its annual report lacks figures such as group sales or profits. Instead an FT analysis points to a valuation roughly half that size, reflecting the difficulties faced by the Saudi authorities in selling even a sliver of Aramco on international markets, given the company’s complex structure, its unique and sensitive role in the country and the legal issues that will surround its planned listing. That is even without looking at the question of how much oil actually lies beneath the desert kingdom’s sands. Mohammed bin Salman, the kingdom’s deputy crown prince and the power behind the throne of his father, King Salman, revealed the IPO idea in January 2016. It was initially proposed as a sale of just 5 per cent of Aramco, with perhaps more to follow, and came as a response to falling crude prices which have damaged the oil-dependent Saudi finances and accelerated the drive to diversify the economy.  The kingdom needs to shrink its enormous fiscal deficit of $75bn, well over a tenth of gross domestic product last year. In the five years to 2015, the government exceeded its budgeted expenditures by a quarter on average. Even with a recovery in oil prices to about $50 a barrel this year, the country will struggle to close that gap.  Privatising Aramco is the first step in rebalancing the economy. By disentangling the company, which accounts for more than two-thirds of government revenues, from the state, Prince Mohammed hopes to make Riyadh less oil-reliant, while providing capital for investment in new industries, ranging from technology, where it is pumping $45bn into the SoftBank Vision Fund, to mining. The privatisation of its national champion is crucial to this process.

Congress Members Call Out Trump for Violating War Powers as He Considers Pushing Yemen Into Famine -- The White House is scheduled to consider this week a proposal from Defense Secretary Jim Mattis to directly engage the US military in Saudi Arabia's war against the Houthis in Yemen, including a planned United Arab Emirates attack on the port of Hodeida.  On Friday, March 31, the UN special envoy for Yemen warned against a military attack on Hodeida: "We as the United Nations are advocating that no military operations should be undertaken in Hodeidah." He warned that military action on the port could "tip the country into famine," according to Bloomberg Government. Former US officials have also warned that this attack could push Yemen into famine: There was an internal debate over the final year of the Obama administration about whether the United States should support potential future efforts by the coalition to take the Hodeidah port, but ultimately the administration decided against it, said Jeremy Konyndyk, a former top USAID official. "From USAID's perspective, we thought the US should strongly oppose this," Konyndyk, the former director of USAID's Office of Foreign Disaster Assistance, told Al-Monitor. ... He said, "From our point of view, it would be disastrous in terms of humanitarian impact if the coalition were to disrupt the aid pipeline and commercial pipeline that moves through that port. ... The view that we had at AID -- among AID leadership -- was that if that port were to be lost, it would likely be enough to tip the country into famine," Konyndyk warned. As Senate Foreign Relations Chair Bob Corker recently affirmed, US participation in this war has never been authorized by Congress: "Certainly engaging in a war against a group outside of ISIS [the Islamic State] is a step beyond the current authorization," Corker told Al-Monitor.

Trump Administration Stops Disclosing Iraq And Syria Troop Deployments In Bid To "Surprise" ISIS --The Trump administration has stopped disclosing material information about the size and nature of the U.S. commitment to military action in Iraq and Syria, including the number of U.S. troops deployed in either country, in a bid to "surprise" the Islamic State with the number of US troops in the region the LA Times reports.Earlier this month, the Pentagon quietly dispatched 400 Marines to northern Syria to operate artillery in support of Syrian militias that are cooperating in the fight against Islamic State, according to U.S. officials. That was the first use of U.S. Marines in that country since its long civil war began. In Iraq, nearly 300 Army paratroopers were deployed recently to help the Iraqi military in their six-month assault on the city of Mosul, according to U.S. officials.The decision appears to be making good on Trump’s promise as a candidate to insist on more of an “element of surprise” in battle tactics.“In order to maintain tactical surprise, ensure operational security and force protection, the coalition will not routinely announce or confirm information about the capabilities, force numbers, locations, or movement of forces in or out of Iraq and Syria,” said Eric Pahon, a Pentagon spokesman.While neither of those deployments were officially announced prior to their implementation, Gen. Joseph Votel, the top US commander in the Middle East did acknowledge the additional troop presence in Syria to the House Armed Services committee on Wednesday.  “They have deployed,” Votel said, adding that there were likely more troops headed for deployment. “We have recognized that as we continue to pursue our military objectives in Syria, we are going to need more direct all-weather fire support capability for our Syrian Democratic Force partners,” Votel told the committee. “We have not taken our eye off what our principle mission is, which is to advise and assist and enable our partners... Help our partners fight, but not fight for them.”A  representative of Operation Inherent Resolve (OIR) confirmed that “routine” troop deployment announcements will stop under Donald Trump as US forces want the Islamic State terrorists to be the “first to know about any additional capabilities the Coalition or our partner forces may present them on the battlefield.”

Civilian Casualties in Iraq, Syria Undercut US Victories | Military.com: -- Islamic State group and al-Qaida-linked militants are quickly moving to drum up outrage over a sharp spike in civilian casualties -- said to have been caused by U.S. airstrikes in Iraq and Syria -- by posting photos online of a destroyed medical center and homes reduced to rubble. "This is how Trump liberates Mosul, by killing its inhabitants," the caption reads. The propaganda points to the risk that rising death tolls and destruction could undermine the American-led campaign against the militants. During the past two years of fighting to push back the Islamic State group, the U.S.-led coalition has faced little backlash over casualties, in part because civilian deaths have been seen as relatively low and there have been few cases of single strikes killing large numbers of people. In Iraq -- even though sensitivities run deep over past American abuses of civilians -- the country's prime minister and many Iraqis support the U.S. role in fighting the militants. But for the first time anger over lives lost is becoming a significant issue as Iraqi troops backed by U.S. special forces and coalition airstrikes wade into more densely populated districts of Iraq's second-largest city, Mosul, and U.S.-backed Syrian fighters battle closer to the Islamic State group's Syrian stronghold of Raqqa. That has the potential to undercut victories against the militants and stoke resentments that play into their hands. At least 300 civilians have been killed in the offensive against IS in the western half of Mosul since mid-February, according to the U.N. human rights office -- including 140 killed in a single March 17 airstrike on a building. Dozens more are claimed to have been killed in another strike last weekend, according to Amnesty International, and by similar airstrikes in neighboring Syria in the past month.

  Brazen Overnight Attack in Tikrit Signals IS Resolve: Islamic State’s brazen overnight attack on Tikrit, killing at least 31 security personnel and civilians, is part of a series of diversionary attacks designed to mask its mounting losses in Mosul and portray that it has strength elsewhere in Iraq, analysts say. “IS might carry these attacks everywhere in Iraq,” said Michael Knights of the Washington Institute for Near East Policy, a research institution. Eighteen Iraqi police officers were among the dead in a series of coordinated strikes claimed by Islamic State (IS) late Tuesday and into Wednesday. Disguised as police Authorities say the attackers disguised themselves in police uniforms and drove police cars to gain access to the city – once a Baathist stronghold of former Iraqi leader Saddam Hussein. The militants stormed the residence of the city’s police colonel, killing him and several members of his family, according to reports. Two of the suicide bombers killed themselves, exploding the munitions in their vests after they ran out of firepower, according to officials. Five attackers were killed in clashes with Iraqi security forces.

Iraqi WMDs Anyone? Washington Post Makes Unfounded Claims Of Iranian Supplies To Insurgencies -- The Washington Post falls back into its 2005 mode of blaming Iran for the capabilities of a local insurgency. This time it is not Iraq where Iran is allegedly providing to insurgents, but Bahrain. Old and debunked claims are hauled up and propaganda from the U.S. proxy Sunni dictatorship is cited as "evidence". It is a top-right front-page story in the Sunday edition and thereby "important". It is also fake news.The headline: U.S. increasingly sees Iran’s hand in the arming of Bahraini militants.The core: The report, a copy of which was shown to The Washington Post, partly explains the growing unease among some Western intelligence officials over tiny Bahrain, a stalwart U.S. ally in the Persian Gulf and home to the Navy’s Fifth Fleet. Six years after the start of a peaceful Shiite protest movement against the country’s Sunni-led government, U.S. and European analysts now see an increasingly grave threat emerging on the margins of the uprising: heavily armed militant cells supplied and funded, officials say, by Iran. The authors insert caveats:While Bahraini officials frequently accuse Tehran of inciting violence, the allegations often have been discounted as exaggerations by a monarchy that routinely cites terrorism as a justification for cracking down on Shiite activists.But after noting that Bahraini authorities notoriously lie the authors regurgitate approvingly the claims of exactly those authorities: ... the country’s investigators said in a confidential technical assessment ... a copy of which was shown to The Washington Post ... That is supported, the authors say, by:  interviews with current and former intelligence officials ... Surly, "current and former intelligence officials" are paragons of truth and veracity and whatever they claim MUST be true.

Assad tells paper he sees no 'option except victory' in Syria | Reuters - Syrian President Bashar al-Assad said there is no "option except victory" in the country's civil war in an interview published on Thursday, saying the government could not reach "results" with opposition groups that attended recent peace talks. The interview with Croatian newspaper Vecernji List appeared to have been conducted before U.S. President Donald Trump accused Assad of crossing "many, many lines" with a poison gas attack on Tuesday. Assad was not asked about the chemical attack in the northwestern Syrian town of Khan Sheikhoun, a text of the interview published by the Syrian state news agency SANA showed. The government has strongly denied any role. More than six years into the Syrian conflict, Assad appears militarily unassailable in the areas of western Syria where he has shored up his rule with decisive help from the Russian military and Iranian-backed militias from across the region. The interview published on Thursday underlined Assad's confidence as he reiterated his goal of dealing a total defeat to the insurgency. He also reiterated his rejection of federalism sought by Kurdish groups in northern Syria. "As I said a while ago, we have a great hope which is becoming greater; and this hope is built on confidence, for without confidence there wouldn’t be any hope. In any case, we do not have any other option except victory," he said. "If we do not win this war, it means that Syria will be deleted from the map. We have no choice in facing this war, and that’s why we are confident, we are persistent and we are determined," he said.

Syria gas attack prompts France to call for emergency meeting of UN Security Council -- France has called for an emergency meeting of the UN Security Council following the suspected chemical weapons attack by the Syrian government on the northern province, Idlib.An estimated 65 citizens are dead, including 11 children under the age of eight, and another 300 are reportedly wounded. This marks the third report of a chemical attack in just one week in Syria.France’s Minister of Foreign Affairs, Jean-Marc Ayrault, called the attacks “atrocious,” and went on to describe them as a threat to national security.France, which is a permanent member of the UN Security Council, has supported Syrian rebels against President Bashar al-Assad for years and lobbied for an international military campaign against Assad over the use of chemical weapons in 2013.Despite the Syrian government denying responsibility, French President François Hollande didn’t mince words when blaming Assad for the attack.Hollande said in a statement that: “Once again the Syrian regime will deny the evidence of its responsibility in this massacre. Like in 2013, Bashar al-Assad counts on the complicity of his allies to act with impunity…Those who support this regime can once again assess the magnitude of their political, strategic and moral responsibility.”

Russia warns it will shoot down alliance jets over Syria if US launches air strikes against Assad - Russian forces could shoot down coalition jets if the United States launches airstrikes against pro-government forces in Syria, the Russian ministry of defence has said.American officials have reportedly discussed using limited airstrikes to force Bashar al-Assad’s government to halt its assault on Aleppo and return the negotiating table after a ceasefire collapsed last month. In Moscow’s starkest warning yet against Western intervention in the war, Russia’s chief military spokesman said that any airstrikes on government-held territory in Syria would be considered a “clear threat” to Russian servicemen.  US military planners should “carefully consider the possible consequences” of such action, Major General Igor Konashenkov said in a statement on Thursday.“Today, the Syrian army has effective S-200, Buk and other air defense systems, which have undergone technical renovation in the past year,” he said.“I remind US 'strategists' that air cover for the Russian military bases in Tartus and Hmeymim includes S-400 and S-300 anti aircraft missile systems, the range of which may come as a surprise to any unidentified flying objects,” he added. Russian air defence troops would not have time to identify the flight path of incoming rockets or aircraft that fired them, and would respond immediately, Maj. Gen. Konashenkov added.

U.S. strikes Syrian military airfield in first direct assault on Bashar al-Assad’s government WaPo. The U.S. military launched 59 cruise missiles at a Syrian military airfield late on Thursday, in the first direct American assault on the government of President Bashar al-Assad since that country’s civil war began six years ago. The operation, which the Trump administration authorized in retaliation for a chemical attack killing scores of civilians this week, dramatically expands U.S. military involvement in Syria and exposes the United States to heightened risk of direct confrontation with Russia and Iran, both backing Assad in his attempt to crush his opposition.Syria and Russia swiftly denounced the attack.A statement by Syria’s military said the U.S. “aggression” had killed at least six people and indirectly aided militant factions such as the Islamic State by weakening Syrian forces. Separately, Syria’s state news agency SANA reported that at least nine civilians, including four children, were killed near the air base. Neither report could be independently verified. In Moscow, Russia announced it was pulling out of a pact with Washington to share information about warplane missions over Syria, where a U.S.-led coalition is also waging airstrikes on Islamic State targets. Russian President Vladi­mir Putin called for an immediate meeting of the U.N. Security Council and his spokesman, Dmitry Peskov, called the U.S. missile strikes “violations of the norms of international law, and under a far-fetched pretext.”

 ISIS, Al-Qaeda Praise Trump's Attack --Having perhaps lost the support of much of his anti-war base, President Trump appears to have won praise from two new groups... Ahrar Al-Sham, Tahrir Al-Sham (#AlQaeda) and #ISIS private Telegram channels praising #UnitedStates attack tonight.— Aldin ???????? (@CT_operative) April 7, 2017   Even even more ironic, today is the 100th anniversary of the United States entering World War One.

Russian PM: "US On Brink Of Military Clash With Russia" - In a statement on Friday morning, Russian Prime Minister Dmitry Medvedev said that the US missile strike violated not only international, and added that the attack “was on the brink of military clashes with Russia.”  “Instead of their much-publicized thesis about a joint fight with a common enemy, Islamic State [IS, formerly ISIS/ISIL], the Trump administration has proven that it will fiercely fight against the legal government of Syria,” Medvedev wrote on his Facebook page. Meanwhile, the International Committee of the Red Criss told Reuters that the situation in Syria "amounts to an international armed conflict" following U.S. missile strikes on a Syrian airbase. "Any military operation by a state on the territory of another without the consent of the other amounts to an international armed conflict," ICRC spokeswoman Iolanda Jaquemet told Reuters in Geneva in response to a query. "So according to available information - the U.S. attack on Syrian military infrastructure - the situation amounts to an international armed conflict." Previous air strikes on Syrian territory by a U.S.-led coalition have been against only the militant group Islamic State, which is also the enemy of the Syrian government. Russia has carried out air strikes in tandem with its ally Syria since Sept. 2015, while Iranian militias are also fighting alongside the troops of Syrian President Bashar al-Assad. ICRC officials were raising the U.S. attack with U.S. authorities as part of its ongoing confidential dialogue with parties to the conflict, Jaquemet said, declining to give details. The ICRC, guardian of the Geneva Conventions setting down the rules of war, declared Syria an internal armed conflict - or civil war, in layman's terms - in July 2012.,Under international humanitarian law, whether a conflict is internal or international, civilians must be spared and medical facilities protected. Warring parties must observe the key principles of precaution and proportionality and distinguish between combatants and civilians.

China’s Confusing Trade and Current Account Numbers: Has China’s current account surplus disappeared? Should I declare victory and go home? I always have thought a fast-growing, high investment emerging economy should run a current account deficit, not a surplus— Not yet, I would say. It is always dangerous to try to assess China’s trade and balance of payments data for the first quarter, and even more so to opine on the basis of numbers from the first two months. China’s q4 to q1 seasonality is vicious, and the data distortions from the lunar new year are real. But the numbers out now point to some big swings—swings that are worth highlighting. And some real puzzles. I would love to paint a simple picture. But I do not think there is one. The level of chaos in the balance of payments data that the combination of data revisions and real changes seem to have produced is in fact impressive. Consider: In the fourth quarter of 2016, China trade surplus in goods—measured goods, trackable goods—was about $500 billion (annualized). A bit less if you trust the seasonal adjustments. That is a bit off from its peak level of around $600 billion, but still pretty large. The goods surplus incidentally is the easiest to verify in the counter-party data. It generally isn’t off by that much. In the fourth quarter of 2016, China’s current account surplus—the surplus on trade in goods and services (e.g. tourism) net of the balance on interest and dividends from cross border investment—was roughly $50 billion (annualized; the non-annualized surplus in q4 was about $12 billion). That is down from $250-$300 billion in the first part of 2016. The q4 gap between China’s goods balance and its current account was absolutely massive—over $400 billion, annualized.The trade data for the first two months of 2017 points to a fairly substantial fall in the goods trade surplus. The seasonally adjusted numbers point to a fall in the goods surplus under $400 billion (seasonally adjusted)—even after adjusting the data a bit on the assumption that February overstates the swing in the trade balance.

China’s 2016 Reserve Loss Is More Manageable Than It Seems on First Glance - Martin Wolf’s important column does a wonderful job of illustrating the basic risk China poses to the world: at some point China’s savers could lose confidence in China’s increasingly wild financial system. The resulting outflow of private funds would push China’s exchange rate down, and rise to a big current account surplus—even if the vector moving China’s savings onto global markets wasn’t China’s state. History rhymes rather than repeating.And I agree with Martin Wolf’s argument that so long as China saves far too much to invest productively at home, it basically is always struggling with a trade-off between accepting high levels of credit and the resulting inefficiencies at home, or exporting its spare savings to the world. I never have thought that China naturally would rebalance away from both exports and investment. After 2008, it rebalanced away from exports—but toward investment. There always was a risk that could go in reverse too. In one small way, though, I am more optimistic than Martin Wolf.I suspect that China’s regime was under less outflow pressure in 2016 than implied by the (large) fall in reserves, and thus there is more scope for a combination of “credit and controls” (Wolf: “The Chinese authorities are in a trap: either halt credit growth, let investment shrink and generate a recession at home, a huge trade surplus (or both); or keep credit and investment growing, but tighten controls on capital outflows”) to buy China a bit of time. Time it needs to use on reforms to bring down China’s high savings rate.All close observers of China know that China has been selling large quantities of reserves over the last 6 or so quarters. The balance of payments data shows a roughly $450 billion loss of reserves in 2016, with significant pressure in q1, q3, and q4. The annualized pace of reserve loss for those three quarters was over $600 billion (q2 was quite calm by contrast). But close examination of the balance of payments indicates that Chinese state actors and other heavily regulated institutions were building up assets abroad even as the PBOC was selling its reserves. In other words, a lot of foreign assets moved from one part of China’s state to another, without ever leaving the state sector.

China is building a brand-new city twice the size of New York City - At a total area of 305 square miles, New York City is quite the sight to behold. So imagine the opulence of Xiongan New Area, a newly proposed city in China that would measure 772 square miles when completed. On April 1, the Chinese government announced its plans to build the sprawling city across three existing counties. The effort is meant to ramp up local economies and provide residents with a cleaner, less-congested metropolis outside of smoggy Beijing. Xiongan New Area also reflects China's ongoing mission to grow its collection of megacities — massive urban bundles whose populations exceed 10 million. Xiongan will eventually live inside the Jing-Jin-Ji region, which also encompasses Beijing and other major cities.  In its burgeoning megacities, China has built some of the longest bridges in the world and invested billions of dollars in other forms of infrastructure, such as highways, schools, hospitals, and office parks.  China's growing megacities will someday be home to great economic might, the country has stated. Reuters Xiongan New Area is already exceeding expectations from a business perspective, the New York Times reports. Soon after the announcement, real-estate investors flocked to buy up local properties, many of which currently sit bare. "Prices have gone up every day," one local real estate agent told the Times. Over the long run, China hopes the new economic zone will allow citizens living on Beijing's outskirts to enjoy more cosmopolitan lifestyles. Instead of relying on cars to make long commutes, residents will be able to walk or ride bikes.

China announces “medical tourism” special economic zone on Hainan Island -- Hainan Island will be designated a special economic zone for "medical tourism," where foreigners will be able to fly to get cheap health care (similar to how offshore entities can go to Guandong Province to have cheap electronics manufactured)>The zone will also have its own regulatory regime for medical experimentation, notably with stem cells, permitting research that is forbidden or controlled elsewhere in the country.  The move formalizes a four-year-old pilot scheme.Hainan Boao Lecheng international medical tourism pilot zone, the first of its kind in the country, was approved by the State Council in 2013. It enjoys nine preferential polices, including special permission for medical talent, technology, devices and drugs, and an allowance for entrance of foreign capital and international communications.The pilot zone also has permission to carry out leading-edge medical technology research, such as stem cell clinical research.Since being established, about 20 projects with a total investment of 19.8 billion yuan ($2.9 billion) have been set up in the pilot zone, with another 15 projects approved.Nine investment projects, with a total contract value of 8.4 billion yuan ($1.2 billion), were agreed at the congress in Boao, and five of them relate to the pilot zone. Hainan, with its subtropical climate and coastal scenery, has many advantages that will help with the development of its medical tourism industry, said Jonathan Edelheit, CEO of the Medical Tourism Association.

Chinese wary about U.S. missile system because capabilities unknown: experts | Reuters -  China is steadfastly opposed to the deployment of advanced U.S. anti-missile radars in South Korea because it does not know whether the defenses, intended for North Korean missiles, are capable of tracking and countering Beijing's own nuclear program, experts say. Beijing's resistance to the THAAD (Terminal High Altitude Area Defense) anti-missile system put up south of Seoul has become a major thorn in bilateral ties with the United States and is bound to be discussed at this week's summit meeting between President Xi Jinping and President Donald Trump. While the United States says THAAD is needed to protect Seoul from the threat posed by North Korea's growing nuclear and missile programs, some Chinese strategists believe it is also a threat to the viability of China's nuclear deterrent. "It is clear that there is no one in China who really knows the technical capability of THAAD and that's part of the problem," said Zhang Baohui, a Hong Kong-based mainland expert on China's nuclear deterrent. "THAAD's full capabilities are secret so there is a real knowledge gap among Chinese strategists. If they are misplaced, they are at least genuine in their concern - they have to assume a worst case scenario." Officially, China says it objects to THAAD because it will destabilize the regional security balance. Chinese officials have also expressed concern about the reported 2,000 km (1,200 mile) range of THAAD's powerful X-band radars, which can look deep into the mainland, rather than the system's shorter range interceptor missiles that can target North Korea's missiles. Besides casting a shadow over U.S.-China ties, THAAD has also ruptured the relationship between Seoul and Beijing. Chinese authorities have closed dozens of Lotte retail stores on the mainland after the South Korean conglomerate agreed to provide land for the missile defense system.There has been a sharp decline in Chinese tourists going to South Korea, while South Korean singers and actors have been blocked in various ways from reaching a mainland Chinese audience, and dozens of Korean-focused blogs suspended in China.

North Korea greets China-US summit with (another) missile test | Asia Times: North Korea test-fired a ballistic missile on Wednesday from its east coast into the Sea of Japan, according to the US and South Korean military, in yet another snub to the UN Security Council. The launch comes ahead of a summit between US President Donald Trump and China’s President Xi Jinping this week where adding pressure on the North to drop its arms program will take centre stage. Topping the agenda of the meeting in Florida will be whether Trump will use trade ties with China to pressure Beijing to rein in the nuclear-armed North. That includes possible sanctions on Chinese banks. The missile was fired from Sinpo, a port city on the North’s east coast, and it flew about 60 km (40 miles), South Korea’s Office of the Joint Chiefs of Staff said in a statement. Sinpo is the site of a North Korean submarine base.

Tensions stoke fears of a first strike against North Korea - North Korea fired what appears to have been an intermediate-range ballistic missile into waters between the Korean Peninsula and Japan early on Wednesday morning. The launch further heightens tensions in the region shortly before US President Donald Trump is scheduled to hold talks with his Chinese counterpart Xi Jinping in Florida this week. The South Korean government reacted by convening its National Security Council and ordering its troops to a higher state of readiness, while the Japanese government issued a strongly worded condemnation of Pyongyang's latest act of provocation. But what grabbed the attention of many was the terse press release from the US Department of State, underlining the sense of resignation over the question of North Korea that appears to be gaining traction in Washington. 'No further comment' The statement read: "North Korea launched yet another intermediate-range ballistic missile. The United States has spoken enough about North Korea. We have no further comment." There are some who say that the response, together with other comments coming from the administration, shows President Trump believes there is no other way to bring North Korea to heel other than the application of military force. "Even in South Korea, there are a lot of people who fear that President Trump will do something as dangerous as a first strike against the North,"

Philippines President Duterte Orders Troops to Occupy South China Sea “Islands” Yves Smith -  China President Xi Jinping’s visit to the US has set off a lot of mischief. First we had a North Korean missile launch, then the US airstrike on Syria, and now Philippines President Duterte poking a stick in China’s eye. Even if Duterte doesn’t follow through, his latest threat is a reversal of his recent policy of making nice to China. From Reuters (hat tip furzy):Philippine President Rodrigo Duterte on Thursday ordered troops to occupy uninhabited islands and shoals it claims in the disputed South China Sea, asserting Philippine sovereignty in an apparent change of tack likely to anger China. The firebrand leader, who on the campaign trail joked that he would jet ski to a Chinese man-made island in the South China Sea to reinforce Manila’s claim, also said he may visit a Philippine-controlled island to raise the national flag. “The unoccupied, which are ours, let’s live on it,” Duterte told reporters during a visit to a military base in Palawan, near the disputed waters. “It looks like everyone is making a grab for the islands there. So we better live on those that are still unoccupied. What’s ours now, we claim it and make a strong point from there.”Duterte’s plan is unlikely to sit well with China, which lays claim to almost all the South China Sea, especially as it comes amid a fast-warming relationship in recent months.China, Malaysia, the Philippines, Taiwan, Brunei and Vietnam contest all or parts of the South China Sea. This has led to confrontations between China and some of its neighbors over the strategic trade route. CNN provided a map of the competing claims:

Japan's BTMU plans international fund transfers via blockchain in 2018- Nikkei Asian Review: -- Bank of Tokyo-Mitsubishi UFJ and six other international banking groups will launch next year a faster and lower-cost cross-border wiring service that uses blockchain, the core innovation behind virtual currency. Banks have poured large sums into building high-security systems for fund transfers. But costs for maintaining and updating them have reached the point where the Mitsubishi UFJ Financial Group unit and others have begun turning to blockchain. Banks can use the technology to develop a remittance system without the need for massive servers, keeping costs down. Advanced encryption technology would make data extremely difficult to falsify. The new platform is also seen further facilitating the exchange of data between banks. U.S. startup Ripple will provide blockchain technology. Joining BTMU are Bank of America Merrill Lynch, Standard Chartered Bank of the U.K., Royal Bank of Scotland, Spain's Banco Santander, Canadian Imperial Bank of Commerce and Australia's Westpac Banking. About 90 banks in all could participate in the new service, according to Ripple. BTMU successfully wired money internally to New York using the technology in trials held late last year. Now the Japanese lender will further develop the system with other international financial groups. It will initially offer the service to individuals in early 2018, then slowly expand to corporate clients. BTMU is the first Japanese megabank to offer a concrete timetable for a rollout.

Japanese retailers quickly embracing bitcoin payments- Nikkei Asian Review: -- Two Japanese retailing groups soon will accept bitcoin payments, a move that is likely to promote wider use of the virtual currency among domestic consumers. Electronics chain Bic Camera is teaming up with Tokyo-based bitFlyer, which runs the largest Japanese bitcoin exchange. This Friday, they will begin a trial run of bitFlyer's bitcoin payment system at Bic Camera's flagship shop in Tokyo's Yurakucho district and at Bicqlo Bic Camera, the hybrid outlet with Uniqlo located in Shinjuku. Customers are allowed to pay up to 100,000 yen ($904) using the cryptocurrency, and they will also get reward points at the same rate as for cash payments. Bic Camera may introduce the payment system at other locations based on usage trends at the two Tokyo stores. Recruit Lifestyle, the retail support arm of human resources conglomerate Recruit Holdings, is partnering with another Tokyo bitcoin exchange operator, Coincheck. The virtual currency will become a payment option at shops that have adopted AirRegi, the point-of-sale app developed by Recruit Lifestyle, by this summer. By using tablets or other devices provided by the store and one's own smartphone, the customer can deduct the amount on the bill from the designated bitcoin account. Coincheck will convert the bitcoins into yen and transfer the funds to the store.

A Chinese-backed dam project leaves Myanmar in a bind - For six years, Daw Kaw Bu has waited to return to the village she was forced to leave to make way for a dam that has yet to be built. “I pray to God to let me work on my own land again,” She may get her answer soon, when a government-appointed commission makes a recommendation on the fate of the $3.6 billion, Chinese-financed Myitsone Dam. The decision is a daunting test for Myanmar’s leader, Daw Aung San Suu Kyi, who risks angering China, the region’s economic powerhouse, if she cancels the project, or the public if she lets it go forward. Analysts say the commission’s report would provide her the political cover to kill an unpopular white elephant that she inherited from Myanmar’s former military government. But getting out of the deal would be difficult. If her government cancels the project outright, it could have to repay some $800 million that the state-owned Chinese developer says it has already spent on the project.If Myanmar offers China other dam projects in return, a compromise her government has floated, they are likely to impinge on disputed ethnic areas where they could threaten the peace talks she has championed since her political party came to power last year. “If she is the leader she claims to be, I think she should cancel” the dam, said Yun Sun, a specialist on China-Myanmar relations at the Stimson Center, a nonpartisan think tank in Washington. “But then she has to somehow deal with an $800 million disbursed investment: It cannot be swept under the carpet without giving China something major, and I cannot think of anything that she could give to China without generating a bigger pushback.”

GDP Grows But Job Security Falls: Only 16% Indians Earn Regular Wage --  No more than 16.5% of Indian workers earn a regular wage or salary, according to the Fourth Annual Employment & Unemployment report (2013-14), the latest available data. In another estimate, made in the same report, three in four Indian households (78%) had no one earning a regular wage or salary.On the other hand, the proportion of casual labourers in the workforce is considerable, 30.9% and growing. Contract and casual work have been growing in India at the expense of regular employment. In more than a decade, between 1999 and 2010, the share of contract workers in total organised employment rose from 10.5% to 25.6%. But the share of directly employed workers fell from 68.3% to 52.4% in the same period. Even regular workers were appointed increasingly on short-term contracts, with little or no social security. This is how the increasing informality in the organised labour market has blurred distinctions between formal and informal labour. The informal sector generates around 50% of India’s gross domestic product (GDP) and informal employment opportunities, in both organised and unorganised sector. It employs more than 90% of country’s workforce. The total figure for formal and informal employment in unorganised sector is 82.7%.Of the current workforce of around 475 million, around 400 million, considerably larger than the population of the USA, are employed with little job security or any formal entitlement to call upon the protection of the labour law regime.Contrary to the promises of successive governments to generate more employment opportunities, the reality has been more uncertainty, fewer jobs and even less security. Even by the government’s own reluctant admission, “the economy has indeed experienced high rates of growth in the post r eforms period [but,] the optimism on employment creation, however, has not been realized to the fullest extent.” In the decade 1999-00 to 2009-10, while GDP growth accelerated to 7.52% per annum, employment growth stayed at just 1.5%, less than the 2% annual employment growth rate seen over the four decades starting 1972-73.

Yet another debt write off for India’s farmers - You’ll have probably already heard about the new governor of Uttar Pradesh, Yogi Adityanath, who was put in charge of India’s biggest state (200m people is quite large by any standard) after the Bharatiya Janata Party’s landslide election victory last month.If your memory needs a jog, he’s the one who looks like Vin Diesel and makes people (re)worry about Hindu nationalism’s rise in Indian politics. As the FT wrote, “Mr Adityanath has also recently announced the mass closure of slaughterhouses and meat shops, as well as instructing police to form ‘anti-Romeo squads’ to stop young people loitering in public.”But let’s leave that aside and concentrate on his latest decision to write off some “$5.6bn – worth of loans to nearly 10m farmers, fulfilling one of its key election promises.” A debt jubilee in UP, if you will. And no, it’s not the first one in India but it is one of the largest. And the fact that this is just one in a reasonably long line is something we’ll come back to at the bottom.But first, here’s Nomura’s Sonal Varma with more detail, and our emphasis:  Uttar Pradesh’s (UP) newly elected BJP government has announced a farm loan waiver totalling INR364bn, or ~2.6% of UP’s FY18 (year ending March 2018) gross state domestic product, on our estimates. This includes a waiver of a total of INR307bn on loans made to 21.5m small and marginal farmers. A further INR56bn of non-performing assets belonging to 700,000 farmers has been written off. This move sees the new BJP government delivering on one of its election promises. Financing of the loan waiver scheme is likely to be borne entirely by the state government, with no contribution from the centre. To balance the fiscal deficit, the UP government plans to issue “farmer relief bonds” (Kisan Rahat bonds). As such, while it may not add to the headline fiscal deficit directly, the liability will remain and understate the headline fiscal deficit. The UP government has budgeted a fiscal deficit of INR415bn (~2.9% of state GDP on our estimates) in FY18, but with Seventh Pay Commission hikes also pending the risks of this rising (both above and below the line) is to the upside. Additionally, the farm loan waiver scheme could put pressure on other states to follow suit.

In India Possession is Maybe 6/10th of the Law - In India you will often see signs asserting Ownership and Possession on buildings and lots that are unoccupied or under construction. The reason is not to stop squatters but rather to avoid the double selling problem. In the United States, it’s fairly easy to find out who owns a piece of land or even an expensive asset like a car. The land registry and titling system in India, however, is expensive and not always easy to check. As Gulzar Natarajan writes: For something so valuable, land records in most developing countries are archaic. No register, which reliably confirms title, exists anywhere in India. Small experiments in some states to build such register have not been successful. Existing registers suffer from problems arising from lack of updation, fragmentation of lands, informal family partitions, unregistered power of attorney transactions, and numerous boundary and ownership disputes. The magnitude of these problems gets amplified manifold in urban areas.It’s possible, for example, for a family member to sell family land without anyone else knowing about it. In Muslim customary law, gifts made on the deathbed can override a will which (surprise!) tends to benefit late-stage caregivers. Verbal deals in general are not uncommon. Indeed, without proper land registration it’s possible for an entirely unconnected person to sell land that he doesn’t own. Even if the real owners have some type of title, the ensuing court process between the real owners and those who thought or claimed they were the real owners will be time and wealth consuming. Forged documents are common. A large majority of all legal cases in India’s clogged court system are property disputes. The best thing is to occupy the land but if you can’t do that you want to signpost the land to make it as clear as possible who owns it so if someone is offered the land for sale they know who to call to verify.

India police search for parents of girl 'living with monkeys' -- BBC  -- Police in northern India are searching lists of missing children to try to identify a girl believed to have been living with monkeys. The little girl, aged between eight and 10, was found a few weeks ago in a forest in Uttar Pradesh. Doctors said she could not communicate and displayed "monkey-like" traits. A senior police official told BBC Hindi she had been playing with a pack of monkeys and imitating their behaviour when police went to rescue her. The little girl was spotted by villagers in the Katarniaghat wildlife sanctuary, on the Indian border with Nepal. The police official, Suresh Yadav, said the monkeys attacked his squad when they arrived to take her away. Doctors said she was malnourished when she was brought in, with long hair and nails, and wounds on her body. She was also unable to communicate but would screech and initially walked on all fours. Her condition is said to be much better now, however, and in the long term she is expected to be handed over to child welfare agencies and other medical specialists to slowly reintroduce her to the world. The hospital's chief medical officer, DK Singh, told BBC Hindi that although she was still in hospital, she would be transferred to the Lucknow Medical College once she had been given a clean bill of health so that she could get better medical care.

Latin America's struggling left boosted by win in Ecuador election | Reuters: Socialist candidate Lenin Moreno on Monday celebrated victory in Ecuador's presidential election, bucking a shift to the right in South America, but his conservative challenger demanded a recount as supporters took to the streets in protest. Moreno's triumph was a relief for WikiLeaks founder Julian Assange after former banker Guillermo Lasso had vowed to remove him from Ecuador's embassy in London if he won the runoff. It was also a boost for the struggling leftist movement in South America after right-leaning governments recently came to power in Argentina, Brazil, and Peru as a commodities boom ended, economies flagged and corruption scandals grew. The region's high-profile Socialist leader, President Nicolas Maduro of crisis-hit Venezuela, congratulated Moreno profusely on Twitter, as did Bolivian President Evo Morales. "Congratulations Ecuador, the citizen's revolution has triumphed!" said Maduro, as did much of his cabinet. "21st century Socialism always triumphs," tweeted Morales. "Congratulations brother @Lenin!" Lasso had promised to denounce the embattled Maduro, who foes say has turned his country into a dictatorship. Moreno, a paraplegic former vice president, secured 51.15 percent of the votes, compared with Lasso's 48.85 percent, with nearly 99 percent of votes counted, according to the electoral council on Monday morning.

Emerging Q1 global bond issuance at record $181 bln -JPM data - Nasdaq.com: (Reuters) - Emerging market borrowers raised a record $181 billion in global bond markets during the first quarter of 2017, with both corporate and sovereign tallies surpassing previous highs, data from JPMorgan showed. The bank, which runs the most widely used emerging debt indexes, said in a note sent late on Monday that sovereign year-to-date issuance stood at $61.5 billion, over $16 billion more than at this time of the year in the past. Emerging market companies raised $119.1 billion, surpassing the previous high of $109.6 billion set in the first quarter of 2013, JPM said. The $51 billion sold in March was more than twice the $21.8 billion from a year back, and well above the average March supply of $28.4 billion. The numbers testify to the global fundraising rush before the U.S. Federal Reserve kicked off interest rate rises, precipitating a rise in U.S. Treasury yields [nL5N1GN35I]. In a report released on Monday, the Institute for International Finance found that outstanding emerging market debt had seen a "spectacular rise" to $55 trillion in 2016, equal to 215 percent of the GDP of developing nations, which was mostly by non-financial corporate debt. [nL2N1HB1E8] JPM said appetite for emerging new debt was being supported by abundant cash flows to bondholders in the form of coupon payments and maturities that it estimated at $26.5 billion so far this year for sovereigns and $72 billion for corporates.

Global debt hits $215 trillion in 2016, led by emerging markets: IIF | Reuters: Global debt rose to 325 percent of the world's gross domestic product in 2016, totalling $215 trillion, an Institute for International Finance report released on Monday showed, boosted by the rapid growth of issuance in emerging markets. Global debt grew by $7.6 trillion in 2016 compared with the prior year. Issuance rose from 320 percent of GDP in 2015. Emerging market debt saw a "spectacular rise" to $55 trillion outstanding in 2016, equal to 215 percent of their GDP. This was driven mostly by non-financial corporate debt, the report said. Emerging markets have raised nearly $40 trillion of new debt between 2006 and 2016, a significant acceleration from the roughly $9 trillion added between 1996 and 2006, according to the report. Global debt has risen more than $70 trillion in the last decade to a record high for debt issuance, the institute said. Developed market countries accounted for $160 trillion, the lion's share of global debt, reaching nearly 4 times, or 390 percent of those markets' combined GDP. The report found that the $32 trillion increase in developed market debt had been driven largely by governments, with U.S. and UK public sector debt having more than doubled since 2006. Japan and developed markets in Europe have seen an increase of about 50 percent in the dollar value of their outstanding government debt.

Moscow And Beijing Join Forces To Bypass US Dollar In Global Markets, Shift To Gold Trade - The Russian central bank opened its first overseas office in Beijing on March 14, marking a step forward in forging a Beijing-Moscow alliance to bypass the US dollar in the global monetary system, and to phase-in a gold-backed standard of trade. According to the South China Morning Post the new office was part of agreements made between the two neighbours "to seek stronger economic ties" since the West brought in sanctions against Russia over the Ukraine crisis and the oil-price slump hit the Russian economy.According to Dmitry Skobelkin, the deputy governor of the Central Bank of Russia, the opening of a Beijing representative office by the Central Bank of Russia was a “very timely” move to aid specific cooperation, including bond issuance, anti-money laundering and anti-terrorism measures between China and Russia.The new central bank office was opened at a time when Russia is preparing to issue its first federal loan bonds denominated in Chinese yuan. Officials from China’s central bank and financial regulatory commissions attended the ceremony at the Russian embassy in Beijing, which was set up in October 1959 in the heyday of Sino-Soviet relations. Financial regulators from the two countries agreed last May to issue home currency-denominated bonds in each other’s markets, a move that was widely viewed as intended to eventually test the global reserve status of the US dollar.Speaking on future ties with Russia, Chinese Premier Li Keqiang said in mid-March that Sino-Russian trade ties were affected by falling oil prices, but he added that he saw great potential in cooperation. Vladimir Shapovalov, a senior official at the Russian central bank, said the two central banks were drafting a memorandum of understanding to solve technical issues around China’s gold imports from Russia, and that details would be released soon.

Greece races to secure next tranche of aid -- Greece and its bailout monitors are set to hold further talks on Wednesday in an effort to seal a deal on pension cuts and labour market reforms needed to unlock the next chunk of aid from Athens’ €86bn bailout programme.Jeroen Dijsselbloem, president of the group of eurozone finance ministers, said on Twitter that Tuesday night’s negotiations in Brussels, which finished in the early hours of Wednesday, had “made good progress”. Officials said the ministers planned to continue the talks later on Wednesday by teleconference.Athens and its creditors are racing to secure a deal ahead of a series of large debt repayments, totalling more than €6bn, that Greece must make in July. An agreement would be a key stepping stone towards getting the International Monetary Fund on board as a financial partner in the bailout, something Germany says is essential if Athens were to receive further tranches of aid.Pierre Moscovici, the EU’s economy commissioner, told the European Parliament on Tuesday that a rapid agreement was “imperative” as delay risked fiscal damage to Greece. “The Greek people have suffered a lot and need to see the light at the end of this long tunnel of austerity,” he said.According to one EU official, reaching the July deadline without a further tranche of bailout loans would leave Greece’s economy “in such a state that all parameters of decision-making would have to be revisited”. Officials are aware that even after a deal has been reached on a reform package, further difficult terrain will have to be crossed before the IMF will consider joining the bailout, including politically thorny discussions on debt relief.Deposits have continued to be pulled out of Greek banks this year amid uncertainty over the bailout, with more than €2bn withdrawn in January and February as fears grew of tighter capital controls. The broader economy has also felt the pain from a stalled injection of bailout cash. Unemployment has remained stuck at 23 per cent, the highest in the eurozone and defying a broader recovery across the bloc, while the country’s manufacturing sector has shrunk for seven consecutive months. The Greek economy contracted 1.2 per cent in the fourth quarter of last year, the worst performance since the country was brought to the brink of default in summer 2015.

Dijsselbloem’s Parliament boycott inflames tensions -- MEPs were not amused Tuesday when Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, no-showed a European Parliament debate on the Greek bailout.European Parliament President Antonio Tajani told the plenary session in Strasbourg that Dijsselbloem had canceled “once again,” but admitted that “there’s no legal obligations for him to take part in our work.”Tajani later said he would file a formal protest against Dijsselbloem, who had pre-empted the criticism in a letter saying he was too busy to attend and had already fielded questions from Parliament’s economic and monetary affairs committee on March 21.That appearance came several days before Dijsselbloem made controversial comments about Greece’s economic policies to German newspaper Frankfurter Allgemeine Zeitung. On Tuesday he sent a second letter to MEPs apologizing for those remarks.Petr Ježek, a Czech MEP, tweeted a photo of Dijsselbloem speaking to students in The Hague last week.@PoliticoRyan Right. He is not answerable to these students either but he seems to have a lot to say to them.https://t.co/ArLiRTNPQv — Petr Ježek (@JezekCZ) April 4, 2017The heart of the spat is different perceptions of what the Eurogroup is and should be.MEPs want a more developed eurozone, with some calling for a eurozone finance minister and treasury, and they want additional oversight over those functions.Guntram Wolff, who heads the Bruegel think tank, said “in principle the Parliament has zero leverage,” because the Eurogroup is an informal body of the Council of the European Union. As such, the Eurogroup — and therefore Dijsselbloem — is not answerable to the Parliament, unlike the European Central Bank and its president and the chair of the Single Supervisory Mechanism, who have treaty and regulations-based obligations to appear before MEPs.

Amendment allows Greek farmers to purchase, lease state land they’ve cleared, cultivated for decades - The government on Wednesday inserted amendments into a controversial draft bill concerning forestry maps, which will allow farmers that have cleared and cultivated state-owned land for decades to actually purchase the expanse or simply continue their agriculture-related activity. The draft amendments allow for a payment plan of 100 installments, for instance, in case farmers choose to purchase land they can prove they cultivate. Another provision allows for the hiring of agronomists and foresters, on a contract basis, with payroll costs expected to be covered by revenue generated from filing fees tacked on to appeals. The opportunity to purchase rural land, under the draft bill, affects tracts ostensibly cleared before 1975 by the same user, with the price set at one-fourth of the land's objective rate - the figure used by the state to tax real estate. Where no objective tax criteria is found, then the price will be based on "commercial rates". For farmers that don't want to purchase the state land they've cleared and cultivated, then a leasing prospect will be available. Nevertheless, in a fashion typical of the modern Greek state's land management, a new amendment allows interested farmers to prove their land use by submitting sworn affidavits affirming they have cleared and cultivate the land. Additionally, other documentation, such as tax statements, registration into the still developing land cadastre etc. must also be submitted. A preamble to the draft bill noted that "...according to customary rules that were applied for land use and issues of land ownership, the right to cultivate usually resulted from long-term use, without existing land deeds (titles)." The initial tabling of the draft bill generated a firestorm of reaction, primarily from rural communities. The standing problem in terms of land use and zoning in Greece continues to be a lack of a unified, functional and digitalized land registry (national cadastre) throughout the country.

France’s Socialists Are Losing to a Communist -- Earlier this month, I joined the estimated 130,000 Frenchmen who answered the call of Jean-Luc Mélenchon, the very-far-left presidential candidate, to stage a “March for the Sixth Republic” from the Bastille to the Place de la République in Paris. Among other radical positions, Mélenchon argues that the Fifth Republic, which was declared by Charles De Gaulle in 1958 and enshrined a monarchical presidency, has reached the end of its useful life and that it’s time for a new, more democratic, more egalitarian France. Mélenchon is a left-wing populist who compares himself to Bernie Sanders. Like Sanders, Mélenchon speaks to the widespread desire of voters on the left to rewrite the orthodox rules of politics. These voters are the other side — the side we have tended to overlook — of the polarization of politics across the West.Mélenchon, 65, spent his career as a Socialist Party backbencher until 2008, when he bolted to form his own Left Party. In 2012, he ran for president and captured a respectable 11 percent of the vote. In that election, the Socialist François Hollande defeated right-wing incumbent Nicolas Sarkozy. But Mélenchon viewed Hollande as the Tweedledum to Sarkozy’s Tweedledee — an apostle of globalism, neoliberalism, and financial austerity, and a puppet of the “Eurocrats” who “dream” of locking “the people in an open-air prison,” as he recently put it in his very pungent (and long-winded) weekly blog post. In February 2016, long before any other candidate had declared him or herself, Mélenchon announced that he would run once again, now as the standard-bearer of another self-created party, La France Insoumise (France Standing Tall, more or less).Mélenchon has no real chance of becoming president and is unlikely to finish higher than fourth in the first round of the upcoming presidential elections. He may well, however, come out ahead of Benoît Hamon, the Socialist candidate. That would constitute an immense moral victory for Mélenchon and his votaries, and an absolute calamity for the Socialists, who, like traditional center-left parties all over Europe, suddenly find themselves in free fall. Earlier this week, Hamon implored Mélenchon — and not for the first time — to withdraw his candidacy in order to create a united left front. Mélenchon responded by telling a crowd of 5,000 supporters that “It is to you that I bound myself. I will negotiate nothing with anyone.”

 There Could Be Another Twist in the French Election - French left-wing candidate Jean-Luc Melenchon’s creeping gain in the polls is adding a new layer of risk to France’s election. Although the possibility of a second round between Melenchon and the anti-immigration, anti-euro National Front’s Marine Le Pen -- candidates of the extreme left and extreme right -- is remote, his rise casts yet another shadow over what has been one of the most tumultuous and unpredictable election campaigns in recent French history. Melenchon, who was a distant fifth in the polls until a couple of weeks ago, is now within touching distance of Francois Fillon, currently in third place. According to an Odoxa poll published by Le Point magazine Friday, Melenchon would get 16 percent of the vote in the first round on April 23, just shy of Republican candidate Fillon’s 17 percent. Emmanuel Macron and Le Pen remain the front runners, with 26 percent and 25 percent respectively. “If Jean-Luc Melenchon’s momentum continues, one could have three or four favorites in a pocket handkerchief, within the margin of error of the polls,” said Yves-Marie Cann, political research director at polling firm Elabe. “And then there will be uncertainty.” A potential battle of the two populists, coming after the Brexit vote in the U.K. and the election of Donald Trump in the U.S., would add to the turmoil in the markets. Although Melenchon, unlike Le Pen, hasn’t said he will take France out of the European Union, he remains hostile to Europe’s institutions and has said he wants to renegotiate treaties and reform the union.

A Le Pen-Led France May Be the Crisis That Draghi Can't Fix - If Marine Le Pen convinces France to embrace her anti-euro stance, Mario Draghi will likely be called on again to be savior of the single currency. The trouble is that this time he might not be willing, or able, to do whatever it takes. In fact, the European Central Bank president and his colleagues have given no signal at all that they’re preparing for the fallout from a potential National Front victory on May 7. Instead, officials privately point to an ad-hoc mixture of existing policy tools -- such as the emergency bank support that kept Greece just-about functioning during its 2015 referendum period -- that could be deployed until the future of France’s place in the euro became clear. Seven years of bailouts, bank rescues and stimulus programs show that the ECB’s theoretically limitless power to print money evaporates as soon as the consensus among political leaders cracks. And Le Pen’s promise to hold a referendum on pulling France out of the euro could see just such a situation arising, leaving the Frankfurt-based ECB sitting on the sidelines as politicians grapple with the currency’s fate.“The ECB has unlimited firing power, as long as it has political backing,” said Guntram Wolff, director of the Brussels-based Bruegel Institute. “But if France and Germany are not on the same page anymore, it means that political backing is no longer there, and there’s not much the ECB can do.” While ECB officials hint that they’d continue to provide liquidity to French lenders, the duration of that support and the possibility of additional action would depend largely on whether the nation’s new president shifts to a cooperative approach. A spokesman for the Frankfurt-based central bank declined to comment on the election.

 Germans Concerned After 270,000 Syrian Refugees Granted Permission To Bring Family Members -- With worries about mass migration having largely faded from Germany's consciousness after a record surge in 2015, and an angry popular reaction, prompted Angela Merkel to curb the inflow of refugees, there is renewed concern in Germany following a report that up to 270,000 Syrians in Germany have the right to bring in their family members, a "revelation" that could refuel the debate about migration less than six months before a national election. Germany's Bild cited a government paper showing that a total of 431,376 Syrians applied for asylum in Germany in 2015 and 2016 and said that of those 267,500 are allowed to bring their families to Germany.  As Reuters observes, Germany blessing such a material migration could play into the hands of the anti-immigrant Alternative for Germany (AfD) party, which has lost support in recent months as the refugee issue has receded from the headlines ahead of a Sept. 24 election.  Sure enough, senior AfD member Alexander Gauland condemned the figures, saying it was "absolute madness" to allow so many people to bring their families to Germany: "Billions and billions of tax money are being swallowed and the social state is being steered toward breakdown while our eyes are wide open."In 2016 Germany suspended family re-unifications for two years for migrants who get "subsidiary protection" - granted to people who are not considered as being persecuted individually but in whose home country there is war, torture or other inhumane treatment. According to Reuters, Syrians are the biggest group of asylum applicants in Germany. They are increasingly being granted subsidiary protection rather than refugee status and that means they are only granted the right of residence for a year, although this can be extended. But Chancellor Angela Merkel's Christian Democrats (CDU), their Bavarian sister party - the Christian Social Union (CSU) - and the Social Democrats (SPD), their junior coalition partner, decided last week to make exceptions for people with subsidiary protection status in hardship cases.

Deutsche Bank's $8.5 billion cash call marks end of era for cuts | Reuters: Deutsche Bank's chief executive said an era of cutbacks was over on Friday after completing an 8 billion euro ($8.5 billion) capital increase to pay legal penalties, keep regulators happy and make fresh investments. "It is clear that we will not succeed by shrinking further," John Cryan said in a letter to staff after Deutsche Bank's latest capital hike, which took its total capital raised over seven years to 30 billion euros, just below its market value. Cryan's cash call was backed by top shareholders - a group of Qatari investors, U.S. fund Blackrock and China's HNA Group - whose stakes and influence over Germany's biggest bank would otherwise have been diluted, one source said. "Our capital increase should eliminate any remaining doubt about Deutsche Bank's stability. This is why it's even more important to focus on a topic that has been in the background for quite some time: growth," the British CEO said. Deutsche Bank shares were down 1.8 percent at the bottom of a flat German blue-chip index by 1452 GMT. Deutsche Bank's fourth capital hike since 2010, previously described by Cryan as a last resort, involved about 80 percent of shareholders buying new shares, while the rest sold their rights, sources told Reuters. Cryan, who has pledged to reward shareholders' trust by seeing through a turnaround of Deutsche, acknowledged that recent feedback showed that while many investors and analysts in Europe were still skeptical about Germany's biggest lender, U.S. investors were more positive.

Credit Suisse raided, client assets seized in tax probe - Credit Suisse, the second-largest Swiss wealth manager, faces a sweeping tax evasion and money laundering investigation spanning five countries and potentially involving thousands of account holders.Investigators in the Netherlands arrested two people — seizing a gold bar, paintings and jewelry — and are probing dozens more suspected of concealing millions of euros in Swiss accounts, the Fiscal Information and Investigation Service said Friday. Criminal investigations are also underway in Australia, Germany, the U.K. and France and the role of bank employees is part of the probes.The probes represent the latest challenge for Chief Executive Officer Tidjane Thiam as he reshapes Credit Suisse to focus on wealth management and weighs options to increase capital depleted by fines for past misbehavior. The bank said its offices in London, Paris and Amsterdam were searched on Thursday by authorities in connection with client tax matters, and that it's cooperating with the authorities."The sheer volume of data and its international scope makes this an exceptional case," said Thierry Boitelle, a lawyer with Bonnard Lawson in Geneva. The tip that triggered the yearlong investigation came from one or more informers to a team in the FIOD, the criminal investigation service of the Dutch Tax and Customs Administration, said Wietske Visser, a FIOD spokeswoman. The five countries coordinated their actions through the European Union's Judicial Cooperation Unit, which said in a statement that further actions are likely in the next few weeks. The raids were done without informing authorities in Switzerland, that country's attorney general's office said in a statement. The Swiss aren't conducting a criminal probe into the matter, a spokeswoman said. In a statement Friday from Zurich, the bank said it has "implemented Dutch and French voluntary tax disclosure programs and exited non-compliant clients," and has applied a withholding tax agreement with the U.K. since 2013.

Italy budget deficit widens in March, first-quarter deficit also higher | Reuters: Italy posted a state sector budget deficit of 22.9 billion euros (19.55 billion pounds) in March, an increase of around 2 billion euros (1.71 billion pounds) compared with the same month last year, the Treasury said on Monday. In the first quarter of the year, the deficit was running at 29.0 billion euros, around 2.65 billion higher than the deficit registered for the same period of 2016, it said in a statement. The state sector borrowing requirement (SSBR), a measure of the gap between central government spending and income, differs from the broader "general government" accounts, which the European Union Stability and Growth Pact refers to when assessing countries' deficit performances. Italy aims to marginally trim its general government deficit this year to 2.3 percent of gross domestic product from 2.4 percent last year, remaining inside European Union's 3 percent ceiling. However, the European Commission says Italy needs faster deficit reduction to bring down its huge public debt of around 133 percent of gross domestic product, the highest in the euro zone after Greece's.

Italian Banks: Not Quiet on the Eastern Front --- Italian banks are back in the spotlight. After MPS [Monte dei Paschi] failed to raise enough capital from private investors earlier this year, the centre stage has moved from Tuscany to the region of Veneto, in the Italian north-east. We have met the main characters previously: Banco Popolare di Vicenza (BPVI) and Veneto Banca were among the Italian banks that failed the ECB’s comprehensive assessment in 2014. They were also in the spotlight last year, when the bank-funded Atlante fund was created, mostly to become the underwriter of last resort in their (otherwise unlikely) capital raise.If we look at the data, things are definitely not looking good. BPVI published its 2016 accounts this week, closing with a € 1.9 billion loss. Veneto Banca postponed the publication of its account, but it is expectedto report a loss of about € 1 billion. Earlier this month, both banks asked access to precautionary recapitalisation, like the one currently discussed for Monte dei Paschi di Siena.Gross NPLs for BPVI were € 9.8 billion in 2016, up 9.3% from last year. € 5.1 billion of these NPLs are classified as bad debts, up 17% year-on-year. BPVI says in its press release that it has received a draft communication from the ECB, following up on a previous inspection and requiring actions to address identified shortcomings. BPVI says this will entail a conservative revision of its credit risk policy, which will presumably determine further negative impact on its 2017 financial position. The current CET1 ratio stands at 8.21% – above the minimum requirement but below the SREP target of 10.25%.What is more worrying is the bank’s liquidity position. The bank’s direct funding was down 14.4% with respect to last year, with BPVI attributing the drop to “reputational issues” and “fear of bail-in”. The bank resorted to ECB liquidity – for a total that currently stands at € 6.4 billion – and to the emission of government-guaranteed securities worth € 3 billion. The liquidity outflow has been hemorrhagic: BPVI’s liquidity coverage ratio at the end of December 2016 was 37.9%, down from 113% in June. Without the emission of the government-guaranteed securities mentioned above, the liquidity ratio would have been below the 90% minimum requirement for 2017.

EU Steps Up Efforts to Deal With $1.1 Trillion Bad-Debt Pile - European Union leaders are stepping up efforts to deal with the more than 1 trillion euros ($1.1 trillion) in non-performing debt weighing down the bloc’s lenders. The Maltese government, which holds the rotating presidency of the EU, called for action to prevent the issue from threatening financial stability and hurting economic growth, according to a note that was circulated ahead of a finance ministers’ meeting in Valletta this week. Valdis Dombrovskis, the European commissioner in charge of financial services, said in a separate letter to the presidency that his office will help coordinate a European strategy on non-performing loans among the 28 member states. “Given its magnitude, the NPL problem will not solve itself, even in the context of economic recovery,” the Maltese presidency said in the note. “A multi-faceted approach combining a mix of policy actions, at national and possibly European level, is the most adequate way to address the NPL problem.” Both documents were obtained by Bloomberg News. A spokeswoman for the Maltese presidency said the discussion in Valletta “will be framed” by the paper. Soured loans are one of the key concerns of European officials because they can stifle lending to healthy parts of the economy. NPLs made up 5.1 percent of all bank loans in the EU at the end of last year, down 0.6 percentage point from a year earlier, the European Banking Authority said on Monday. Greece, Cyprus, Portugal and Italy are the countries with the highest shares of bad debt, according to the EBA.

Draghi Draws Line Under ECB Rate Debate and Warns on Prices - Mario Draghi sought to quash the idea that the European Central Bank will begin tightening policy sooner than planned, saying that inflation in the euro area isn’t strong enough for officials to start signaling such a shift. “I do not see cause to deviate from the indications we have been consistently providing in the introductory statement to our press conferences,” the ECB President said in a speech in Frankfurt on Thursday. “We have not yet seen sufficient evidence to materially alter our assessment of the inflation outlook -- which remains conditional on a very substantial degree of monetary accommodation.” Draghi’s message comes after weeks of diverging signals from policy makers on the strategy the central bank will follow to exit its unprecedented stimulus. With the region’s upturn gaining momentum, the threat of deflation off the table, and slower purchases in the ECB’s 2.28 billion-euro ($2.43 billion) quantitative-easing plan as of this month, some governors have been urging tweaks to central bank’s forward guidance. The ECB president countered such demands saying that the current policy path -- which expects that interest rates will “remain at present or lower levels for an extended period of time, and well past the horizon” of asset purchases -- is still appropriate to make sure that growth and inflation are solid enough to withstand the end of stimulus.

The Next Step in Europe's Negative-Interest-Rate Experiment - The European Central Bank (ECB) pushed its deposit rate to minus 0.4 percent in April 2016: Since then, euro area banks must pay 0.4 percent per annum on their excess reserves held at ECB accounts. This, in turn, has far-reaching consequences. To start with, banks seek to evade this "penalty rate," especially by buying government bonds.   That inevitably pushes bond prices up and lowers bond yields. Moreover, the ECB keeps monetizing government debt as well. The result is a tremendous downward pressure on the yield environment. For instance, the real (inflation-adjusted) return on short-term German bonds currently stands at around minus 2.5 percent per annum.  Negative interest rates (both in nominal and real terms) contribute to lowering the debt burden of financially overstretched states and banks. In fact, negative interest rates force the ratio between outstanding debt and gross domestic product to shrink. Such a monetary policy benefits borrowers at the expense of creditors. The latter has to foot the bill.At the same time, however, Eurozone banks’ businesses suffer from the ECB's negative interest rate policy. On the one hand, they find it increasingly difficult to remain profitable in an environment of extremely suppressed interest rates. On the other hand, banks run into higher costs due to a negative ECB deposit rate (and the costs keep rising as the ECB creates more and more excess reserves in the banking system). Banks are under pressure to impose negative rates on client accounts. Given negative deposit rates, however, clients are most likely to withdraw (at least part of) their deposits in cash, and banks could experience a (huge) cash drain, resulting in a funding gap. They are therefore likely to increasingly push the ECB to end the policy of keeping the deposit rate in negative territory. If the ECB relents (and it is likely that it does), it would presumably bring the deposit rate back to zero. This, in turn, would bring all bond yields back up and above the zero line. To prevent the interest rate from rising too much, however, the ECB would have to continue manipulating long-term bond yields. This can be achieved by continued bond purchases. The ECB can set long-term yields at politically desired levels. It simply declares a certain minimum price for bonds. The market prices of bonds will converge towards the minimum price and will not fall below such a level. By monetizing debt, the ECB expands the outstanding quantity of money, driving up inflation at the same time.

Spain drops plan to impose veto if Scotland tries to join EU - Spain has said it would not veto an attempt by an independent Scotland to join the EU, in a boost to Nicola Sturgeon’s campaign for a second independence referendum and the clearest sign yet that Brexit has softened Madrid’s longstanding opposition.Alfonso Dastis, the Spanish foreign minister, made it clear that the government would not block an independent Scotland’s EU hopes, although he stressed that Madrid would not welcome the disintegration of the UK.He also said Edinburgh would have to apply for membership, a process fraught with uncertainty that is likely to take several years. But asked directly whether Spain would veto an independent Scotland joining the EU, Dastis said: “No, we wouldn’t.” Madrid is keen not to fuel Catalonia’s desire for independence. “We don’t want it [Scottish independence] to happen,” he said. “But if it happens legally and constitutionally, we would not block it. We don’t encourage the breakup of any member states, because we think the future goes in a different direction.”The change in tone could prove a significant boon to Scotland’s first minister, who has repeatedly demanded the right from Westminster to hold a second independence referendum before Brexit. Scotland voted overwhelmingly to remain in the EU during the referendum last year, but it has been believed Spain would block it from rejoining if independent from the UK.The softening stance this weekend reflects the new approach being taken by Dastis, a career diplomat, who was promoted to foreign minister last November after the centre-right prime minister, Mariano Rajoy, formed a government following 300 days of political paralysis in 2016.In the run-up to Scotland’s 2014 independence referendum, Rajoy said Scottish independence would be a catastrophe that would risk Europe’s disintegration, but the political calculus in Madrid and Brussels has shifted since Britain voted to leave the EU. EU leaders are more sympathetic to Scotland, where 62% voted to remain in the EU, while insisting that Scots cannot inherit Britain’s EU membership.

Gibraltar accuses EU of behaving like a 'cuckolded husband who is taking it out on the children': Gibraltar has accused the European Union of behaving like a "cuckolded husband who is taking it out on the children" by appearing to hand Spain a veto over "the Rock's" future in Brexit negotiations. Fabian Picardo, the chief minister, made the comments after Spain accused Britain of "losing its temper" over Gibraltar. It came as talk of a "war" between Britain and Spain over the row was dismissed as "absurd". Alfonso Dastis, Spain's foreign minister, said he was "surprised" by Britain's response after the EU’s draft Brexit negotiating guidelines appeared to hand Spain an ­effective veto over whether an eventual deal will apply to Gibraltar. He said: "The Spanish government is a little surprised by the tone of comments coming out of Britain, a country known for its composure." Mr Picardo said: "Gibraltar is not a bargaining chip in these negotiations. Gibraltar belongs to the Gibraltarians and we want to stay British."

Tensions rise as EU says Spain has its ‘full support’ for Brexit power grab over Gibraltar -- The EU broke its silence this morning as the diplomatic crisis between Madrid, London and Brussels over the future of the Rock deepens. In a statement EU Commission chief spokesman Margaritis Schinas said eurocrats were "100 per cent behind" Spain over the inclusion of Gibraltar's future in the bloc's negotiating guidelines. And in a move likely to inflame tensions with Westminster he refused to answer questions on whether or not Brussels now officially recognises the Rock as a disputed territory. The EU has previously taken a relatively neutral position towards Gibraltar on account of the fact that both Spain and Britain were members of the bloc. But now that the UK is leaving Brussels appears to have rowed in firmly behind Madrid's claim to the overseas territory. The inclusion of a clause in the bloc's draft negotiating guidelines for Brexit, published on Friday, effectively hands Spain a veto over Gibraltar's inclusion in any future trade deal between Britain and the EU.

Spanish Gunship Makes "Illegal Incursion" Into British Waters Off Gibraltar -  Just days after a post-Brexit UK cabinet put Europe on edge when a former Conservative leader said on Sunday that Theresa May "would go to war" to protect Gibraltar, Spain has tested the former EU member's resolve when on Tuesday afternoon the Gibraltar government tweeted that a Spanish gunship has made an illegal incursion into British waters off Gibraltar amid rising Brexit tensions over the territory.According to SkyNews which broke the story, the Royal Navy told the ship to leave but the incident, the seventh of its kind this year, is likely to escalate already rising tensions over the sovereignty of the Rock.Illegal incursion into #British #Gibraltar Territorial Waters by Spanish Navy patrol ship Infanta Cristina this afternoon. #BGTW pic.twitter.com/IkYadi8XNn— HM Govt of Gibraltar (@GibraltarGov) April 4, 2017The alleged incursion comes the day after Spanish foreign minister Alfonso Dastis told the UK not to "lose tempers" after the EU Brexit negotiation guidelines effectively gave Spain significant power over Gibraltar's future.Theresa May and Foreign Secretary Boris Johnson have moved to reassure the people of Gibraltar that the territory will remain under British control. Lord Howard told the Sophy Ridge on Sunday programme: "I think there's no question whatever that our Government will stand by Gibraltar." As we reported previously, over the weekend former Conservative leader Lord Howard told Sky News Theresa May could be willing to defend the British territory - like Margaret Thatcher had over the Falklands.He said: "Thirty-five years ago this week, another woman prime minister sent a task force half way across the world to defend the freedom of another small group of British people against another Spanish-speaking country. "I'm absolutely certain that our current prime minister will show the same resolve in standing by the people of Gibraltar."

Downing Street defends ex-Tory leader Michael Howard's claim UK would go to war with Spain over Gibraltar | The Independent: Downing Street has refused to condemn ex-Tory leader Michael Howard's claim that the UK would go to war with Spain over Gibraltar. Number 10 said all the Conservative grandee was doing was trying to establish "the resolve" that Theresa May's administration has to defend the sovereignty of the territory. Ms May also laughed off suggestions Britain was willing to use its military muscle to influence the debate with the EU on Gibraltar, saying it was "jaw jaw not war war" - borrowing a phrase from Winston Churchill. It came after the Spanish Foreign Minister urged the UK Government to "be cool", following the furore around Lord Howard's comments that Britain would go to war over Gibraltar in the same way it had over the Falklands.Theresa May's official spokesman said "it isn't going to happen", when asked about the former Tory leader's comments on a potential war with Spain. But when repeatedly asked if Ms May had found the intervention unhelpful, he said: "All that Lord Howard was trying to establish, was the resolve that we have to protect the rights of Gibraltar and its sovereignty as I have set out. "We've been very clear that we will support fully Gibraltar's right to its sovereignty." On Friday morning, European Council President Donald Tusk published his draft guidelines for the forthcoming Brexit negotiations with the EU, which said Spain would be given a veto over any deal that would affect the status of Gibraltar. The Number 10 spokesman added: "These are draft guidelines that were issued on Friday. We expect the position to come back to us later this month...and obviously we will wait and see what is agreed by the 27 [EU nations]."

May suggests unrestricted EU migration will continue post-Brexit -- Theresa May has indicated that free movement of EU citizens to the UK could continue for a period after Brexit, as she eyes an “implementation phase” after 2019, while new border systems and a trade deal are put in place. Mrs May, who is on a visit to Saudi Arabia, has subtly adjusted her language in recent days to bring her stance more closely into line with the EU negotiating position, which states that no trade deal can be concluded until after the UK leaves. She has also appeared to concede that the UK might have to comply with European Council president Donald Tusk’s demand that the EU’s “core principles”, including those relating to immigration, would have to apply during any transition period. Although Mrs May insisted that the UK would have control over its borders in any transition, she suggested on Tuesday that immigration from the EU could continue until after the next British election in 2020. Asked directly to “rule out free movement in any transitional period once we leave the EU”, May said: “You’ve used the phrase transitional phase; I have used the phrase implementation period. “If you think about it, once we’ve got the deal, once we’ve agreed what the new relationship will be for the future, it will be necessary for there to be a period of time when businesses and governments are adjusting systems and so forth, depending on the nature of the deal, a period of time during which that deal will be implemented.” Earlier on Tuesday, Downing Street insisted Mrs May’s position had not changed, but her language has shifted to bring her more closely in line with the EU’s Brexit negotiating draft, which says the two-year talks might include only a “framework for the future relationship”.

MEPs tell Britain: Without us, no deal – POLITICO — Britain’s tendency to sneer at the European Parliament has been accentuated since the Brexit vote. But, as the U.K. prepares to leave the European Union, MEPs want to remind it of one thing: their power to veto the final deal. As the 751-seat chamber limbered up for Wednesday’s debate and vote on MEPs’ red lines for the Brexit negotiations, a week after U.K. Prime Minister Theresa May formally launched the process by triggering Article 50, some lawmakers were keen to emphasize their power and readiness to blow the whole thing up. “If the Parliament rejects the deal, there is no deal,” said Danuta Hubner, a Polish MEP and president of the Committee on Constitutional Affairs, which will oversee the final withdrawal agreement. “What it will say at the end of the process is legally binding.” Even the pro-Brexit top Conservative in the European Parliament, Syed Kamall, acknowledged that his MEP colleagues “will have to approve the withdrawal arrangements.” “Of course, MEPs will want to express their views and comment on the negotiations,” added Kamall, who presides over the European Conservatives and Reformists group of MEPs, which is dominated by the Tories. “My group and its members will do all it can to make sure that talks are measured, constructive and pragmatic.”

The truth about Brexit - Theresa May has now invoked Article 50 and, by doing so, she has triggered the Brexit process at a more formal level. As she said after the letter was handed over to President Tusk: “It is a historic moment – there is no turning back.” Almost every day I get another email on Brexit and, interestingly, many of those emails come from readers in countries far away. It clearly isn’t a topic that only preoccupies those of us who live in the UK. We are now almost 10 months into the unknown, and one could – with some right – take the view that, as nobody knows how it will all pan out, what’s the point in writing more about it? Having said that, one could also argue that we know things now that we didn’t know last summer. I certainly do; hence this follow-up note on Brexit. One disclaimer before I begin. I am a Remainer, so the following may be a tad coloured (but only a tad). I believe the future outside the EU will be a great deal more problematic than most people realise. Exhibit 1 above explains the prevailing attitude amongst the Brexiters I speak to – a view I am confronted with virtually every day of the week. “Why worry? We are a net importer of goods from most EU countries. They [the other Europeans] have a great deal more to worry about than we do, if the free trade agreement is abolished.”Even if this month’s Absolute Return Letter has a negative bias, I owe to my readers to point out that Brexit is not only bad news. A weak Sterling, for example, will likely give UK industry a major boost, but that is already well advertised by the Brexit brigade and, in this letter, the aim is to focus on what is (largely) kept out of the media. If only life were that simple, but it isn’t. Martin Wolf has produced a series of great articles on Brexit for the Financial Times, where he argues that, although the UK runs a significant trade deficit vis-à-vis the Rest of the EU (‘rEU’), UK exports to rEU still account for almost 50% of total UK exports (exhibit 2). No free trade agreement would put those exports at risk.

Theresa May begins to dismantle Brexit roadblocks - Theresa May has begun to dismantle roadblocks to a Brexit deal, including accepting the possible extension of free movement, as the European Parliament agreed to open the way to a potential “association agreement” between Britain and the EU.With Britain’s parliament in recess, the prime minister used a three-day visit to the Middle East to soften her stance on Brexit, effectively conceding that the UK may have to carry on playing by some EU rules after it leaves the bloc in 2019.Mrs May has accepted that Britain will not be able to sign a trade deal until after it formally leaves the EU and becomes a “third country”, raising the need for a transition agreement to bridge the gap between Brexit and the ratification of the deal.The EU’s draft negotiating guidelines stipulate that if the UK wants to stay part of the single market during that period it will have to stick to existing rules, which include making budget payments, allowing the free movement of people and accepting the jurisdiction of the European Court. Asked in Riyadh whether she would rule out free movement in any transition period after Britain left the EU, Mrs May replied: “You’ve used the phrase transitional phase; I have used the phrase implementation period.  “If you think about it, once we’ve got the deal, once we’ve agreed what the new relationship will be for the future, it will be necessary for there to be a period of time when businesses and government are adjusting systems and so forth, depending on the nature of the deal, a period of time during which that deal will be implemented.”

Hardliners stay 'Zen' over Theresa May's softer Brexit mantras - During her three-day visit to the Middle East Theresa May has been subtly softening her stance on Brexit — but the Eurosceptic anger that might be expected has failed to materialise.Instead, an intensive behind-the-scenes party management exercise, allied to the desire on the part of Conservative MPs to present a united front, has so far prevented any backlash. “We are very relaxed with the prime minister,” said the Eurosceptic Conservative Peter Bone. “I’m extremely supportive.”Mrs May’s suggestion in Saudi Arabia that free movement of EU citizens could continue for a limited transition period after Brexit was a significant move, heralding a new flexibility. She has further conceded that a UK-EU trade deal might not be signed until after the Brexit deadline of 2019.But Mr Bone said the prime minister had made it clear free movement would ultimately come to an end and declined to criticise the suggestion it might be extended for a few more years. We are very relaxed with the prime minister. I’m extremely supportive The shift in Mrs May’s language has been welcomed by pro-Europeans: Anna Soubry, a former minister, said it was “extremely good news”. But Tory Eurosceptics — who co-ordinate their positions on a WhatsApp message group — have managed to present a united front on every development in the Brexit saga.Even though her negotiating policy has moved almost imperceptibly over the past three days, the Conservatives have never wavered in their backing of the prime minister. Asked to comment on their attitude, Steve Baker, a leading Eurosceptic MP, said simply: “Zen.” Several factors lie behind this apparent calm. The most basic explanation offered by Conservatives is that on the biggest question of all, they are getting what they want: Brexit. It is hard to find Eurosceptic MPs ready to publicly reject the kind of tactical measures Mrs May might need to take to secure that objective and at the same time cause minimal damage to the British economy.

Berlin embraces its own hard Brexit — It took less than 24 hours for Brexit to disappear from Germany’s front pages.  The morning after U.K. Prime Minister Theresa May formally informed the European Union that her country was headed for the door, every British tabloid led with the story under banner headlines. In Germany, meanwhile, the largest-selling daily Bild featured a famous German comedian announcing plans for a civil union with his longtime boyfriend. It wasn’t just the front pages — in the Bundestag, a debate last week about Brexit was sparsely attended and received little media coverage. “The mood here,” said Jens Zimmermann, an MP, “is different.” Or make that indifferent — at least when it comes to the messages from London. As the rhetoric in Britain careens into overdrive  — invasion of Gibraltar, anyone? — the Germans remain Germanically impassionate, unimpressed by what were perceived as poorly veiled threats regarding security and trade.In Berlin, officials say that, as negotiations begin, they have the upper hand. Brexit may have some limited economic impact on Germany, but the consequences for the U.K. could be far more devastating. And Berlin is sticking to its hard line that doing what it thinks is needed to keep the EU from disintegrating is far more important to its long-term interests than anything it might gain economically by bending to British pressure on trade.German officials including Finance Minister Wolfgang Schäuble delivered that message to Philip Hammond, chancellor of the exchequer, last week. Just hours after the U.K. triggered Article 50, Hammond flew to Germany, where he was joined by Foreign Secretary Boris Johnson, to lobby German officials. But they received little encouragement.In her letter triggering Article 50 last week, May wrote that a failure to reach an agreement on Brexit “would mean our cooperation in the fight against crime and terrorism would be weakened” — language the Germans didn’t appreciate. Detlef Seif, a conservative lawmaker, called it “an extraordinarily primitive attempt at blackmailing us.”High-ranking German politicians believe Westminster has overestimated its negotiation position in the upcoming talks. “They pretend to hold jokers in their hands,” said a government official on condition of anonymity. “This doesn’t seem very plausible, considering they already have to play the terrorism card.” For the current leadership in Brussels and Berlin, the principle of free trade and free movement is indivisible — take both or take none. The U.K. wants access to the market but without free movement and has argued that Berlin will come around to the British side on this because of Germany’s large trade surplus with the U.K.

Brexit’s Biggest Loser May Actually Be Poland - With the clock now ticking on two years of Brexit negotiations, Poland looks more vulnerable to a painful divorce between the U.K. and European Union than anywhere else. Poland is the biggest net recipient of EU aid and also the continent’s largest provider of cross-border labor. And it’s in the arrivals halls at provincial airports like this former military base 160 kilometers (99 miles) north of Warsaw where those two things meet. Refurbished using 121 million zloty ($31 million) of EU cash, the airport revolves around servicing some of the almost 1 million Poles living and working in Britain, a third of all EU nationals residing in the country. Now, not only is their status in doubt, there’s also going to be less money as the EU loses its biggest net contributor after Germany. “It’s obvious that Brexit is crucially important to us,” Deputy Foreign Minister Konrad Szymanski said in an interview in Warsaw. “If we don’t carry it out well, it will harm the internal market. And it will probably be difficult to coordinate on residency issues because the stakes are uneven.”The onset of Brexit could hardly have come at a worse time for the country. Its nationalist government is increasingly isolated in Brussels after trying to oust EU President Donald Tusk, a former Polish premier. At the same time, the country relies on EU investments to prevent the economy from slowing. More than 250 billion euros ($267 billion) were or will be spent since Poland joined the bloc with other former communist states in 2004. In today’s dollars, that’s equivalent to more than the U.S.-funded Marshall Plan provided to western Europe after World War II.The Law & Justice leadership has said it seeks to weaken, not strengthen, EU institutions after Brexit. Prime Minister Beata Szydlo accused the EU of posing a threat to Polish sovereignty last year when officials questioned why she hadn’t implemented the rulings of the nation’s top court. That poses a real risk that Poland’s $477 billion economy will be left behind should the rest of Europe choose to integrate faster following Brexit, according to Miroslaw Gronicki, who served as finance minister during the year after Poland joined the EU.

  Freeing up the rich to exploit the poor – that’s what Trump and Brexit are about -- George Monbiot - Propaganda works by sanctifying a single value, such as faith, or patriotism. Anyone who questions it puts themselves outside the circle of respectable opinion. The sacred value is used to obscure the intentions of those who champion it. Today, the value is freedom. Freedom is a word that powerful people use to shut down thought. When thinktanks and the billionaire press call for freedom, they are careful not to specify whose freedoms they mean. Freedom for some, they suggest, means freedom for all. In certain cases, this is true. You can exercise freedom of thought, for instance, without harming others. In other cases, one person’s freedom is another’s captivity. When corporations free themselves from trade unions, they curtail the freedoms of their workers. When the very rich free themselves from tax, other people suffer through failing public services. When financiers are free to design exotic financial instruments, the rest of us pay for the crises they cause. Above all, billionaires and the organisations they run demand freedom from something they call “red tape”. What they mean by red tape is public protection. An article in the Telegraph last week was headlined “Cut the EU red tape choking Britain after Brexit to set the country free from the shackles of Brussels”. Yes, we are choking, but not on red tape. We are choking because the government flouts European rules on air quality. The resulting air pollution frees thousands of souls from their bodies.   Ripping down such public protections means freedom for billionaires and corporations from the constraints of democracy. This is what Brexit – and Donald Trump – are all about. The freedom we were promised is the freedom of the very rich to exploit us.

UK steps back from Brexit cliff edge - FT -- British business has long feared that the UK is heading for a disorderly Brexit, falling off a cliff as it fails to strike a deal with the EU. The nightmare may yet happen but, at the end of this week, it is looking a little more remote.In the months before triggering Article 50, Theresa May was cheered on by the Tory right as she sounded a hard and uncompromising tone on Brexit. Now that negotiations with the EU are on the horizon, the music coming out of Downing Street has become more nuanced.As the FT has reported this week, change has come in numerous ways. Mrs May seems to have accepted that the UK will not be able to sign a trade deal until after it leaves the EU. That deepens the likelihood that a transitional arrangement will be needed between Brexit and ratification of a comprehensive trade pact.The prime minister has accepted that new immigration controls may not be applied until some time after Brexit happens. This will be welcomed by business, which is worried about a sudden drying up of European talent.Mrs May also appears to have dropped her demand for parallel negotiations with the EU, accepting the European Commission’s demand that “significant progress” is made on divorce proceedings before trade talks can begin.“The government is moving from a state of denial towards something more like realism,” says Mujtaba Rahman of Eurasia Group, a consultancy. “This means talks in Brussels will start on a more constructive footing than might otherwise have been the case.” But is this a false dawn? There are certainly reasons for caution.  On the one hand, the prime minister must consider 60 hardline Tories — plus much of the British media — who will reject a Britain that ends up being “half in and half out” of the EU. On the other hand, Brussels will not allow the British to appear as though they are thriving outside the EU club and enjoying the attributes of membership without cost.

The Labour party is set to lose hundreds of council seats across the UK in May - — The Labour party is set to lose 125 council seats in May's local elections and faces "cataclysmic" defeat in Scotland, according to a new forecast from pollster Lord Hayward. He predicts that the Tories and Lib Dems will gain 100 seats each in May's elections, while the Scottish National Party will also perform well and take control of Edinburgh and Glasgow's councils. UKIP, meanwhile, are forecast to lose up to 100 seats, with most of their losses taking place in England, as the party's post-Brexit decline under new leader Paul Nuttall continues. Hayward, a Tory peer, told the Herald newspaper that the elections would be "a reflection of where the Labour party actually is - it isn't appealing to its old core of working class voters in the Midlands, the north and also Scotland." There are more than 20,000 council seats in the UK as a whole.  On Tuesday, an ICM/Guardian poll found that Labour's popularity had fallen to a two-year low. Support for the party, which has polled disastrously under insurgent left-wing leader Jeremy Corbyn, was 25% compared to the Conservatives' 43%.

What is ‘global Britain’? A financier and arms merchant to brutal dictators - Certainly there is something ridiculous about May, Fox and foreign secretary Boris Johnson scampering around the world as if the last 150 years hadn’t happened, dreaming of a military presence east of Suez while clearly desperate for a deal with any human-rights-abusing dictator that will meet them. But it is no less frightening for that. A ruling elite tortured by its inability to rule the world, which believes such a role is its birthright, can still make dangerous decisions.“Global Britain”, the international component of Brexit, is just such a decision. It is a strategy that the hard right has dreamed of for decades. We will be the financier and arms merchant to dictators. We will be the trading centre for financial products too dangerous for European standards. We will be the premier investment hub for the emerging super rich of the developing world, where everything can be bought for a good enough price. Britain is for sale, and we don’t much care who is buying.For the rest of the world, “global Britain” has already had significance. In January, May flew from the court of Donald Trump, where he was signing his draconian Muslim ban, to Turkey, where thousands of President Erdoğan’s opponents languish in jail awaiting trials – and flogged £100m of arms. Trump used May as a symbolic weapon against the EU, Erdoğan basked in the legitimacy she brought. Senior ministers have already undertaken an astonishing number of visits to the Gulf, paying homage to the oil barons who promise to keep the London markets afloat. Johnson might think of them as exotic local rulers, but they hold all the cards. Saudi holds Yemen in the modern equivalent of a medieval siege, where a devastating famine will starve its opponents into submission at the cost of tens of thousands of lives. But May, Fox and Johnson have other matters to discuss. On Tuesday, Fox was in the Philippines, greeting a president, Rodrigo Duterte, who apparently compares himself to Hitler and brags of mass murder, who derides the United Nations and is killing thousands of his citizens under the guise of a war on drugs. None of this would have been mentioned, of course.

‘Cartel’ Traders Weigh Surrender to Face U.S. Rigging Charges - Some of the U.K. currency traders whose online chats led to guilty pleas by four of the world’s biggest banks are weighing whether to present themselves to the U.S. to fight charges against them.Federal prosecutors are discussing ways for three U.K.-based traders to avoid an extensive extradition process and come to the U.S. voluntarily for trial, according to people familiar with the talks. At least two are considering it, two people said.The people said the prosecutors have been talking with lawyers for former JPMorgan Chase & Co. trader Richard Usher, ex-Citigroup Inc. trader Rohan Ramchandani and Chris Ashton, formerly of Barclays Plc, who were charged in January with conspiring to rig exchange markets through discussions in an electronic chat room known as The Cartel. They released statements at the time declaring their innocence.  The alternative to facing the U.S. charges is spending months or years trapped in the U.K. fighting extradition. That can be a costly battle for defendants, who may need the money to mount a defense if they are ultimately handed over to the U.S., as has happened in similar cases.  One factor in the discussions with the Justice Department is whether the judge would allow the traders to return home to await trial after they appear in the U.S. to plead not guilty, one of the people familiar with the discussions said. Judges tend to follow the government’s lead on such decisions. The traders also want an assurance that the government won’t add charges, another person said.  “Some figure if at some point I’m going to get extradited over there anyway, let me deal with the substance now and not prolong the agony,” said Michael Koenig, a partner at Hinckley, Allen & Snyder LLP who isn’t involved in the case. “Some people can’t live with uncertainty and don’t want to look over their shoulder.”  Prosecutors have recently reached out to some witnesses to ensure their cooperation if the trial goes forward, an indication that the government thinks it will, according to another person familiar with the matter.