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

Saturday, May 13, 2017

week ending May 13

 Less is more when it comes to Federal Reserve policy - Larry Summers - Friday’s US employment report was generally strong, with job growth of 211,000, declining unemployment and a drop in the number of workers involuntarily confined to part-time work.  The data, along with indications that growth in the second quarter is likely to come in above 3 per cent, suggest the economy is reasonably robust. But these economic data present difficult issues of interpretation and policy choice for the US Federal Reserve. Is the economy or the stock market enjoying a “sugar high” or is the current path sustainable? What weight should the Fed give strong employment figures relative to gross domestic product growth that remains modest by historical standards and relative to low rates of inflation and expected inflation? How should the Fed treat the tension between the great uncertainty that so many economic actors experience and near-record low levels of market volatility and expected volatility?   Given how little the administration has actually changed policy, recent economic performance was pre-determined before Donald Trump took office.   Fundamentals unrelated to the new administration have strengthened, particularly as strong earnings reports for the first quarter have come in, growth abroad has strengthened and bond yields have declined.   The greatest puzzle regarding the stock market is not its level but its lack of volatility. We have for months been in a period where volatility has been low by historic standards, despite what seems high policy uncertainty. Perhaps this reflects technical factors in the market. It may also be that uncertainty is a kind of self-denying prophecy as it causes investors to scale back their leverage, which in turn limits volatility. It is probably important to recognise also that much of market volatility reflects factors other than economic policy. There is also the observation that price inflation remains very much under control and that some wage growth in excess of price growth would be desirable given the erosion of labour’s position in the economy over the last period. The Fed will have little room to respond if it overdoes things and the economy goes into recession. Sometimes the hardest and most important decisions in government involve doing less rather than more. This is one of those times for the Fed. Caution should be its watchword.

Key Measures Show Inflation close to 2% in April - The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning: According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.1% (1.4% annualized rate) in April. The 16% trimmed-mean Consumer Price Index also rose 0.1% (1.0% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics' (BLS) monthly CPI report. Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers rose 0.2% (2.0% annualized rate) in April. The CPI less food and energy rose 0.1% (0.9% annualized rate) on a seasonally adjusted basis.  Note: The Cleveland Fed released the median CPI details for April here. This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.4%, the trimmed-mean CPI rose 2.0%, and the CPI less food and energy rose 1.9%. Core PCE is for March and increased 1.6% year-over-year. On a monthly basis, median CPI was at 1.4% annualized, trimmed-mean CPI was at 1.0% annualized, and core CPI was at 0.9% annualized.  Using these measures, inflation was soft in April.  Overall these measures are mostly close to the Fed's 2% target (Core PCE is still below).

April 2017 CPI Inflation -  Kevin Erdmann - Non-shelter Core CPI, year over year, now down to 0.8%.  Luckily those rent checks that homeowners write to themselves and put in their bank accounts each month are keeping inflation near its target level.*  That's why the Fed needs to raise rates next month, because all that rental income is just causing an avalanche of fixed residential investment.  We need to stamp this thing out before it gets out of hand. Are we going to get a repeat of 2008, where by the time the Fed meets, 5 year inflation spreads in the TIPS market are back down below 1.5%, and FOMC members will explain to us how we can't really trust market measures? OK, Wall Street Journal!  Time for one of your well-timed op-eds, explaining how it's the Fed's job to create panics and contractions!  This is your speciality.  It's your time to shine!’

Money-Supply Growth Fell to an 8-year Low in March - The supply of US dollars has slowed during early 2017 with March's year-over-year percentage increase hitting a 103-month low of 5.9 percent. The last time the year-over-year growth rate was lower was during September of 2008, when the growth rate was 5.2 percent. Monthly year-over-year growth rates in the money supply have been falling each month since October. (All the numbers used here were posted in mid-April 2017.)  Over the past eight months or so, money supply growth rates have become somewhat volatile with the growth rate surging from 6.7 percent in late 2015 up to 11.3 percent by late 2016, and down again to March's multi-year low. nThe M2 measure also showed a downward turn in recent months, although not to the same extent as the "Austrian" measure. The year-over-year change in M2 during March was 6.3 percent which put M2 growth near a 12-month low. M2 movements were otherwise unremarkable, however.   In fact, the AMS measure has now dropped below that of M2, which has not happened since the period of 2005 to 2008.  A similar phenomenon occurred from 2000 to 2001. In both cases, sizable declines in the AMS measure below M2 signaled brewing economic troubles. Two factors that may be contributing to a decline in money supply are the drop in Treasury Deposits at the Fed, and a relative lack of new loans being made in the banking sector.   In March, growth in commercial and industrial loans began to fall to multi-year lows, with April's totals showing the smallest amount of growth in loan activity since 2009. As Frank Shostak explains here, the money stock tends to shrink when banks cut back on loans:

 US Q2 GDP Growth Expected To Rebound -- Tepid economic growth in the first quarter is on track to revive in Q2, according to estimates from several sources. Although the forecasts are wide-ranging at the moment, the unifying factor is a widespread view that output will pick up in the second quarter after a sluggish start to the year. Among the more bullish estimates at the moment is the Atlanta Fed’s GDPNow model, which is projecting a dramatic acceleration in growth to 4.2% for Q2 (as of May 4) — far above the stall-speed gain of just 0.7% reported by the Bureau of Economic Analysis for Q1. The GDPNow resonates with the crowd these days in the wake of the model’s generally accurate forecast of a sharp deceleration in Q1 growth. Recent polling of Wall Street analysts reflects an upbeat outlook too, according to CNBC’s Rapid Update data for May 4. The survey’s median forecast is projecting a solid 3.5% bounce in Q2 growth.Other estimates see a softer rebound. The New York Fed’s latest nowcast, for instance, calls for a 1.8% advance in Q2, based on the May 5 update.Nonetheless, it’s notable that there’s widespread agreement that Q1’s feeble growth rate isn’t expected to deteriorate further in Q2. Surprising? Not really. Recent analysis of business-cycle risk (see last month’s update, for instance) has routinely indicated that the probability is virtually nil that the US is slipping into a recession.The caveat is that there’s a long road ahead before the initial Q2 GDP report is published in late-July. A lot could go wrong between now and then, although a lot could go right. In any case, Q2 estimates at this stage are little more than guesstimates. That said, the early numbers look encouraging, including last week’s employment report for April, which revealed a snapback in job creation after a weak gain in March. The Conference Board’s (CB) Employment Trends Index, a multi-factor measure of the labor market, is signaling a bullish future too.

Just One Week Later, Atlanta Fed's Q2 GDP Forecast Crumbles From 4.3% to 3.6% ---  Four months after the Atlanta Fed started off its Q1 GDP nowcast at 2.5%, then raised it just shy of 3.5% before eventually crashing, and closing the books at 0.2%, slightly below where the BEA reported Q1 GDP, on May 1 the regional Fed released its initial GDP forecast for Q2,and, as we noted last week, it came as no surprise to anyone that the initial estimate was just a tad optimistic at 4.3%, to which we commented that if past is prologue, "expect this number to end roughly 50% lower in three months when the first advance Q1 GDP report is released."One week later, we are a third of the way there, because moments ago, the Atlanta Fed did just as expected, and chopped off a whopping 17% from its initial estimate, revising its Q2 GDP estimate from 4.3% as of May 1 (and 4.2% as of May 4) to 3.6%, due to a decline in forecast real consumer spending growth and real private fixed investment. The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 3.6 percent on May 9, down from 4.2 percent on May 4. The forecast for second-quarter real consumer spending growth and real private fixed investment growth declined from 3.0 percent and 6.9 percent to 2.7 percent and 5.3 percent, respectively, after the employment situation release by the U.S. Bureau of Labor Statistics on Friday. The model's estimate of the dynamic factor for April—normalized to have mean 0 and standard deviation 1 and used to forecast the yet-to-be released monthly GDP source data—has fallen from 0.76 to 0.32 since the last GDPNow update on May 4. The forecast of the contribution of inventory investment to second-quarter growth decreased from 1.11 percentage points to 0.99 percentage points after this morning's wholesale trade report from the U.S. Census Bureau.

 U.S. Commerce's Ross says 3 percent GDP growth not achievable this year | Reuters: The U.S. economy will fall short of the Trump administration's goal of 3 percent growth this year and will only achieve that when its regulatory, tax, trade and energy policies are fully in place, Commerce Secretary Wilbur Ross said on Tuesday. The GDP target "is certainly not achievable this year," Ross told Reuters in an interview. "The Congress has been slow-walking everything. We don't even have half the people in place." But Ross said it ultimately could be achieved in the year after all of Republican President Donald Trump's business-friendly policies are implemented. He noted that delays were possible if the push for tax cuts was slowed down in Congress. Ross also signaled the Trump administration would try to use existing tools to aggressively enforce trade rules and insist on fairer treatment for U.S. goods, rather than adopt the slash-and-burn approach Trump discussed on the campaign trail in 2016. The comments appear to represent another move to the center by the administration, with Ross acknowledging that trade deficits for things like imported oil are "blameless" and not inherently bad. Ross, a billionaire investor, said the Commerce Department is working on some "self-initiated" anti-dumping and anti-subsidy cases on behalf of private industries that could help shield them from unfairly traded imports. "I believe that enforcement will be one of the major tools for fixing things," he said.

For The First Time, You Can Track Every Dollar The Government Spends -- Despite paying trillions in Federal taxes every year, Americans' requests for a clear, detailed breakdown of where their money goes every year, have gone unanswered and been ignored by both Republican and Democrat administrations for one simple reason: transparency has an unpleasant way of mutating into accountability, which is the scariest thing imaginable for any career politician. Not any more.  On Tuesday, the US Treasury launched a new website designed to track virtually every dollar - out of roughly $4 trillion - in federal spending. The new website,, was created to put data into the hands of taxpayers by empowering them to track how their tax dollars are spent. The site is designed to follow federal agency spending and, for the first time, links spending data to awards distributed by the government. In the statement, the Treasury said that “the new site provides taxpayers with the ability to track nearly USD in government spending from Washington, DC directly into their communities and cities,” says Treasury Secretary Mnuchin. “Furthermore, greater access to data will drive better decision making and strengthen accountability and transparency – qualities central to the Administration’s focus on a more innovative and effective government.”Federal spending flows through hundreds of federal agencies and programs to thousands of companies and nonprofits and millions of individual citizens. Visitors to the site can search by location, federal agency or by keyword for a specific program or type of spending. They can also search for a specific recipient of federal funds, such as a business or university. Treasury released this new version of the site in accordance with Digital Accountability and Transparency Act (DATA Act) requirements. The DATA Act was enacted into law in May 2014 to make federal spending data more accessible, searchable, and reliable. The data on is compiled by Treasury with the assistance of other federal agencies and will be updated and published on the site quarterly, with the first batch of data published in May 2017.

 The good old days, when men were men and Republicans cared about deficits - Catherine Rampell -  You may want to sit down before you read what I’m about to tell you. It appears that — maybe — Republicans don’t actually care much about deficits at all, at least not when a fellow Republican is president. Here are the results from an Economist/YouGov poll conducted in April 2014. When respondents were asked whether the government should prioritize reducing the budget deficit or cutting taxes, a slight majority (54 percent) said reducing the deficit. The shares preferring deficit reduction were roughly equal for Democrats and Republicans, though the Republicans were more likely than Democrats to name tax cuts over “not sure.” The same poll question was asked again last week. Somewhat improbably, Democrats’ responses are…exactly the same. Republicans, however, are now more likely to say government should prioritize tax cuts over deficit reductions: The Economist/YouGov, April 29 - May 2, 2017.  So much for the conservative party being fiscally conservative.

 US Treasury Collects A Record $1.929 Trillion In Taxes In Fiscal 2017 - According to the just released Monthly Treasury Statement, in April the US Treasury collected $456 billion and spent $273 billion, resulting in a budget surplus of $182 billion, higher than the $179 billion expected, and well above last year's $106.5 billion surplus. In a surprising jump in government revenues, receipts rose 3.9% y/y in April while outlays plunged a whopping 17.7% y/y, likely the result of debt ceiling considerations. For the 7 months in the fiscal Year To Date through April 2017, the Treasury collected $1.929 trillion in tax revenues, up $14 billion from the $1.915 trillion collected fir the same period in 2016.As the chart below shows, on a YTD basis, after lagging for the past 4 months, as of April the amount of taxes collected YTD has set a new record at just under $2 trillionDespite the record tax collections, for the YTD period, the toal deficit was $344.4BN, down modestly from $352.9BN last year, thanks again to the recent jump in receipts which were up 0.7% YTD while outlays rose 0.2%. We expect the deficit to grow again next month once the artificial spending considerations associated with last month's debt ceiling worries are no longer an issue, at least until September.The largest portion of the tax revenue collected YTD came from individual income tax, which was $945 billion. This was followed by Social Security and other payroll taxes, equal to $870 billion. Income taxes collected from US corporations amounted to only $160 billion and was just over the $154 billion in other taxes and duties collected.  With some 153.2 million people employed in the United States in April, this means that the $1.929 trillion in taxes collected equaled approximately $12,600 taxes collected per worker for the first 7 months of the year, on aveerage.

U.S. Military: 'We Are Prepared to Use Nuclear Weapons' -- Twice in seven days the U.S. shot nuclear-capable long-range missiles toward the Marshall Islands, but the same government refused in March to join negotiations for a new treaty banning nuclear weapons . Tests conducted April 26 and May 3 from Vandenberg Air Force Base northwest of Lompoc, California, launched modernized Minuteman-3 ballistic missiles, and the U.S. Air Force said in a statement that such tests ensure "the United States' ability to maintain a strong, credible nuclear deterrent as a key element of U.S. national security…"  In late March, U.S. Ambassador to the United Nations Nikki Haley explained why the U.S. would boycott the "treaty ban" negotiations that began March 27 at the UN in New York City. Haley said about nuclear weapons, "[W]e can't honestly say that we can protect our people by allowing the bad actors to have them, and those of us that are good, trying to keep peace and safety not to have them." North Korean president Kim Jong-un could have said the same thing about his seven nuclear warheads, especially in view of US bombs and missiles currently falling on seven countries—Iraq, Afghanistan, Syria, Pakistan, Yemen, Somalia, and Libya—and engagement in massive war games off the Korean peninsula. Ambassador Haley managed to avoid being two-faced on one level. Joining the ban treaty talks would have been openly hypocritical while her colleagues in the war department were preparing both new nuclear weapons production and a series of test launches. Another April test , at the Tonopah bombing range in Nevada, dropped a so-called "B61-12" the newest US H-bomb now in development and scheduled to go into production after 2022.  As it did Feb. 21 and Feb. 25, 2016, the Air Force regularly tests Minuteman-3s. Deputy Pentagon Chief Robert Work explained before the Feb. 25 launch that the US had tested "at least" 15 since January 2011, "And that is a signal ... that we are prepared to use nuclear weapons in defense of our country if necessary." This is a Big Lie. To "use" nuclear weapons produces only massacres, and massacres are never defensive.

The US Bill H.R. 1644 to kill Russian food export and Chinese trade --  At the end of April 2017, the United States government apparatchiks have officially  divorced themselves from reality by starting two initiatives, both being a severe infringement on Russia’s sovereignty. First is an announcement of the US government tender to run a “refugee resettlement center” in Moscow for the Eurasian countries each of which having its own US Embassy. So far there has been no official Russia’s reaction to this announcement. On April 29, the US House of Representatives passed a newly minted H.R. 1644: Korean Interdiction and Modernization of Sanctions Act. Despite of its title, the Bill targets Russia, China, Iran and Syria by a slew of measures that normally would be implemented only in a time of war. At the look of it, the US Congress members claim to enforce the control over implementation of the UN Security Council resolution that limits the trade of the DPRK with other countries, and bans the supply of weapons, aircraft, missiles, nuclear and other technologies. However, the document also provides the “legal basis” for US military control over Russian ports in the Far East and in Syria, and also over the Iranian and Chinese ports. What the Russian politicians and observers found the most amazing was the fact that the UN Security Council has never requested the US to provide control over implementation of its resolution on the DPRK.As it is being presented, the H.R. 1466 Bill is an affront not only to common sense, but also to the fundamental norms of international law. For starters, if it becomes a law the Bill will allow the US military to inspect, search and seize any vessel or aircraft suspected in violation of the anti North Korea sanctions per their own discretion. It also gives the US military the authority to inspect the sea ports in Russia, Syria, Iran and China, implying that resisting will result in much broader sanctions against these four countries.If adopted and signed into law by President Trump, the bill will also sanction Russia’s global food trade due to the North Korean workers being employed in Russia’s agricultural sector, at the time when Russia overtakes the US and Canada as a major grain supplier. The Bill, apparently, stands to completely ban the trade of Russia’s produced food over the world in order to replace it with the US produced Genetically Modified Organisms that the US sells as food.

 US COAST GUARD CHIEF: Russia has 'got us at checkmate' in the Arctic -- The commandant of the U.S. Coast Guard issued a stark warning on Wednesday that Russia was leagues ahead of Washington in the Arctic. And while the warming Arctic opens up, the United States could be caught flat-footed while other geopolitical rivals swiftly step in.  Adm. Paul Zukunft, commandant of the U.S. Coast Guard, warned that Russia is building up a huge military and industrial presence in the region while the United States dawdled. Russia is showing “I’m here first, and everyone else, you’re going to be playing catch-up for a generation to catch up to me first,” said Zukunft in remarks before the Center for Strategic and International Studies. “They’ve made a strategic statement,” he said.  Take icebreakers, specialized ships that can punch through thick Arctic ice and ensure access to sea lanes for both commercial and military ships. Russia has 40, while the United States has only two in service today, and only one really available for the Arctic.  As Arctic ice recedes, it’s opening access to a rich bed of natural resources other countries like Russia and China are hungrily eyeing: An estimated 30 percent of the world’s untapped gas reserves, 13 percent of the oil reserves, and $1 trillion in minerals. The United States will struggle to keep other geopolitical rivals from filling the void without a proper Arctic footprint, Zukunft warned.  The Polar Star, the last remaining U.S. heavy icebreaker built in the 1970s, is well past its prime. “Having only one heavy icebreaker … it is the one aspect I lose sleep over,” he said. Zukunft is pushing for funding from Congress to build six new icebreakers by 2023, high aims given the Coast Guard’s rocky start in the federal budget process.

The Trump-Duterte Bromance -- Last weekend, US President Donald Trump came under heavy criticism, including from officials within his own administration, for extending a formal invitation to his Filipino counterpart, Rodrigo Duterte.According to the White House, the two controversial leaders had a "very friendly conversation". To the chagrin of human rights groups, the American president went so far as to praise the Duterte administration's brutal crackdown on illegal drugs as "[a] very hard [effort] to rid its country of drugs, a scourge that affects many countries around the world".  In fact, during their first phone conversation in December, Duterte claimed that Trump "was quite sensitive also to our [concerns] about drugs", and "was wishing me success in my campaign against the drug problem".According to the media and civil society groups, Duterte's "war on drugs" has reportedly claimed an average of a thousand lives every single month.   The anti-crime campaign, however, is popular at home, where the majority of the population has expressed trust and approval for their unorthodox leader.   A human rights lawyer recently sought to initiate a formal complaint against the Filipino president at the International Criminal Court, accusing Duterte of committing crimes against humanity. Amid concerns over the human rights situation in the Philippines, the European Union is considering imposing sanctions on the country, while the US State Department is expected to cancel a $434m development aid package.To be fair, Trump's invitation to the Filipino leader makes perfect geopolitical sense, given growing concerns over the Philippines' lurch into the Chinese sphere of influence in recent months. Moreover, both Trump and Duterte seem to have developed an unusual rapport, given their almost identical populist, anti-establishment bent.

Donald Trump hasn’t quite thought through his first foreign trip to Saudi Arabia, Israel and the Vatican -- Not since Ibn Batuta, travelled the Middle East in the 14th century has anyone set out with higher ambitions that Donald Trump. Batuta, a Moroccan Muslim traveller and scholar, had a few things in common with Trump. He reached what is now Saudi Arabia. He went to Jerusalem. He even had a keen eye for nubile ladies – there were a few wives, not to mention a Greek slave girl to be groped. But there the parallels end. For Ibn Batuta was sane.Yet now we know that Trump thinks he’s touching the three monotheistic religions because he’s going to Riyadh, Jerusalem and then the Vatican (not quite in the Middle East but what’s a hundred miles for a guy like Trump). A few problems, of course. He can’t go to Holy Mecca because Christians are banned and the old king of Saudi Arabia represents a head-chopping Wahabi autocracy some of whose citizens have paid for – and fought alongside – the dreaded Isis which Trump thinks he is fighting.Then when he goes to Jerusalem, he will meet Benjamin Netanyahu who hardly represents world Jewry and plans to go on thieving Arab lands in the West Bank for Jews, and Jews only, whatever Trump thinks. Then he’ll turn up at the Vatican to confront a man who – great guy though he may be – only represents Roman Catholics and doesn’t much like Trump anyway. Ibn Batuta was away from home for around a quarter of a century. Thank heavens Trump’s cutting that back to three days.Trump says he will fight for peace deal between Israel and Palestine Of course, he’s no more going to be talking to “Islam” in Saudi Arabia than he is “Judaism” in Jerusalem. The Sunni Saudis are going to talk about crushing the “snake” of Shia Iran – and we must remember that Trump is the crackpot who shed crocodile tears over the Sunni babies killed in Syria last month but none for the Shia babies killed in Syria a few days later – and hope they can re-establish real relations between their execution-happy kingdom with the execution-happy US. Trump might just try to read UN rapporteur Ben Emmerson’s latest report on the imprisonment of human rights defenders and the torture of “terror” suspects in Saudi Arabia. No. Forget it.

Commerce secretary warns Canada against 'retaliatory action' on lumber tariff - POLITICO: Secretary of Commerce Wilbur Ross on Saturday doubled down on the imposition of tariffs on Canadian softwood lumber, saying they were not based on "political considerations" and that "threats of retaliatory action" are "inappropriate." "The Department of Commerce's recent preliminary decision to impose tariffs on Canadian softwood lumber was based on the facts presented, not on political considerations," Ross said in a statement. "If any Canadian or British Columbian official wishes to present additional information, we will consider it carefully and impartially." Ross added that a "negotiated settlement is in the best interest of all parties" and the U.S. is willing to work toward one. "Threats of retaliatory action are inappropriate and will not influence any final determinations," he continued. Last month, the Trump administration imposed a roughly 20 percent tariff on softwood lumber imported from Canada, garnering bipartisan support. In a letter sent Friday to British Columbia Premier Christy Clark, Canadian Prime Minister Justin Trudeau called the tax "unfair," saying he is "carefully and seriously" considering trade action on coal exports. "We share the commitment to fighting climate change and protecting the environment," Trudeau wrote. "We strongly disagree with the US Department of Commerce's decision to impose an unfair and punitive duty on Canadian softwood lumber."

US, China reach access deals for beef, poultry | TheHill: The White House said Thursday that it has struck agreements with China on several persistent trade irritants that will help reduce the massive trade deficit with Beijing. Commerce Secretary Wilbur Ross announced deals that will send U.S. beef exports to China, allow Chinese imports of cooked poultry, expand U.S. electronic payment services and provide for faster regulatory approval of biotechnology products by Beijing.China and the U.S. had previously committed to more market access on most of these trade issues over the years but implementation had been repeatedly delayed. The latest agreements set a series of new deadlines for the trade issues although specifics about how each component will be accomplished weren’t included in the Trump administration’s fact sheets provided to reporters. Ross highlighted his expectation that the improved flow of trade with China will start lowering the nation's $347 billion trade deficit with China by the end of the year although he didn't provide any estimates of how much. “By the latter part of the year, you should see something," he said. Trade deficits have been a major focus of the Trump administration with studies planned to determine global problem spots. As part of the deal, Ross told reporters that China has agreed to accept U.S. beef imports by July 16, which would be nearly a year after Beijing said it would start buying beef again under the Obama administration. The two nations agreed to restart sales in September but U.S. producers were unable to get their beef into China. 

Beijing, US reach trade deal to boost American imports to China in wake of Xi-Trump summit | South China Morning Post: The United States has reached a trade agreement with Beijing that will boost shipments of American liquefied natural gas, beef and other products, as well as improve its market access of financial services to China. The accord follows pledges by US President Donald Trump and Chinese President Xi Jinping to address a US$350 billion trade imbalance in China’s favour by coming up with concrete measures within 100 days of the two leaders’ summit in Florida last month. US Commerce Secretary Wilbur Ross hailed the agreement as “a herculean accomplishment” forged in record time. “This is more than has been done in the whole history of US-China relations on trade,” Ross told reporters on Thursday evening at the White House. “Normally trade deals are denominated in multiple years, not tens of days.”US financial industry shares a large portion of this agreement on market access. US credit rating services, electronic payment services and bond underwriting business are now all allowed in Chinese market. The US would also allow American companies to ship liquefied natural gas to China. Regular LNG exports from the US would give the country a chance to supply China with a fuel that is in high demand because it burns cleaner than coal and oil and is therefore becoming the fuel of choice for electricity generation, along with renewable sources. The LNG export market is currently dominated by Australia, Qatar and Malaysia. Under this agreement, China will accept beef from the US into the Chinese market, effectively ending the 14-year ban on American beef after an outbreak of mad-cow disease in US in 2003. Reciprocally, US will allow Chinese cooked chicken to sell in the American market. 

Cheap Chinese Aluminum Is a National Security Threat -- Cheap Chinese steel has upset U.S. steel producers for years, as Chinese manufacturers have unloaded excess capacity on world markets at unbeatably low prices. The Trump administration has even invoked the supposed threat to national security from cheap imports to threaten trade restrictions on steel imports. But the United States has plenty of steel-manufacturing capacity to meet its defense needs. What’s genuinely threatened, however, is another sector altogether: Aluminum. A glut of cheap Chinese aluminum has done more than hollow out that industry; it may also actually be jeopardizing national security.Since China joined the World Trade Organization (WTO) in 2001, cheap Chinese aluminum has flooded American markets, closing factories and putting people out of work. The number of aluminum smelters in the United States has fallen from 23 to five in that time. Eight smelters have either shut down or scaled back operations since 2015, and about 3,500 aluminum jobs have disappeared in the last 18 months alone.A bigger worry, however, is national security. High purity aluminum is used to make certain kinds of jets, such as Boeing’s F-18 and Lockheed Martin’s F-35, as well as armored vehicles. But the United States now has just one domestic manufacturer of high purity aluminum left — Century Aluminum’s Hawesville, Ky. plant, which is currently operating at 40 percent capacity amid dropping prices.The prospects for importing high purity aluminum, from a geopolitical risk standpoint, aren’t friendly; only a few smelters in the world produce it, and those are located mostly in Russia, the Middle East, and China. The situation prompted the Trump administration to launch a probe into aluminum imports on April 26, after launching a similar probe on steel earlier in the month.

Protectionism or National Security? Import Limits on Steel and Aluminum | Econofact - Menzie Chinn - The Trump Administration has proposed a number of trade related measures purportedly on the basis of national security. The first involves invoking a seldom-used provision of the trade law to investigate whether imposing import restrictions for steel and aluminum is justified by national security reasons. The second is the creation of a new White House office, the Office of Trade and Manufacturing Policy, superseding and replacing the National Trade Council established at the outset of the Trump Administration. The question is whether the threats posed to national security are genuine, or merely a means of protecting domestic industries under the guise of national security. The primary determination made by the Department of Commerce under this statute has historically been whether the U.S. has sufficient productive capacity for the relevant type of article. It is unlikely that import competition in the steel and aluminum industries poses a real threat to national security, given ample supply of domestically sourced steel, and the presence of reliable alternative non-domestic sources of aluminum. Hence, these investigations, if conducted as they have in the past, will likely result in negative determinations. If the investigations do result in protectionist measures, these are likely to raise prices for downstream consumers in the defense industry, as well as the overall economy. A finding that leads to protectionist measures is also likely to invite retaliation by our trading partners, which could lead to a process of escalating protection.

U.S. Senate confirms Trump trade representative ahead of NAFTA talks | Reuters: The U.S. Senate on Thursday approved President Donald Trump's nominee for U.S. Trade Representative, a critical position ahead of renegotiations of the North American Free Trade Agreement with Canada and Mexico. Delays in Senate confirmation of veteran trade lawyer Robert Lighthizer more than 100 days after his nomination have set back Trump's trade agenda, including the start of talks about revamping one of the world's biggest trading blocs. Lighthizer won support from both Republicans and Democrats in the Republican-led Senate on Thursday, with an 82-14 vote to confirm his nomination. The administration has had to wait for Lighthizer to be in place before triggering the formal process to begin renegotiating NAFTA. It was not immediately clear when the White House would begin that process. To do so, the Trump administration must send a letter to Congress declaring its intention to launch negotiations in 90 days. The Republican president has said the 23-year-old trade pact devastated U.S. workers and has vowed to tear it up if he fails to get a better deal. Some Democrats, while critical of Trump's views on trade, said they were confident Lighthizer would work to help U.S. workers. "He's a real pro," Senator Ron Wyden, a Democrat from Oregon, said before voting in favor. Lighthizer's approval came despite the objections of two Republican senators, John McCain of Arizona and Ben Sasse of Nebraska, who said they were worried he did not appreciate NAFTA's benefits.

Jared Kushner Needs to End the No-Bid Contract - American Conservative -- If you’re Jared Kushner, what could possibly be harder than mending U.S.-Mexico relations? Try being Washington’s front man for streamlining the out of control, stagnant federal government bureaucracy.As the recently-appointed head of the new Office of American Innovation, Kushner has been tasked with incorporating private sector solutions into some of the government’s most dysfunctional agencies, operations, and services. While this might seem like an impossible task, there is one way the new office can clinch a big first win: stopping the government’s wasteful, uncompetitive practice of awarding sole-source (“no-bid”) contracts.In typical Washington fashion, hasty bureaucrats oftentimes dole out large government contracts to their favored multi-million dollar corporations without even considering others for the job. Key decision-making factors like cost, efficiency, and reliability are tossed to the curb in the name of working in “the public interest.”These bureaucrats are spending our tax dollars like children rolling down the supermarket aisles. It is irresponsible and unsustainable. If the Trump administration is serious about “draining the swamp,” then these no-bid contracts need to be blasted into the history books.

Bernanke Shuns Trump Tax Cuts, Admits "Lot Of Americans Left Out Of Recovery" --Ben Bernanke on Sunday pressed for infrastructure spending and tax reform, saying they would benefit the economy more than tax cuts.“I think that it is important, as I mentioned, even though the recovery is proceeding, the underlying growth path is not very strong. Productivity gains have not been very strong,” Bernanke said on CNN’s “Fareed Zakaria GPS,” referring to President Trump’s proposed tax cuts.The former U.S. Federal Reserve Chairman said the Trump a dministration's plans to cut personal tax rates appear ill-timed and may do little to spur a higher rate of economic growth.“It would have made more sense to have more tax cuts and more spending in 2013 or 2012,” Bernanke said in an interview on Bloomberg Television. “From that perspective with unemployment at 4.5 percent, the case today is a little weaker.”“What we want to do is try to improve the supply side of the economy, make it grow faster, have greater potential,” he said.“And I think that probably that to do that, I would think that on the fiscal side, thatinfrastructure spending that improves our roads, our bridges, our schools, and tax reform, not necessarily tax cuts, but reform that makes the system simpler, more efficient, those would probably be the highest-return fiscal actions in terms of getting higher growth,” he continued.“If I have to increase the deficit, I think I'd rather do it on infrastructure and maybe tax reform,” he added. Bernanke also said partisan politics makes lawmakers dig in their heels rather than working together to help improve the economy.

‘Competitive’ distractions: Cutting corporate tax rates will not create jobs or boost incomes for the vast majority of American families - Tax reform has moved to the center of the policy stage. In recent months, proposals to reform the American corporate tax code have included relatively new and untested ideas that have garnered much of the attention, with the “destination-based cash-flow tax” being the exemplar.1 In the end, however, we predict that calls for corporate tax “reform” will end up where they have too often been in recent years: with loud claims that American corporate income tax rates are too high, and that these allegedly too-high rates somehow hurt American “competitiveness.” Indeed, the recent Trump administration tax proposals provide large rate cuts for corporations.

  • What proponents of corporate tax cuts argue: A central argument proponents of corporate tax cuts make is that U.S. corporations face higher tax rates than those of our peer countries; they claim that this differential hurts U.S. “competitiveness” (a word they rarely define) and discourages companies from investing in the U.S. Consequently, they further claim that cutting corporate tax rates would increase American companies’ “competitiveness,” which they imply (but rarely argue directly) would redound to the benefit of most American families.
  • What this report finds: We find their central argument—that U.S. corporations face high corporate taxes—to be empirically false. While U.S. statutory tax rates are higher, the effective tax rate paid by corporations is in fact roughly equivalent to the effective tax rates of our peer countries, due to loopholes in the U.S. tax code. Further, we find that even if the effective corporate tax rate were higher (if loopholes were closed), economic theory and data do not support the idea that cutting these rates would encourage further investment in the U.S. or benefit Americans in general; we find that such cuts would primarily benefit a small number of high-income capital owners while increasing the regressivity of the tax system overall.
  • Recommendations: If we wish to reform corporate tax policy to benefit the vast majority of Americans—and not just a wealthy few—we should not be talking about lowering corporate tax rates or offering other tax breaks to corporations; we should instead be focusing on closing loopholes in the system that have eroded the corporate income tax base, to ensure the corporate sector is paying its appropriate share of taxes. 

Troubled Wisconsin Man Goes on 50 State Killing Spree -  On Thursday afternoon, in Washington D.C., Paul Ryan, 45, entered his place of work in a murderous frenzy, killing thousands and injuring millions more, before he was finally stopped by the Senate. Based on a manifesto he posted to the internet the evening before his assault, it is believed he was specifically targeting women, poor people, and people of color. A deeper dive into his public profile and social media shows a checkered past. He has expressed sexist, classist, and racist leanings for many years, although people close to Ryan say they did not expect him to act on them so effectively. Clearly a deeply troubled man, he has alternately blamed his actions on President Obama, President Trump, and God. Sources indicate he may be at least partially behind a conspiracy theory, widely circulated in certain circles, that the government has been secretly attempting to gain control of the wealth and guns of elderly Caucasian men, before castrating them. While some co-workers describe him as a passive man, colleague Maxine Waters calling him “spineless” and “gutless” for example, at least one co-worker, Joe Kennedy, was not surprised by the ferocity of his violent tear. Joe had in fact spoken up about concerns about Ryan’s recent behavior, describing it as being without mercy, and “an act of malice.” Had his words been heeded in a timely manner, many, many lives might have been saved. Recently Ryan had aligned himself with a local gang known as ‘The Freedom Caucus’ notorious for their longstanding feuds with the groups American Women and Thugs. A family member, speaking anonymously, expressed there had been an ongoing concern among those close to Ryan about what he might do under the influence of this group. Update: Not initially reported, Ryan is a Caucasian Christian, apparently radicalized as a child in Wisconsin through an organization called St. Mary’s Catholic School. Multiple sources have now confirmed that in addition to The Freedom Caucus, he also had connections to a radical Christian terrorist cell in D.C. comprised of lobbyists, CEOs, and other politicians, known as The Republicans. We understand a number of other members were taken into custody at the same time as Ryan, and a group mug shot has been released.

GOP Congressman: ‘People Who Lead Good Lives’ Don’t Have Pre-Existing Conditions - Patheos  - Alabama Rep. Mo Brooks claims “people who lead good lives” don’t have pre-existing conditions, and people without pre-existing conditions have “done things the right way.” Brooks made his ridiculous and insulting claims during an interview with CNN’s Jake Tapper earlier this week. At the time Brooks told Tapper:  (the new proposal) will allow insurance companies to require people who have higher healthcare costs to contribute more to the insurance pool. That helps offset all these costs, thereby reducing the cost to those people who lead good lives, they’re healthy, they’ve done the things to keep their bodies healthy. In essence, Congressman Brooks is arguing sick people don’t deserve affordable healthcare because “people who lead good lives” don’t have pre-existing conditions; and if you do have a pre-existing condition, you probably deserve it because you have not been living a “good” life. In addition, Brooks believes healthy people should not be responsible for sick people because people without pre-existing conditions have “done things the right way.” Explicating Brooks’s bizarre and offensive reasoning, Patheos blogger Jeana Jorgensen observes that Brooks is the victim of “sympathetic magic,” noting: … this pernicious and prevalent form of sympathetic magic is most at work in the belief systems of people who’ve ingested certain kinds of institutional religion… These religions tell people that there’s an all-knowing, judgmental deity watching over us and getting ready to sort us into behavior-appropriate afterlives; that things happen to us for a reason; and that there’s a definite link between how moral/faithful you are and what you deserve. And let’s not forget the persistent sex-negativity found in such religions, either.Jorgenson does a nice job of giving a scholarly account of Brooks’s deeply flawed reasoning. Yet the real world consequences of such erroneous critical thinking will have tragic, even fatal results. Even more alarming, Brooks is apparently not alone in his critical thinking failure. In fact, Brooks’s disdain for those with pre-existing conditions is reflected in the new GOP healthcare reform bill passed earlier this week. The new Trumpcare legislation will allow insurance companies to deny coverage for pre-existing conditions, including rape, sexual assault, domestic violence, PTSD, and a whole host of other pre-existing conditions.In short, under Trumpcare insurance companies will be allowed to discriminate against customers who have pre-existing conditions, and will be allowed to refuse payment for problems stemming from them.

First Female A-10 Combat Pilot Just Made Sure Congress is Required to Use New GOP Healthcare Bill Coverage - As the first full week of May closed in the House of Representatives, the “repeal and replace” options put forward for Obamacare had passed. Barely. While Trump celebrated the win, many felt conflicted about their votes. Yet there’s one sure sign of hope, even for the critics of Trump Care, and that came from the desk of Martha McSally. McSally wanted to ensure that the rules that apply to all Americans really did apply to all Americans. Members of Congress and the Senate had been exempted from some of the provisions concerning preexisting conditions, specifically the state waiver provisions of the American Health Care Act. “Any law we pass that applies to our constituents must apply equally to Members of Congress as well. Anything short of that is hypocrisy. Congress must abide by the laws it passes and should be treated no differently than other hardworking Americans,”  Rep. McSally said. “My measure eliminates double standards by preventing Members of Congress from exempting themselves from American Health Care Act.”  This is welcome news to everyone outside of Congress. The MacArthur Amendment to the American Health Care Act would have exempted members of Congress and their staff from the facing what we all will face. Not anymore. H.R. 2192, is a standalone bill that will repeal this provision if the American Health Care Act becomes law. Her amendment passed the House by a vote of 429-0.

If Trumpcare Ends Up Happening, Up to 7 Million Veterans Could See Their Health Care Ruined - The abominable AHCA (or simply Trumpcare), the House Republican’s replacement of Obamacare, is being felt far and wide. While the Senate has already said it has no intention of taking up the House version and the hope is it will die there, many are frightened by the sheer amount of malice the bill contains. Among the many negatives in the Republican plan to repeal Obamacare, one of the hastily added "improvements" to the bill could wind up making 7 million military veterans ineligible for health care tax credits. The very party that shamelessly exploits the troops out of political expediency, feigning patriotism in the form of flag pins, is now screwing veterans, and Press Secretary Sean Spicer has absolutely no answer for it.  The snafu was discovered by Chris Jacobs, the former policy adviser for the House Republican Conference under Chairman Mike Pence. Jacobs discovered:  The most recent estimates suggest about 9.1 million individuals are enrolled in VA health programs. However, a 2014 Congressional Budget Office score of veterans’ choice legislation concluded that about 8 million [veterans] qualify to enroll in VA’s health system but have not enrolled. Subtracting for VA enrollment gains since that CBO score leaves approximately seven million veterans eligible for, but not enrolled in, VA health programs, and thus potentially affected by the House’s ‘technical’ change. Just when you thought these disingenuous GOP lawmakers couldn’t possibly get any more evil, they go full-blown Lex Luthor. Here is the angry response from Will Fischer, an Iraq War veteran and director of government outreach for VoteVets:   What started as a bad bill has now turned into a grotesque Frankenstein monster, a crude and rushed patchwork of mini-bills that hurt people who can least afford it. Now, we find out that Trumpcare will strip tax credits from potentially millions of veterans, and flood the VA with new patients at a time the VA is understaffed to handle a rush, thanks to the Donald Trump’s hiring freeze.Since the freeze went into effect, we’ve already seen wait times lengthen; the claims backlog that President Obama had virtually eliminated, starting to grow again. This will only cause things to get worse. We cannot put it more simply than this: Trumpcare will punish veterans. You cannot be pro-veteran and vote for Trumpcare.

Obamacare Repeal Next Steps: Why Goldman Is Suddenly Far Less Optimistic -- On Friday morning, in the aftermath of Trump's surprising victory forcing the GOP Healthcare bill repealing Obamacare through the House, we noted that Goldman's DC analyst Alec Phillips responded that, somewhat paradoxically, the impact on Trump's broader economic agenda could actually be more problematic than most commentators expected, stating that "the main effect of House passage is to delay the consideration of tax legislation, which looks even more likely than before to be delayed until 2018."In a subsequent, and far more detailed note titled "Health Reform Gains Momentum as the Rest of the Agenda Slows", over the weekend Phillips has provided an extensive explanaion why he believes that the passage of Trumpcare will likely adverse implications on Trump's tax policy timeline.Here is the summary from the Goldman analyst:

  • House Republicans have passed their American Health Care Act (AHCA), moving repeal of the Affordable Care Act (ACA) one step closer to reality. However, while the House vote was necessary for ACA repeal, it is far from sufficient, and the process is likely to become harder after this first step.
  • House passage increases the likelihood that health legislation will be enacted this year, though it still faces several obstacles. In the meantime, uncertainty regarding insurance regulation and subsidization could lead to lower enrollment and plan participation in the existing system, which has already struggled with weaker than expected enrollment and declining plan options.
  • In isolation this legislative victory is likely to be interpreted as bullish for other aspects of the agenda, including tax reform, as it demonstrates that congressional Republicans may be able to form a working majority on controversial issues after all.
  • However, the revival of health legislation, which could at least take a few more months to conclude, could substantially delay consideration of the remainder of the legislative agenda. This further reduces the likelihood that Congress will enact a tax cut before year-end, in light of the additional steps that would be necessary once the health bill has been enacted.
  • While we continue to believe that tax legislation is likely to be enacted in early 2018,further delays could push consideration of tax legislation too close to the upcoming midterm election, reducing the likelihood that tax legislation is enacted in the next two years.

Buffett says AHCA is tax cut for the rich | Fox News: Billionaire Warren Buffett said Saturday that the Republican approach to overhaul the health care system is a tax cut for the rich. The Berkshire Hathaway chairman, speaking at an annual shareholders’ meeting in Omaha, Neb., said his federal income taxes last year would have gone down 17 percent had the new law been enacted. "So it is a huge tax cut for guys like me," Buffett said. "And when there's a tax cut, either the deficit goes up or they get the taxes from somebody else." The House narrowly passed a bill to repeal and replace Obamacare, a major victory for President Trump who has railed against Obama’s landmark healthcare bill. Republicans have promised that the American Health Care Act would address growing healthcare costs, which Buffet said was eating away at the economy like a “tapeworm.” He added that healthcare costs have rose much faster in the U.S. than the rest of the world and warned it will “go up a lot more.” "Medical costs are the tapeworm of American economic competitiveness," he said. "That is a problem this society is having trouble with and is going to have more trouble with." According to Forbes, Buffett is the fourth-richest man in the world with a net worth of more than $74 billion. He vocally supported Hillary Clinton in the 2016 presidential election.

GOP braces for healthcare blowback at home | TheHill: House Republicans are bracing themselves for encounters with angry constituents when they return to their districts this weekend after casting votes on legislation to repeal and replace ObamaCare. Rep. Tom MacArthur (R-N.J.), the centrist who negotiated the amendment that helped bring the House GOP’s healthcare bill over the finish line, expects his town hall next Wednesday could get rowdy. MacArthur noted the event is being held in Willingboro, N.J., where he only won 10 percent of the vote in the last election. “This is a not a town that’s going to perhaps be thrilled with this. But I will meet my constituents and talk to them and tell them why and help them understand that what they hear in the media and what fearmongerers are trying to whip up is simply not the truth,” MacArthur said just off the House floor after Thursday’s 217-213 vote on the healthcare bill. MacArthur has risen in prominence since crafting an amendment to the healthcare legislation with conservative House Freedom Caucus Chairman Mark Meadows (R-N.C.) that would allow states to apply for waivers from key ObamaCare provisions.The amendment to the bill gives states the chance to be exempted from rules that prevent insurance companies from charging sick people higher premiums and that mandate the services health plans must cover. To win a waiver, a state would have to meet certain conditions, including offering high-risk pools of insurance coverage for the sick. 

Republicans’ health-care plan could launch some ugly political battles in state legislatures -- Even if a watered-down version of House Republicans' health-care legislation becomes law, states are probably going to be on the hook for billions of dollars of health-care costs, especially for the poor and sick. And that means they're going to have to make some hard choices: Do you find a way to raise taxes/cut other services to keep your most vulnerable population insured? Or do you just stop insuring them? That's the heart of the question facing all 50 states as Republicans in Washington unwind the federal government's involvement in health care. Legislatures trying to answer it could get ugly. States just don't have the money right now to make up for the health insurance subsidies the federal government could cut back on. Thirty-one states started 2017 with deficits — a couple are closing in on $1 billion, according to a MultiState Associates study.  But the House Republicans' health-care plan would whack almost every state's budget in potentially big ways:

  1. It would drastically cut the federal government's contribution to Medicaid (even states that didn't expand Medicaid under Obamacare). And Medicaid spending was the largest slice of states' spending in fiscal 2016.
  2. It would drastically cut federal subsidies for people who get their insurance through the marketplaces Obamacare set up.
  3. And it would leave millions of mostly middle- and lower-income people uninsured (though how many, we don't know, since Republicans voted on their bill without an official estimate). And uninsured people who get sick could cost state and local governments and private hospitals up to $1 trillion in unpaid-for health coverage over the next decade, according to one analysis from the Urban Institute.

 Obamacare Co-Architect Gruber Blames Trump for Law’s Woes - Jonathan Gruber, an MIT economics professor known as the co-architect of Obamacare, blamed President Donald Trump on Sunday for Obamacare's woes. After Obamacare's passage in 2010, it was Gruber who said it was the "stupidity of the American voter" that allowed the passage of the healthcare law. He explained to "Fox News Sunday" that Trump's election was the cause of Obamacare's problems, The Washington Times reported Sunday. Fox News host Chris Wallace explained that in Iowa the one insurance company still participating in Obamacare was considering dropping out, which would leave 94 of its 99 counties without an insurer, to which Gruber responded, "Look, and whose fault is this?""Wait, you're going to blame the problems with Obamacare on President Trump?" Wallace asked."Insurers' profits were trending positively, insurers were saying positive things about their ability to stay in the exchange, to succeed," Gruber said. "Then, you have a president who comes in, undercuts open enrollment, doesn't honor the obligations this law makes to insurers."Gruber said the result was "premiums are going up and insurers are exiting."Republican strategist Karl Rove, also appearing on the show, took issue with Gruber's comments about Obamacare, whose lower enrollment and higher costs preceded Trump's election, stating the only thing the president did was stop Obamacare ads from running shortly before the enrollment period would end in January."Trump stopped the ads on the 26th of January, and the end of the enrollment period was the 31st," Rove said. "Really? The problems of Obamacare are going to b e solved by four days' worth of TV ads?"

Donald Trump has no idea what health insurance costs -  “In a short period of time,” President Trump recently told Time magazine in an interview about his first months in the White House, “I understood everything there was to know about health care.”  Around the same time, Trump gave another interview, this one to the Economist. He talked a lot about health care in it. And his comments suggest he still has a lot to learn — starting with how much health insurance actually costs. Speaking with editors from the Economist, Trump seemed uncertain about how the health insurance industry works, or how the Republican plan to overhaul it would work. He waffled on how he’ll continue running the Affordable Care Act.Trump cited numbers that don’t seem to come from any recent version of the health care debate. He talked about how health insurance ought to cost “$15 a month” — a premium that anyone who has ever purchased coverage, let alone studied the health insurance market, knows is unheard of. The president estimated that the Republican bill would save “$400 to $900 billion” in government spending — an amount significantly higher than the $337 billion in savings that the Congressional Budget Office has referenced in its analyses of an early version of the bill.But perhaps most concerning to health insurance plans was the uncertain answer he gave on whether he would continue paying a key Obamacare subsidy program, known as the cost-sharing reduction subsidies. If Trump stopped making those payments, which are currently challenged in court by House Republicans, it would leave insurers with about $8 billion in unpaid bills.  “We’re subsidizing it and we don’t have to subsidize it,” Trump told the Economist, referring to the law’s contested cost-sharing reduction payments.  “You know if I ever stop wanting to pay the subsidies, which I will...” Trump’s answers likely don’t give much comfort to the insurance plans that participate in the Obamacare marketplaces right now, which have begged for more certainty on this particular issue. And they don’t suggest that Trump has familiarized himself with the details of the Republican health care plan either.

GOP Attack on Obamacare Won’t Slow Calls for Democrats to Back Single-Payer -- naked capitalism - Jerri-Lynn here: This Real News Network interview with Carol Paris, President of Physicians for a National Health Program, provides a brief overview of the implications of Thursday’s House vote to repeal Obamacare for the prospects for a single-payer alternative, such as Medicare-for-all.  Note that this is by no means either the last nor a particularly comprehensive look at the subject.  I’m nonetheless posting this short interview to provide readers with a chance to discuss the health care reform issue more thoroughly.

Charlie Munger says single-payer healthcare is the solution -- Charlie Munger says that single-payer healthcare is the answer to fix the nation’s healthcare system woes. A longstanding Republican, the Berkshire Hathaway vice-chairman acknowledges it is an unusual position for someone from his party to espouse.“I’m not a normal Republican,” he said, noting that there’s “a lot wrong” with the system.“Having a basic level of care for everybody with no insurance aspect as a right I think is a good idea” Munger said.Munger, who Berkshire CEO Warren Buffett calls his partner, made the remarks in Omaha the day after Berkshire’s annual meeting. Munger said there’s good and bad parts of our healthcare system.“At the top, it’s the best medical care in the world,” Munger said. He explained that if you have a difficult type of cancer or you’re in need acute care, you’re better off in the U.S. than anywhere else.“That’s the good part,” he said. “The bad part is the Rube Goldberg system that arose by accident. There’s massive amounts of excess cost. There’s huge amounts of extending death so people can make more money, which is disgusting. There’s a lot wrong with system.  “And of course the politicians on each side don’t want to figure this out, they just hate each other and scream at each other, so it’s a disgusting outcome. And of course the cost goes up three, four, five six percent a year! So there’s a lot wrong—and there’s a lot right.”

Where the ACA Should Go Next? -- This is the first in a series of 3 posts written by Maggie Mahar discussing Medicare, what it covers, and what it lacks in coverage. Maggie touches on the Public Option and Medicare. I start to get edgy when people talk about the Public Option, Universal Coverage, Single Payer, Medicare-For-All, etc. as they do not really define it and who will control its funding. We have a Congress which is intent on cutting the PPACA/ACA/Obamacare which many take offense to today and leaving us with far less. I am not so sure we can trust Congress and politics to insure our healthcare. On Tue, Sep 9, 2014 at 1:47 PM, Dan emailed: Rortybomb, New Piece on Where the ACA Should Go Next Rorty touts the 2009 House Bill which calls for a Public Option and described here To improve ‘Obamacare,’ reconsider the original House bill.  Maggie Mahar replies: Originally I favored a public option, but in fact, at the time, no one really spelled out who would run the public option–or how it would be run.One of the best things about the ACA is that lets both HHS and CMS make end-runs around Congress. I would never want a public option that was run by Congress.Here is the comment I just posted in reply to the post “Where the ACA Should Go Next”I would need to know far more about the public option—and how it would be different from Medicare– before voting for it.Medicare is extraordinarily wasteful– 1/3 of Medicare dollars are squandered on unnecessary treatments that provide no benefit to the patient. Why? Because Congress is Medicare’s board of directors, and lobbyists representing various specialist’ groups, hospitals, device-makers and drug-makers control Congress.Meanwhile, Medicare does not cover much needed care, ie. vision checks are just one example. This is why the vast majority of Medicare beneficiaries must buy separate private insurance (MediGap or Medicare Advantage) to supplement what medicare doesn’t cover.Finally, I favor narrow networks. They keep costs down. The doctors and hospitals that are not included in the networks are those that refuse to negotiate  prices.  By excluding them we remind doctors and hospitals that we can no longer afford letting providers charge whatever they wish. No other developed nation allows doctors and hospitals to simply set prices.

 What Democrats Won't Admit About Voters and Health Care --  Tyler Cohen - Since the Republican House approved its replacement for Obamacare, critics of the bill have told us how it will take health insurance away from millions of people, while doing little to control medical costs or bring fiscal rectitude. Those arguments are mostly true, but the same commentators have neglected to acknowledge a crucial point. The House plan won’t work for the same reasons Obamacare has had trouble -- namely there is no social consensus on who should pay the bills. Consider the part of the plan that would take away many federal-level protections embedded in Obamacare for those with pre-existing conditions. Instead, state governments are to cover those individuals through high-risk pools, with the federal government paying modest subsidies to the states to help. Most likely, millions of Americans will be left at loose ends.  But keep in mind that the American Health Care Act of 2017 does not prevent states from spending whatever is needed to cover pre-existing conditions, if they so choose. The underlying truth is that voters at the state level just aren’t that interested in paying for these benefits, preferring instead to lower taxes, or to spend the money on roads, schools and prisons.In other words, when American voters are given a direct bill for health-care expenditures, they recoil, even when the beneficiaries are in needy or desperate situations. The Democrats are good at tarring the Republicans for indifference to the plight of these people, but less keen to admit that the larger popular indifference plagues their own health-care visions as well. A meme I’ve seen going around on Twitter put it this way: Health-care expenditures are about 1/6 of GDP, but no American wants to spend 1/6 of income on health care.  Unfortunately, we cannot avoid these costs, so we have taken refuge in the traditional American pastime of trying to hide them as much as possible.

Trump to Announce Slate of Conservative Federal Court Nominees -  NYT — Having filled a Supreme Court vacancy, President Trump is turning his attention to the more than 120 openings on the lower federal courts. On Monday, he will announce a slate of 10 nominees to those courts, a senior White House official said, the first in what could be near monthly waves of nominations.The White House counsel, Donald F. McGahn II, said the nominations were a vindication of a commitment Mr. Trump made during the campaign “to appoint strong and principled jurists to the federal bench who will enforce the Constitution’s limits on federal power and protect the liberty of all Americans.”The administration continues to draw on lists of 21 potential Supreme Court nominees, put together with the help of the conservative Federalist Society and Heritage Foundation, that Mr. Trump issued during the campaign. But it is looking at other sources, too, the White House official said. Mr. McGahn, who has supervised the selection of the nominees, is looking for scholarly credentials and “intellectual boldness,” among other qualities, the official added.Jonathan H. Adler, a law professor at Case Western Reserve University, said the appeals court picks on Mr. Trump’s list included “incredibly strong nominees” who were within the judicial mainstream and should “have an intellectual influence on their courts.” But liberal groups expressed alarm at the prospect of a federal bench filled with Mr. Trump’s appointees. “The Trump administration has made clear its intention to benefit from Republican obstructionism and to pack the federal courts with ultraconservatives given a stamp of approval by the Federalist Society,” said Nan Aron, the president of the Alliance for Justice, referring to the conservative legal group. “We’ll be scrutinizing the records of these nominees very carefully.”

 U.S. Census director resigns amid turmoil over funding of 2020 count - The director of the U.S. Census Bureau is resigning, leaving the agency leaderless at a time when it faces a crisis over funding for the 2020 decennial count of the U.S. population and beyond. John H. Thompson, who has served as director since 2013 and worked for the bureau for 27 years before that, will leave June 30, the Commerce Department announced Tuesday. The news, which surprised census experts, follows an April congressional budget allocation for the census that critics say is woefully inadequate. And it comes less than a week after a prickly hearing at which Thompson told lawmakers that cost estimates for a new electronic data collection system had ballooned by nearly 50 percent.No successor for Thompson was announced. A Commerce Department spokesperson said an acting director would be designated “in the coming days” and the position would be filled permanently “in due course.” John H. Thompson has led the Census Bureau since 2013 (U.S. Census Bureau/U.S. Census Bureau) The decennial count typically requires a massive ramp-up in spending in the years immediately preceding it, involving extensive testing, hiring and publicity. However, in late April Congress approved only $1.47 billion for the Census Bureau in the 2017 fiscal year, about 10 percent below what the Obama administration had requested. And experts say the White House’s proposed budget for 2018, $1.5 billion, falls far below what is needed. Compounding the problem, the bureau had hoped to implement a new system that relies more heavily on electronic data collection than in the past. That plan was announced after Congress told the bureau that the cost of the 2020 count could not exceed the cost of the 2010 count; the new system was promoted as a cost-saving measure. But at the May 3 hearing, Thompson said that a $656 million cost estimate from 2013 for the new system had been off and the current projected cost was $965 million. Despite this, he told the committee that the bureau was “progressing well” toward being ready for 2020.

 Trump's threat to the 2020 Census: It’s three years away and still a year from its scheduled dress rehearsal, but nervous observers are already asking: What happens to the 2020 U.S. census under President Donald Trump? Though it may sound like one of the driest bureaucratic responsibilities of the federal government, the census has crucial implications for national politics—and requires years of planning, hundreds of thousands of new employees and even a marketing campaign to ensure the broadest possible snapshot of the American population. Already, Congress’ inability to agree on a full-year funding measure for fiscal 2017 has forced the Census Bureau to cancel multiple field tests and delay opening three field offices. It also had to cut back on new, less labor-intensive methods for verifying household addresses, a critical undertaking that was supposed to make the 2020 census more cost-effective and accurate. And more broadly, the Trump administration’s hard-line rhetoric and executive orders cracking down on undocumented immigrants may already be creating a major new risk for the census, making members of minority and immigrant communities less likely to respond. “If you imagine that the federal government is asking for personal information and you feel that the federal government is hostile and that if you were to answer this, perhaps they would use this against you,” said Terry Ao Minnis, director of the census and voting programs at Asian Americans Advancing Justice. “That, of course, will make people less inclined to participate.”

 U.S. likely to expand airline laptop ban to Europe: government officials | Reuters: The Trump administration is likely to expand a ban on laptops on commercial aircraft to include some European countries, but is reviewing how to ensure lithium batteries stored in luggage holds do not explode in midair, officials briefed on the matter said on Wednesday. Any expansion of the ban could impact U.S. carriers such as United Airlines (UAL.N), Delta Air Lines Inc (DAL.N) and American Airlines Group (AAL.O). Six U.S. and European officials said they expect the U.S. Department of Homeland Security (DHS) to make an announcement but declined to say when. DHS officials plan to meet with airline industry officials on Thursday to discuss security issues, two people briefed on the matter said. Also on Thursday, Homeland Security Secretary John Kelly will give a classified briefing to senators about domestic threats and airline issues are expected to be discussed, a congressional aide briefed on the matter said. In March, the U.S. announced laptop restrictions on flights originating from 10 airports including in the UAE, Saudi Arabia, Qatar and Turkey because of fears that a concealed bomb could be installed in electronic devices taken onto aircraft. Britain quickly followed suit with restrictions on a slightly different set of routes. One European official acknowledged that the expanded ban could affect flights to the United States from Britain. DHS spokesman Dave Lapan said Kelly "hasn't made a decision but we continue to evaluate the threat environment and have engaged in discussions with airline representatives and other stakeholders about the threat." Some U.S. airlines have been making plans in the event of an order to require them to bar passengers from traveling to the United States without larger electronics in the cabin, airline officials briefed on the matter said.

European officials warn U.S. of laptop ban safety risk - May. 12, 2017: Europe has warned the U.S. that imposing a laptop ban on transatlantic flights could pose a risk to safety. The Trump administration is preparing to ban large electronic devices from the cabins of flights from Europe, extending restrictions imposed earlier this year on flights from 10 airports in the Middle East and Africa. "It was clear yesterday the decision to expand the ban has been made," an airline industry source said on Friday. "We are just waiting on the order." U.S. administration officials said in March that intelligence suggests terrorists are able to hide explosives in laptops. Passengers on flights covered by the restrictions are required to carry anything bigger than a smartphone in checked baggage. But aviation experts say storing large numbers of devices with lithium batteries in the cargo hold of a plane constitutes a fire risk. European officials, including EU transport commissioner Violeta Bulc, underscored those concerns in a call with U.S. Secretary for Homeland Security John Kelly on Friday. "Commissioner Bulc highlighted the potential safety implications of putting a large number of electronic devices in the aircraft hold," a European Commission spokesperson said. The spokesperson described the call as "a very constructive exchange of views" and said the EU had invited U.S. officials to Brussels next week for talks "to jointly assess the potential risks and review future measures."

Policy Watch: Congress blocks 14 Obama-era rules in an unprecedented blitz of CRA votes -- Yesterday was the final day congressional Republicans could use the Congressional Review Act (CRA) to block regulations issued in the final months of the Obama administration. The CRA is a controversial law that gives Congress the power to overturn rules put in place by the previous president for 60 legislative days after the president leaves office—and robs future administrations of the ability to implement new rules. Republicans have used this rather obscure law to block an unprecedented 14 regulations.  The rules blocked by congressional Republicans and President Trump provided important protections ensuring the health and safety of consumers, working people, and the general public. The five labor-related rules that were blocked would have made it harder for companies to get federal contracts if they violated labor laws, made it easier for the Occupational Safety and Health Administration (OSHA) to track workplace injuries, helped people save for retirement, and made it easier for people to collect unemployment insurance. The blocked Fair Pay and Safe Workplaces rule required companies applying for federal contracts to disclose violations of federal labor laws and executive orders addressing wage and hour, safety and health, collective bargaining, family medical leave, and civil rights protections. Currently, there is no effective system for distinguishing between law-abiding contractors and those that violate labor and employment laws. By blocking this rule, Republicans have ensured that businesses that violate basic labor and employment laws will continue to be rewarded with taxpayer dollars.

Sessions issues sweeping new criminal charging policy -Attorney General Jeff Sessions overturned the sweeping criminal charging policy of former attorney general Eric H. Holder Jr. and directed his federal prosecutors Thursday to charge defendants with the most serious, provable crimes carrying the most severe penalties. In a speech Friday, Sessions said the move was meant to ensure that prosecutors would be “un-handcuffed and not micromanaged from Washington” as they worked to bring the most significant cases possible. “We are returning to the enforcement of the laws as passed by Congress, plain and simple,” Sessions said. “If you are a drug trafficker, we will not look the other way, we will not be willfully blind to your misconduct.”The Holder memo, issued in August 2013, instructed his prosecutors to avoid charging certain defendants with drug offenses that would trigger long mandatory minimum sentences. Defendants who met a set of criteria such as not belonging to a large-scale drug trafficking organization, gang or cartel, qualified for lesser charges — and in turn less prison time — under Holder’s policy.  Civil liberties advocates at the time praised the move as appropriately merciful — potentially preventing people from facing lifelong penalties for crimes that did not warrant such a punishment. But Sessions’s new charging policy, outlined in a two-page memo and sent to more than 5,000 assistant U.S. attorneys across the country and all assistant attorneys general in Washington, orders prosecutors to “charge and pursue the most serious, readily provable offense” and rescinds Holder’s policy immediately.

Attorney General Speaks About Stricter Charging, Sentencing Recommendations C-SPAN

How a tight budget could complicate Sessions’ vow to fight crime — Attorney General Jeff Sessions is promising his Justice Department will lead the charge in helping cities fight violent crime, and police chiefs are ready with their wish-lists. More technology to trace guns after shootings. More grant money. More intelligence analysts to help dismantle gangs. More protective gear and equipment. As the head of one police officers’ union put it, “We need more of everything.” But Sessions, who cut his teeth as a federal prosecutor in Mobile, Alabama, at the height of the drug war in the 1980s, has inherited a federal government that built itself to fight terrorism since 9/11 and, more recently, to combat cybercrime. Since taking office, Sessions has spoken repeatedly about a spike in murders. He and President Donald Trump ordered the creation of a crime-fighting task force, bringing together the heads of the major law enforcement agencies. And they seem to be counting on tighter border security to stop a flow of drugs and reduce crime. But they have yet to detail how federal law enforcement should juggle priorities or offer new money for crime-fighting, especially in the face of Trump’s plan to slash nonmilitary budgets. Some clarity could come Thursday when the administration unveils its budget proposal. “He’ll find out very quickly that you can’t pull people off all these other things just to go do that,” said Robert Anderson, who was the FBI’s most senior criminal investigator until his retirement in 2015. Anderson joined the bureau in the 1990s, when combating violence and drugs was its top challenge. “Now he’s walking into a much different Justice Department and FBI.” 

The Conviction of an Activist for Laughing Portends Repression of Protest Under Trump - A year in jail for laughing. That's not a scenario from a dystopian movie set in some far-off future under a repressive government. It's the sentence that Code Pink activist Desiree Fairooz is facing after being convicted in early May of disorderly conduct for -- yes -- laughing during the confirmation hearing of new Attorney General Jeff Sessions.The 61-year-old Fairooz, along with fellow Code Pink activists Tighe Barry and Lenny Bianchi, were arrested while attending a January 10 Senate hearing. Fairooz laughed out loud when Sen. Richard Shelby (R-Ala.) had the gall to state that Sessions' record of "treating all Americans equally under the law is clear and well-documented."In fact, Sessions' racist record is so well documented that Shelby himself ran a campaign ad in 1986 suggesting that Sessions had called the Ku Klux Klan "good ole boys." No wonder Fairooz couldn't help laughing. As she explained in an interview with Jezebel, she laughed because "I found that statement ridiculous. It was absurd, because his history shows otherwise. At that point, I could not hold in my chortle." According to reports, her laughter didn't prevent Shelby from continuing his praise of Sessions. The only "disorder" was caused when several officers moved in to arrest her. As she was being taken away, Fairooz reportedly shouted, "Do not vote for Jeff Sessions!" and waved a sign that read, "Support Civil Rights, Stop Sessions."As she explained, "[The police] created disturbance by bringing over other police officers. I was charged with parading, but they paraded me. It was maddening." Bizarrely, according to the Huffington Post testimony at Fairooz's trial focused on how loud her laugh was, and whether or not it was "reflexive" -- with Katherine Coronado, the officer who first moved in to arrest Fairooz, actually testifying that she did not think Shelby's statement was funny enough to warrant a laugh.

30 Anti-Protest Bills Introduced in U.S. Since Election Day -- Since Donald Trump was elected, there has been an assault on the pillars of what many would be considered a free and fair democratic society: the right to protest and the right to free speech. As millions stand up for science , for women's and LGBT rights and for the climate, the authorities are trying to crack down on peaceful dissent, leading one commentator to argue that there is a now a " free speech crisis in America." Many veterans of protests will argue that we have been here before. Indeed, I wrote a book more than 25 years ago, titled Green Backlash , that looked at how the authorities were trying to silence environmental activists. But these are dark days again, with a country-wide attack on civil rights. According to the American Civil Liberties Union (ACLU), more than 30 separate anti-protest bills have been introduced in the country since Nov. 8 last year, in "an unprecedented level of hostility towards protesters in the 21st century." Many of these have been introduced in states such as North Dakota, where indigenous activists spent months fighting the controversial Dakota Access pipeline . The Guardian reported that more than 20 states have proposed bills that would "crack down on protests and demonstrations" since Trump was elected. One bill under consideration in Tennessee could effectively allow a driver to legitimately run over a protester "who is blocking traffic in a public right-of-way if the driver was exercising due care."

 ‘Yes, It’s a Crime’: Dem Senator Calls For ‘Special Prosecutor’ to Investigate Huma Abedin -- Over the course of hours of testimony, James Comey confirmed yesterday that top Clinton aid Huma Abedin forwarded classified emails to Anthony Weiner, her twice disgraced sexting husband currently under federal investigation.“His then spouse Huma Abedin appears to have had a regular practice of forwarding emails to him for him, I think, to print out for her, so she could then deliver them to the Secretary of State.” said Comey during the hearing.Right … Move along, nothing to see here.On Morning Joe, Thursday, Willie Geist opened an interview with Connecticut’s Democratic Senator Richard Blumenthal by asking point blank if Abedin’s actions were criminal.“Do you believe that is a crime,” he asked.Blumenthal said quite possibly. “If there was classified information and it was improperly passed to a person unauthorized to receive it. Yes, it’s a crime,” he said. “Without knowing what the intentions were and so forth, there is potentially a prosecutable crime.” “Should it have been prosecuted,” host Joe Scarborough jumped in. “It still may be potentially. It’s not outside the statute of limitations. Who will decide it? That’s why we need a special prosecutor to review all of this investigative material.” he said before artfully pivoting back to questions over Donald Trump and Russia.’

Former Trump security aide was Russia blackmail risk: ex-U.S. official | Reuters: Former Acting U.S. Attorney General Sally Yates said on Monday she warned the White House in January that then-national security adviser Michael Flynn had been compromised and could have been vulnerable to blackmail by Russia. Yates testified at a Senate Judiciary subcommittee hearing that focused primarily on Flynn, and did not shed much light on other aspects of investigations of allegations that Russia meddled in the 2016 U.S. election and whether there was collusion between President Donald Trump's campaign and Moscow. Yates repeatedly declined to discuss details of the investigation in a public forum. Former Director of National Intelligence James Clapper, who also testified, said he stood by past assertions that he had not seen evidence of such collusion but also declined to comment on classified matters. Yates briefly led the U.S. Justice Department until Trump fired her on Jan. 30 for declining to defend his travel ban on seven Muslim-majority countries. She told White House counsel Don McGahn on Jan. 26, less than a week into Trump's presidency, that Flynn had not been telling the truth about his contacts with Russia's ambassador to Washington. Making her first public statements about the issue, Yates said she feared Moscow could try to blackmail Flynn because it also knew he had not been truthful about conversations he had with Ambassador Sergei Kislyak about U.S. sanctions on Russia. Flynn, a retired general once seen as a potential Trump vice president, has emerged as a central figure in the Russian probes. Russia has repeatedly denied any meddling in the election and the Trump administration denies allegations of collusion with Russia.

6 Takeaways From Monday’s Senate Hearing on Russia - NYT - When did the White House know — and exactly who knew — about conversations that Michael T. Flynn, the former national security adviser, had with the Russian ambassador? That was the focus on Monday at a Senate hearing where Sally Q. Yates, the former acting attorney general, testified about Russia’s interference in the presidential election. James R. Clapper Jr., the former director of national intelligence, also testified, giving senators a chance to go well beyond the Flynn affair and ask about leaks of classified information to the news media; the F.B.I.’s investigation into the Russian interference and possible collusion by Trump associates; and — this being a hearing in the Republican-controlled Congress — Hillary Clinton’s emails.

  • 1.Perhaps the biggest takeaway on Monday was that a lot of people had serious concerns about Mr. Flynn serving as national security adviser. But none of them was named Donald J. Trump.
  • 2. In a Twitter message posted hours before Monday’s hearing, Mr. Trump suggested that Ms. Yates had tipped off journalists about Mr. Flynn’s conversations with the Russian ambassador. Ask Sally Yates, under oath, if she knows how classified information got into the newspapers soon after she explained it to W.H. Counsel. — Donald J. Trump (@realDonaldTrump)
  • 3. The F.B.I. keeps secrets — from everyone. Among the most secretive investigations conducted by the F.B.I. are those that examine the links between American citizens and foreign governments, which are known as counterintelligence investigations. So when the F.B.I. began examining possible connections between Trump associates and Russia this past summer, it appeared to have told almost no one — not even Mr. Clapper, who was then overseeing the bureau as the director of national intelligence.
  • 4. Letting go (of Clinton’s emails) is hard. Few would disagree that Mr. Flynn’s falsehoods or Russia’s meddling are important. But for some Republicans, the alpha and omega of any congressional hearing is Mrs. Clinton’s use of a private email server while serving as secretary of state.
  • 5. You can learn a lot from the news media. Ms. Yates’s brief tenure as acting attorney general came to an abrupt end on the evening of Jan. 30 when she refused to defend Mr. Trump’s executive order barring refugees and travel from several predominantly Muslim countries.
  • 6. Still, those reporters are pesky. There was a lot of talk about leaks of classified information — some of it comical. 

F.B.I. Director James Comey Is Fired by Trump -- “While I greatly appreciate you informing me, on three separate occasions, that I am not under investigation, I nevertheless concur with the judgment of the Department of Justice that you are not able to effectively lead the bureau,” Mr. Trump said in a letter to Mr. Comey dated Tuesday. “It is essential that we find new leadership for the F.B.I. that restores public trust and confidence in its vital law enforcement mission,” Mr. Trump wrote. Officials at the F.B.I. said they were not immediately aware of Mr. Comey’s dismissal, which Mr. Trump described as effective immediately. In a separate letter released at the White House, Mr. Spicer said that the president informed the director that he has been “terminated and removed from office.” Memos released by the White House show that Rod J. Rosenstein, the newly sworn-in deputy attorney general, that recommended Mr. Comey be fired over how he disclosed the investigation into Mrs. Clinton. Mr. Comey broke with longstanding tradition and policies by discussing the case and chastising the Democratic presidential nominee’s “careless” handling of classified information. Then, in the campaign’s final days, Mr. Comey announced that the F.B.I. was reopening the case, a move that earned him widespread criticism. A longtime prosecutor who served as the deputy attorney general during the George W. Bush administration, Mr. Comey came into office with widespread bipartisan support. Senator Ron Wyden, Democrat of Oregon and a member of the Senate Intelligence Committee, said in a post on Twitter that Mr. Comey “should be immediately called to testify in an open hearing about the status of Russia/Trump investigation at the time he was fired.”

Trump fires FBI Director Comey, setting off U.S. political storm | Reuters: WASHINGTON U.S. President Donald Trump ignited a political firestorm on Tuesday by firing FBI Director James Comey, who had been leading an investigation into the Trump 2016 presidential campaign's possible collusion with Russia to influence the election outcome.The Republican president said he fired Comey, the top U.S. law enforcement official, over his handling of an election-year email scandal involving then-Democratic presidential nominee Hillary Clinton. The move stunned Washington and raised suspicions among Democrats and others that the White House was trying to blunt the FBI probe involving Russia. Some Democrats compared Trump's move to the "Saturday Night Massacre" of 1973, in which President Richard Nixon fired an independent special prosecutor investigating the Watergate scandal. White House officials denied allegations that there was any political motive in the move by Trump, who took office on Jan. 20. Senate Democratic leader Chuck Schumer said he spoke to Trump and told him he was "making a very big mistake" in firing Comey, adding the president did not "really answer" in response. An independent investigation into Moscow's role in the election "is now the only way to go to restore the American people’s faith," Schumer said. 

Read: Donald Trump’s full letter firing James Comey ABC

Memo from Deputy AG Rosenthal recommending the removal of Director Comey – Imgur

GOP Intelligence chairman troubled by Trump’s firing of FBI director - Senate Intelligence Committee Chairman Richard Burr (R-N.C.) said Tuesday he is “troubled by the timing and reasoning” of President Trump's firing of FBI Director James Comey.“I have found Director Comey to be a public servant of the highest order, and his dismissal further confuses an already difficult investigation by the committee,” Burr said in a statement.The chairman is leading a Senate investigation into Russia’s influence over the 2016 presidential election.  “In my interactions with the director and with the bureau under his leadership, he and the FBI have always been straightforward with our committee,” Burr said. “Director Comey has been more forthcoming with information than any FBI director I can recall in my tenure on the congressional intelligence committees.”  Burr’s statement, along with statements of concerns Tuesday evening by two other Republican chairmen, Senate Armed Services Committee Chairman John McCain (R-Ariz.) and Senate Foreign Relations Committee Chairman Bob Corker (R-Tenn.), raises pressure on Republicans to endorse the appointment of a special prosecutor or the creation of an independent committee to examine Russia’s influence on domestic politics.

Dems ask Justice Dept, FBI to ‘preserve any and all files’ on Comey firing -  Democrats on the House Judiciary Committee sent a letter to the Department of Justice and FBI Tuesday night, asking that both agencies “preserve any and all files” related to the firing of former FBI Director James Comey and the investigation into Russia's interference in the 2016 election."In light of today's shocking decision by the President to fire FBI Director Comey, it is imperative that you take several immediate steps to protect the integrity of your investigations into Russian efforts to influence our recent election and related matters," the Democrats wrote in a letter.They asked that all materials related to "the Department’s and FBI’s criminal investigation into matters related to Russian interference in our federal elections; collusion with individuals associated with the Trump campaign; and associated matters" be saved and off limits to White House officials or associates.The letter specifically named Attorney General Jeff Sessions as someone the documents should be protected from, citing his recusal from the Russia probe. They similarly requested all "materials related to Director Comey’s termination by the President, so that it may be subsequently reviewed by appropriate members of Congress, and in connection with any subsequent investigations."The Democratic senators cited alleged attempts by the White House and other recent events as further reason to preserve the documents. “Our request is even more important given that a series of White House efforts to influence the investigation and the media coverage of it have made it clear that the Trump administration cannot be allowed to interfere any further in this investigation," the letter read.

Firing Fuels Calls for Independent Investigator, Even From Republicans --President Trump’s decision on Tuesday to fire the F.B.I. director, James B. Comey, immediately fueled calls for an independent investigator or commission to look into Russia’s efforts to disrupt the election and any connections between Mr. Trump’s associates and the Russian government. Calls to appoint an independent prosecutor have simmered for months, but until now, they had been voiced almost entirely by Democrats. Mr. Comey’s insistence that he was pressing ahead with the Russia investigation, and would go wherever the facts took him, had deflected those calls — especially because he was in such open defiance of a president who said the charges were “fake.” Mr. Comey’s firing upended the politics of the investigation, and even Republicans were joining the call for independent inquiries. Senator John McCain, Republican of Arizona, who is among the most hawkish members of Congress on Russia, said that he was “disappointed in the president’s decision” and that it bolstered the case “for a special congressional committee to investigate Russia’s interference in the 2016 election.” He got support from the chairman of the Senate Intelligence Committee, Richard M. Burr of North Carolina, a Republican leading what appears to be the most active congressional investigation on Russia. “I am troubled by the timing and reasoning of Jim Comey’s termination,” Mr. Burr said in a statement. It “further confuses an already difficult investigation by our committee,” he said, adding that Mr. Comey had been “more forthcoming with information” than any of his predecessors. The Democratic vice chairman of the Senate panel, Mark Warner of Virginia, said in a brief interview that Mr. Comey’s firing “means the Senate Intelligence investigation has to redouble its efforts, has to speed up its timeline, because we’ve got real questions about the rule of law.” 

James Comey Learned He Was Fired From A TV News Report -- According to the NYT's Michael Schmidt, today's termination of James Comey was not an impromptu event: the "WH and DOJ had been working on firing Comey since at least last week. Sessions had been working to come up with reasons." Still, only a handful of people got a heads up: Trump called Senators Lindsey Graham (R) and Diane Feinstein (D) before breaking the news. They are the top Republican and Democrat on the Senate committee running the Russia probe. He did not, however, tell Comey, who according to the NYT, learned he was unemployed byhearing it on the TV. Comey, who is three years into a 10-year term at the helm of the F.B.I., learned from news reports that he had been fired while addressing bureau employees in Los Angeles. While Mr. Comey spoke, television screens in the background began flashing the news. Shortly after, a letter was delivered to F.B.I. Headquarters in Washington.

Comey Thought News of His Firing Was a Prank, Chuckled at the Suggestion -- James Comey was trying to inspire confidence in his underlings at the time of his dismissal. He was giving a speech to them when someone said that he had been fired, after learning from it from the teevee. According to the NY Times, Comey thought it was a jolly-good prank, well done old sport. He gave a hearty chuckle, maybe even cracked a smile, and then continued to orate in front of the Los Angeles office. Then it happened. It fucking happened.Mr. Comey was addressing a group of F.B.I. employees in Los Angeles when a television in the background flashed the news that he had been fired.In re sponse, Mr. Comey laughed, saying he thought it was a fairly funny prank. Then his staff started scurrying around in the background and told Mr. Comey that he should step into a nearby office. Mr. Comey stopped addressing the group. He proceeded to shake hands with the employees he had been speaking to. Then he stepped into a side office, where he confirmed that he had been fired. At that point, he had not heard from the White House.

JPMorgan: "Comey’s Dismissal Saps Trump’s Political Capital At The Worst Possible Time" With so much taking place overnight, and confused global market whipsawing in the aftermath of a barrage of political, geopolitical and earnings news, here is another recap to follow our traditional market wrap, this time courtesy of JPMorgan, focusing on the key things that are happening this morning.From JPM's Adam Crisafulli

  • Market update – Asia saw mixed price action, Eurozone stocks are off small, and US futures are down a few points.
  • What’s happening this morning? There are a few moving pieces this morning.Trump managed to go a few days w/o controversy (a relatively long stretch for the current White House) but the Comey firing is by far the biggest headline of the night. As far as the market is concerned, Comey’s dismissal saps Trump’s political capital and weakens relations w/Congress at the time when he is trying to move an ambitious pro-growth agenda through the Senate and House.

Will Trump’s Firing of FBI Director James Comey Be His Saturday Night Massacre? -- Yves Smith -- Trump’s sudden and unexpected firing of FBI director James Comey is likely to damage Trump. The question is whether this move will simply serve as the basis for sowing further doubts in the mainstream media against Trump, or will dent Trump’s standing with Republicans. Comey made an odd practice of making moves that were arguably procedurally improper in his handling of the Clinton e-mail investigation, but some favored Clinton while others were damaging, given an impression of impartiality to the general public via getting both parties riled with Comey at various points in time. And regardless of what one thinks of his political and legal judgment, Comey had a reputation of being a straight shooter. And more generally, the director of the FBI is perceived to be a role above the partisan fray. Firing him is fraught with danger; it has the potential of turning into in a Nixonian Saturday Night Massacre, where the firing of special prosecutor Archibald Cox led the press and public to see Nixon as desperate to stymie an investigation into Watergate charges. It was the archetypal “the coverup is worse than the crime”.  To minimize risk, Trump’s would have needed to have engaged in a whispering campaign against Comey, or least have notified some key figures in Congress that this was about to happen and give the rationale for the turfing out. And it appears he did do that to at least a degree, in that (as you will see below), Lindsay Graham, a member of the Senate Judiciary Committee, made a statement supporting the firing. But given the surprised reaction in the press, it looks like any ground-sowing for this move was minimal. Caution and preparation don’t rank high as Trump Administration priorities.

Why Comey was fired: DOJ rips handling of Clinton case in ouster - President Trump’s seemingly abrupt decision Tuesday to fire FBI Director James Comey was made at the recommendation of top Justice Department officials who claimed that his controversial handling of the Hillary Clinton email case last year rendered him unfit for the position. A senior White House official told Fox News it was purely “coincidental” that the firing occurred on the same day Comey faced scrutiny for giving faulty testimony about emails sent from Clinton aide Huma Abedin to Anthony Weiner. Rather, Comey had been the subject of a review by the very top of the Trump Justice Department. Newly confirmed Deputy Attorney General Rod Rosenstein penned an extensive memo for Attorney General Jeff Sessions outlining concerns with Comey’s conduct during and after the Clinton email probe. The memo said “almost everyone agrees that the Director made serious mistakes.” Rosenstein wrote that he could not defend Comey’s handling of the end of the investigation, and could not understand “his refusal to accept the nearly universal judgment that he was mistaken.” The first count against Comey, according to Rosenstein, was his July 5, 2016 announcement during which he alleged Clinton and her colleagues were “extremely careless” in handling classified material on her personal email and server but also said the FBI would not recommend charges. The memo said Comey was “wrong to usurp” then-Attorney General Loretta Lynch’s authority. “It is not the function of the Director to make such an announcement,” Rosenstein wrote, adding that Comey “at most” should have said the FBI had finished its investigation and presented findings to prosecutors. The memo said Comey compounded “the error” by holding a press conference to “release derogatory information about the subject of a declined criminal investigation,” suggesting he did so “gratuitously.” 

How Comey became tangled in the US election – and why it led to his downfall - FBI director James Comey loomed over the presidential election as a highly contentious figure, an extraordinary predicament for the sitting director of the nation’s top law enforcement agency.  Tasked with overseeing a federal investigation into Hillary Clinton’s use of a private email server as secretary of state, Comey earned the chagrin of both the left and right. His decision to use a lengthy press conference to clear Clinton of any criminal activity on 6 July – even as he characterized her behavior as “extremely careless” – was met with scorn by Trump and Republicans running to thwart her White House ambitions. That moment swiftly transformed Comey into Public Enemy No 1 on the right, which accused him of giving Clinton preferential treatment as the central plank of their campaign collapsed, after months of arguing that her email use had disqualified her from the presidency.But just months later, Trump heralded Comey as a hero in what proved to be a decisive moment in the presidential contest.On 28 October, with only 11 days remaining until the election, Comey sent a terse and vague letter to members of Congress that new emails had been discovered related to the previously closed Clinton investigation.A media frenzy ensued, as did false reports that an indictment was forthcoming. A visibly frustrated Clinton addressed the cameras that same evening, demanding that Comey provide more details so as to lift the cloud of suspicion he had once more cast upon her candidacy.Days later, Comey cleared Clinton’s name once more. The emails, it turned out, were mostly personal or duplicates of what the FBI had previously examined. But the damage had been done, according to several polls that marked a dramatic shift among undecided voters who swung toward Trump.

Here's What Happens Next To The FBI's Russian Probe After Comey's Firing - The termination of FBI Director James Comey has prompted concerns and questions about the future of the agency's probe into Russian interference and "hacking", much to Putin's amusement, to sway the 2016 presidential election and possible collusion with Trump's campaign.  Democrats are terrified Comey's firing on Tuesday could jeopardize the ongoing FBI probe and have renewed calls for an independent investigation. Some Republicans have said that could undermine concurrent investigations underway in the U.S. Senate and House of Representatives. Here, according to Reuters and Bloomberg, is what could happen next: The investigations already underway could continue. Comey's firing does not necessarily mean the FBI's investigation into Moscow's role in the 2016 election will be disrupted or end, legal experts told Reuters. The career FBI staffers Comey put in charge of the probe will likely continue it, even as the search for a new director begins. The parallel inquiries underway in Senate and House committees could likewise progress.

  • The Justice Department, other federal agencies or the U.S. Congress could conduct independent investigations. The Justice Department could conduct a criminal investigation. But other federal agencies and departments have the power to conduct fact-finding inquiries, according to University of Southern California law professor Sam Erman.  Congress could also create a special commission or appoint a special master separate from the committee probes, Erman said.
  • The Justice Department could appoint a special counsel. Most Democrats have said they prefer the appointment of a special counsel at the Justice Department to oversee the probe since it is the only agency that can bring a criminal case.
  • Deputy Attorney General Rod Rosenstein would likely appoint a special counsel. Attorney General Jeff Sessions has recused himself from involvement in Russia-related probes after misstating his own contacts in 2016 with Russia’s ambassador in Washington. Rosenstein would likely appoint a special counsel.  Some Democrats, however, have already raised questions about Sessions' role in advising Rosenstein on Comey's firing and called for a nonpolitical appointee at the Justice Department to make the special counsel decision.
  • The appointment of a special counsel would not end the congressional probes. Senate Republicans, including some from leadership, have said a special counsel should not be appointed because it would imperil ongoing congressional probes but a special counsel would not have the authority to demand Congress halt a probe.  Criminal probes can at times complicate congressional matters, particularly with witness testimony. But an investigation undertaken by a special counsel would be no different than the one already underway at the FBI. "It wouldn't interfere any more or any less if a special counsel were appointed," Levitt said.

FBI Director Comey Fired as Investigators Convened Grand Jury – Pam Martens - Both CNN and CBS News have now confirmed that a grand jury had been convened as part of the investigation into Trump campaign associates’ ties to Russia prior to President Donald Trump firing FBI Director James Comey. CNN first reported the news last evening that the U.S. Attorney’s office in Alexandria, Virginia had issued grand jury subpoenas in recent weeks to associates of former National Security Advisor Michael Flynn seeking business records.CBS News confirmed the report this morning, adding that “the probe has been going forward aggressively.” The convening of a grand jury is typically associated with a belief that criminal activity may have occurred.President Trump has come under withering criticism last night and today for firing the head of the FBI while the agency was conducting an active investigation of people close to the President.Why the President decided to fire Comey at this moment in time has been the source of much speculation by major media outlets. The fact that the investigation had moved into more serious territory has become a growing narrative. Receiving less media attention is the testimony that Comey delivered before the Senate Judiciary Committee last Wednesday. That testimony may have set off alarm bells in the White House. In one exchange with Senator Richard Blumenthal, Comey refused to clarify that President Trump was not a target of the investigation. The exchange was as follows:

  • Blumenthal: But as a former prosecutor, you know that when there’s an investigation into several potentially culpable individuals, the evidence from those individuals and the investigation can lead to others. Correct?
  • Comey: Correct. We’re always open-minded about — and we follow the evidence wherever it takes us.
  • Blumenthal: So potentially, the President of the United States could be a target of your ongoing investigation into the Trump campaign’s involvement with Russian interference in our election. Correct?
  • Comey: I just worry — I don’t want to answer that. That seems to be unfair speculation. We will follow the evidence. We’ll try and find as much as we can and we’ll follow the evidence wherever it leads.

Comey’s firing: Trump frustration finally boiled into action (AP) -- For weeks, President Donald Trump had been seething. The swirling questions about possible contacts between his presidential campaign team and Russia just wouldn't stop, and he felt it was overshadowing his early achievements. Who was to blame? In Trump's view, FBI Director James Comey. Comey had allowed the bureau's investigation to play out in the press, the president told those close to him, and hadn't done enough to stop leaks about it. Those simmering frustrations, described by people with knowledge of the president's conversations, culminated with Trump's surprise announcement late Tuesday that he was firing Comey. The people recounting the behind-the-scenes activity spoke only on condition of anonymity to disclose private discussions. White House officials offered a somewhat different version Wednesday of how Trump came to fire Comey, casting his decision as one that reflected an "erosion of confidence" that had long been in the making. "Frankly, he'd been considering letting Director Comey go since the day he was elected," said White House spokeswoman Sarah Sanders. She also expressed the White House hope that the Russia investigation would wrap soon. "We'd love for that to be completed so that we can all move on." But for weeks, the Russia investigation has not appeared to be going away. Comey confirmed in March that the FBI was looking into possible coordination between the Russians and Trump associates. As Trump's presidency hit its 100-day mark, reporters were still asking questions. Just last week, Comey answered more questions about it at hearing before the Senate Judiciary Committee. That testimony — during which Comey noted he felt "mildly nauseous" at the thought that his actions in the Hillary Clinton email case influenced the election — made Trump increasingly convinced he wanted Comey gone, according to a White House official. That's around the time Comey was asking the Justice Department for more resources to pour into the Russia investigation — an indication the questions will be continuing. The embattled top lawman told lawmakers he made the request for more help in a meeting with Rod Rosenstein, the deputy attorney general overseeing the Russia probe, according to three U.S. officials. The Justice Department denies there was such a request. The White House would not say whether Trump knew.

Inside Trump’s anger and impatience — and his sudden decision to fire Comey - Every time FBI Director James B. Comey appeared in public, an ever-watchful President Trump grew increasingly agitated that the topic was the one that he was most desperate to avoid: Russia. Trump had long questioned Comey’s loyalty and judgment, and was infuriated by what he viewed as the director’s lack of action in recent weeks on leaks from within the federal government. By last weekend, he had made up his mind: Comey had to go. At his golf course in Bedminster, N.J., Trump groused over Comey’s latest congressional testimony, which he thought was “strange,” and grew impatient with what he viewed as his sanctimony, according to White House officials. Comey, Trump figured, was using the Russia probe to become a martyr. Back at work Monday morning in Washington, Trump told Vice President Pence and several senior aides — Reince Priebus, Stephen K. Bannon and Donald McGahn, among others — that he was ready to move on Comey. First, though, he wanted to talk with Attorney General Jeff Sessions, his trusted confidant, and Deputy Attorney General Rod J. Rosenstein, to whom Comey reported directly. Trump summoned the two of them to the White House for a meeting, according to a person close to the White House. The president already had decided to fire Comey, according to this person. But in the meeting, several White House officials said Trump gave Sessions and Rosenstein a directive: to explain in writing the case against Comey.

Comey infuriated Trump with refusal to preview Senate testimony: aides | Reuters: The anger behind Donald Trump's firing of FBI Director James Comey on Tuesday had been building for months, but a turning point came when Comey refused to preview for top Trump aides his planned testimony to a Senate panel, White House officials said. Trump, Attorney General Jeff Sessions and deputy Attorney General Rod Rosenstein had wanted a heads-up from Comey about what he would say at a May 3 hearing about his handling of an investigation into former Democratic presidential candidate Hillary Clinton's use of a private email server. When Comey refused, Trump and his aides considered that an act of insubordination and it was one of the catalysts to Trump’s decision this week to fire the FBI director, the officials said. "It gave the impression that he was no longer capable of carrying out his duties," one official said. Previews of congressional testimony to superiors are generally considered courteous. Comey, who testified for four hours before the Senate Judiciary Committee, said it made him feel "mildly nauseous" that his decision to make public his reopening of a probe into Clinton's handling of classified information might have affected the outcome of the Nov. 8 presidential election. But he said he had no regrets and would make the same decision again. Trump's sudden firing of Comey shocked Washington and plunged Trump deeper into a controversy over his campaign's alleged ties with Russia that has dogged the early days of his presidency. Democrats accused the Republican president of firing Comey to try to undermine the FBI's probe into Russia's alleged efforts to meddle in the 2016 election and possible collusion with members of the Trump campaign, and demanded an independent investigation. Some of Trump's fellow Republicans called his dismissal of Comey troubling.

Days Before Firing, Comey Asked for More Resources for Russia Inquiry - Days before he was fired as F.B.I. director, James B. Comey asked the Justice Department for more prosecutors and other personnel to accelerate the bureau’s investigation into Russia’s interference in the presidential election. It was the first clear-cut evidence that Mr. Comey believed the bureau needed more resources to handle a sprawling and highly politicized counterintelligence investigation.His appeal, described on Wednesday by four congressional officials, was made to Rod J. Rosenstein, the deputy attorney general, whose memo was used to justify Mr. Comey’s abrupt dismissal on Tuesday. It is not yet known what became of Mr. Comey’s request, or what role — if any — it played in his firing. But the future of the F.B.I.’s investigation is now more uncertain than at any point since it began in late July, and any fallout from the dismissal is unlikely to be contained at the bureau.The firing of James B. Comey as director of the F.B.I. has led several lawmakers to call for an independent investigator or commission on top of the current investigations into potential links between Russia and the Trump campaign.  Two separate congressional inquiries into Russian meddling are relying on evidence and intelligence being amassed by the F.B.I., and if the bureau’s investigation falters, the congressional inquiries are likely to be hobbled. Perhaps for this reason, Mr. Comey’s firing appears to have imbued the Senate Intelligence Committee with a renewed sense of urgency.The committee issued its first subpoena in the Russia investigation on Wednesday, ordering Michael T. Flynn, President Trump’s former national security adviser, to hand over records of any emails, phone calls, meetings and financial dealings with Russians. It was an aggressive new tack in what had been a slowly unfolding inquiry. A day earlier, the Senate panel began pressing a little-known government bureau that tracks money laundering and terrorism financing for leads in the Russian investigation. Senator Richard M. Burr of North Carolina, the Republican chairman of the Intelligence Committee, and Senator Mark Warner of Virginia, the Democratic vice chairman, also invited Mr. Comey to testify in a closed session — a setting that would allow Mr. Comey to discuss classified information and any meetings he held with superiors at the Justice Department or with Mr. Trump. Mr. Comey has not yet said whether he will attend.

FBI firing leaves Russia probe in uncertainty | TheHill: The FBI’s investigation into Russian interference in the presidential election is on uncertain footing after President Trump abruptly fired the man leading it, Director James Comey. Agents were reportedly floored by the dismissal, and some are wondering whether they will be allowed to continue that probe, according to a report in The New York Times. Multiple media outlets reported Wednesday that Comey had sought significant additional resources for the investigation just days before he was fired, suggesting an intensifying inquiry. The Justice Department flatly denied the reports, calling them “totally false.” Perhaps most transparently, critics say, the president himself seemed to hint that his motivation for firing Comey was displeasure with the investigation into whether Trump campaign associates coordinated with Russia to help swing the election in his favor.  “While I greatly appreciate you informing me, on three separate occasions, that I am not under investigation, I nevertheless concur with the judgment of the Department of Justice that you are not able to lead the Bureau,” Trump wrote in the second paragraph of his Tuesday letter axing Comey. The White House has insisted that the impetus for firing Comey came from Deputy Attorney General Rod Rosenstein and was grounded in his concerns with Comey’s handling of the investigation into Hillary Clinton’s use of a private email server while secretary of State. Yet the White House said Wednesday that Trump had been weighing Comey’s ouster since day one of his presidency.

By firing Comey, Trump may have fanned the flames he hoped to control – In firing FBI Director James B. Comey, President Trump may have hoped to bring the investigation of Russian interference in the 2016 election under control. Instead, as reaction in Washington spread on Wednesday, the move seemed to carry a large risk of making his troubles worse. Trump has both privately and publicly seethed for weeks about the investigation into whether anyone connected with his campaign had cooperated with Russian efforts to influence the election. He was angered further last week that Comey would not publicly back his claim that no evidence of collusion exists. “The Russia-Trump collusion story is a total hoax” and a “taxpayer funded charade,” he tweeted on Monday, the day White House officials now say he first discussed firing Comey with Atty. Gen. Jeff Sessions and Deputy Atty. Gen. Rod Rosenstein. But if the goal was to get the investigation over with, firing Comey probably moved matters in the wrong direction, according to both Republican and Democratic former White House officials. “In the short term it certainly fans the flames,” said Ed Rogers, a longtime Republican strategist and aide to former Republican presidents. In an email lament circulated among prominent Republicans, A.B. Culvahouse Jr., former Reagan White House counsel and head of Trump’s vice presidential search effort, said the firing “both prolongs the FBI/DOJ investigation and undermines the credibility of the Trump campaign's denials of no conspiracy with Putin.” “We could be talking about Russian hacking in the mid-terms at this rate,” he wrote.

White House’s FBI story unravels | TheHill: Key portions of the White House’s explanation of how President Trump decided to fire FBI Director James Comey came into question on Thursday, underlining a growing credibility crisis for the administration. Remarkably, it was Trump himself who undercut statements from White House officials about the firing. In an interview with NBC’s Lester Holt, the president said he had made up his mind about getting rid of Comey even before receiving a recommendation from Deputy Attorney General Ron Rosenstein and Attorney General Jeff Sessions. “I was going to fire regardless of the recommendation,” Trump said. On Tuesday night, the White House had stressed that Trump decision to fire Comey came in response to a memo from Rosenstein that criticized the FBI director's handling of the probe into Democratic presidential nominee Hillary Clinton's use of a private email server while secretary of State. That memo was sent to Trump on Tuesday and stated that Comey had done “substantial damage” to the FBI’s credibility. Since then, White House aides and Vice President Pence repeatedly said the president had acted on the recommendation of the Justice Department.Trump’s comments Thursday sent aides scrambling to reconcile the conflicting storylines.White House spokeswoman Sarah Huckabee Sanders on Wednesday had denied that Trump had already decided to fire Comey before meeting with Rosenstein and Sessions on Monday. Sanders on Thursday said she had made that statement without speaking to the president.“I think it’s pretty simple. I hadn’t had a chance to have the conversation directly with the president,” Sanders said when asked to explain the discrepancies in the White House's account. “I went off the information I had.”

NBC Releases Extended Trump Interview: "No Collusion Between Me And The Russians" - (w/ video) Having thrown the official White House "Comey termination" narrative for a tailspin, when in an excerpt from his NBC News interview posted earlier, Trump said he was going to fire Comey "regardless" even without getting Deputy AG Rosenstein's report and that Comey had told Trump he was not under investigation, moments ago NBC released several more excerpts from the much anticipated Trump interview. The key highlight of the latest release is that Trump said he supports a full investigation into Russian interference in the U.S. election last year, saying he wants the probe to be done "absolutely properly.""I want to find out if there was a problem with the election having to do with Russia.... If Russia or anybody else is trying to interfere with our elections I think it’s a horrible thing and I want to get to the bottom of it and I want to make sure it will never ever happen.”Trump told Lester Holt but also insisted there was "no collusion between me and my campaign and the Russians." Instead, "this was set up by the Democrats.""The other thing is, the Russians did not affect the vote, and everybody seems to think that" he added."As far as I'm concerned, I want that thing to be absolutely done properly," Trump said. "Maybe I'll expand that, you know, lengthen the time (of the Russia probe) because it should be over with, in my opinion, should have been over with a long time ago. 'Cause all it is, is an excuse but I said to myself, I might even lengthen out the investigation, but I have to do the right thing for the American people." Speaking about the investigation, Trump added that "I want that to be so strong and so good. And I want it to happen."

Trump’s Denial of Ties to Russian Investments Opens Next Leg of Scandal -- Pam Martens -- Last evening, Donald Trump was interviewed by NBC’s Lester Holt on the growing controversy surrounding Trump’s motivations in firing the Director of the FBI, James Comey. Excerpts from the interview have been widely carried on numerous media channels.  In one particularly noteworthy moment, Holt queried Trump on his money ties to Russia with Trump responding that he had just given Republican Senator Lindsey Graham a letter confirming that he has no investments in Russia. The exchange between Holt and Trump went as follows:

  • Holt: Can you tell us whether you, your family, your businesses, your surrogates have accepted any investments, any loans from Russian individuals or institutions?
  • Trump: In fact, I just sent a letter to Lindsey Graham from one of the most prestigious law firms in the country — a tremendous highly rated law firm — that I have nothing to do with Russia. I have no investments in Russia. None whatsoever. I don’t have property in Russia. A lot of people thought I owned office buildings in Moscow. I don’t have property in Russia and I am ah, in very, I mean I’m in total compliance in every way. Now I have to tell you, I file documents, hundreds of pages worth of documents, with the Federal Elections Bureau, everybody’s seen them. I’ve built a great company. But I’m not involved with Russia. I have had dealings over the years where I sold a house to a very wealthy Russian many years ago. I had the Miss Universe Pageant which I owned for quite awhile. I had it in Moscow a long time ago. But other than that I have nothing to do with Russia.” [The Miss Universe Pageant took place in Moscow in 2013 — four years ago.]

There are multiple problems with Trump’s response to Holt, major among them being that Trump did not answer the question Holt asked. Holt was not asking if Trump owned properties located in Russia, he asked if Trump, his family, his businesses, or his surrogates “have accepted any investments, any loans from Russian individuals or institutions.” Trump was silent on that critically important subject. There has been growing media attention to the interview that Donald Trump Jr. (Trump’s son and a key manager of his real estate empire) gave to Hazel Heyer in September 2008. In that interview, Trump’s son had this to say about Russian money flowing into the U.S. assets of the Trump empire: “And in terms of high-end product influx into the US, Russians make up a pretty disproportionate cross-section of a lot of our assets; say in Dubai, and certainly with our project in SoHo and anywhere in New York. We see a lot of money pouring in from Russia. There’s indeed a lot of money coming for new-builds and resale reflecting a trend in the Russian economy and, of course, the weak dollar versus the ruble.” In other words, Trump not owning property in Russia is beside the point if the Russian oligarchs are stashing their cash in Trump properties in Dubai and Manhattan.

The Feds have 'Trump tapes' akin to Nixon's 'Watergate tapes' | TheHill: With President Trump acting increasingly like former President Nixon during the Watergate scandal coverup, there is one similarity between the two scandals that is not receiving the media attention it deserves. During the Watergate scandal, Nixon had a taping system installed in the Oval Office, recording conversations he had there. These tapes revealed wrongdoing with recorded proof beyond all reasonable doubt.During the Russia scandal that plagues the Trump presidency, there are also large numbers of recorded conversations that provide the equivalent of the Watergates tapes. I call them "Trump tapes", which were legally recorded by counter-intelligence and law enforcement authorities for legitimate security and law enforcement purposes. The eavesdropping that created these tapes was originally aimed against foreign individuals with interests that are are hostile to America, including Russian targets. The tapes would include every mention by foreign intelligence targets of every individual associated with Trump with whom they spoke.After the Nixon tapes became public, they were used as evidence and compiled into volumes of reading material and audio recordings that remain available for listening today. Imagine if the Trump tapes that exist today are someday made public! At least some of them will probably become public, used in court proceedings or by congressional investigating committees. To understand the potential political and legal time bombs that might be out there, consider the following: Every time we read a public name of a Russian individual who had some contact with anyone associated with Trump, from Russian government officials or shady characters with ties to Russian intelligence, there is an above-average probability that their conversations were recorded and emails were monitored.

Trump warns Comey: Better hope there are no tapes of our meeting | TheHill: President Trump on Friday morning issued a cryptic threat to fired FBI Director James Comey, amid a storm of media leaks contradicting the White House. “James Comey better hope that there are no "tapes" of our conversations before he starts leaking to the press!” Trump tweeted. A number of reports emerged late Thursday revealing current and former FBI officials dispute Trump’s account of a meeting he had with Comey earlier this year. Trump in an NBC interview on Thursday said Comey had requested a dinner with him, during which he asked to stay on as the FBI head. The president also said Comey told him three times — twice over the phone and once at their dinner meeting — that he was not the subject of any FBI investigations. But that claim has been met with raised eyebrows in Washington. Bureau officials, speaking to the press, have contradicted Trump’s claims on several points. Officials told NBC that the White House requested the dinner meeting, not Comey. A former senior official said that Comey would never have told the president he was not under investigation. “Two people who have heard his account of the dinner” told The New York Times that Trump asked Comey to pledge his political loyalty at the dinner — but was rebuffed by Comey, who promised honesty but not loyalty. The differing in accounts comes as the White House has offered shifting explanations for Trump’s decision to fire Comey.

Trump attacks on fired FBI chief meet resistance; Russia probe proceeds | Reuters: President Donald Trump on Thursday ran into resistance for calling ousted FBI chief James Comey a "showboat," an attack that was swiftly contradicted by top U.S. senators and the acting FBI leader, who pledged that an investigation into possible Trump campaign ties to Russia would proceed with vigor. In his first interview since firing Comey on Tuesday, Trump appeared to try to underscore that Comey's dismissal was about his performance at the Federal Bureau of Investigation and not about the Russia probe. Trump faces accusations from Democrats that he fired Comey to hinder the FBI investigation into U.S. intelligence agency allegations that Russia meddled in the 2016 presidential election to benefit Trump. The probe has hung over Trump's presidency since he took office in January and threatens to overwhelm his policy priorities. "He's a showboat. He's a grandstander," Trump told NBC News. "The FBI has been in turmoil. You know that, I know that, everybody knows that." Trump's characterization was at odds with that of the top Republican and Democratic lawmakers on the Senate Intelligence Committee. At a hearing on Thursday, the Republican chairman of the panel, Richard Burr, and the top Democrat, Mark Warner, praised Comey. Warner said he was offended at Trump's remarks. Acting FBI Director Andrew McCabe, testifying in place of Comey, contradicted Trump's appraisal of turmoil at the FBI, saying that Comey had "broad support" from the rank and file "and still does to this day."A White House spokeswoman on Thursday morning had said that Trump was expected to soon visit FBI headquarters, but MSNBC later reported that plan had been thrown out after agency officials told the White House that Trump would not be greeted warmly following his firing of Comey. 

More Drama: Deputy Attorney General Rosenstein Threatens To Resign Over Comey Termination -- Two days after Trump's termination of James Comey, more details about the circumstances of Comey's departure continue to emerge and the most dramatic highlight from this morning's news wrap comes from the WaPo, which reports that Deputy Attorney General Rod Rosenstein - the man allegedly instrumental in arranging Comey's termination - may not stay at the DOJ much longer. Recall that on Tuesday afternoon the White House cast a memo written by him on Tuesday as the impetus for the move. But critics say the 52-year-old Harvard graduate, with a reputation as straight-shooting and non-partisan, has been sucked into providing cover forTrump to push Comey out. The details from WaPo are as follows:Trump told Vice President Pence and several senior aides — Reince Priebus, Stephen K. Bannon and Donald McGahn, among others — that he was ready to move on Comey. First, though, he wanted to talk with Attorney General Jeff Sessions, his trusted confidant, and Deputy Attorney General Rod J. Rosenstein, to whom Comey reported directly. Trump summoned the two of them to the White House for a meeting, according to a person close to the White House.The president already had decided to fire Comey, according to this person. But in the meeting, several White House officials said Trump gave Sessions and Rosenstein a directive: to explain in writing the case against Comey. The pair quickly fulfilled the boss’s orders, and the next day Trump fired Comey.Recall that Rosenstein was overseeing the FBI's probe into election interference because his own boss, Attorney General Jeff Sessions, has recused himself from it after a row over contacts with the Russian ambassador to the US. And now, as a result of the "alleged scapegoating", Rosenstein has "threatened to resign after the narrative emerging from the White House on Tuesday evening cast him as a prime mover of the decision to fire Comey and that the president acted only on his recommendation." With the WaPo once again quoting an unnamed person "close to the White House, who spoke on the condition of anonymity because of the sensitivity of the matter" one should as usual take this with a grain of salt.

Deputy AG Presses White House To "Correct" Comey Narrative: WSJ - With the narrative of how the Comey firing went down in constant flux (The White House and President Trump contradicting each other), WSJ reports that Deputy Attorney General Rod Rosenstein pressed White House counsel Don McGahn to correct what he felt was an inaccurate White House depiction of the events surrounding FBI Director James Comey’s firing, according to a person familiar with the conversation.  If you're confused - we don't blame you. Here is how this has played out... we think. Pretext: On Monday Trump met with Rosenstein where they discussed Mr. Comey’s job performance. At the White House’s prompting, Rosenstein Tuesday wrote a memo to the president detailing his concerns about the director’s conduct.In that letter, Mr. Rosenstein never expressly recommended that Mr. Comey be fired.

  • 1) Trump administration seems to try to scapegoat Deput AG Rosenstein as being pivotal in the decision to fire FBI Director Comey. The president’s termination letter to Mr. Comey, written on the same day, began by pointing to the memos he had received from the attorney general and deputy attorney general, and offered no further explanation for his decision to fire him. Sarah Sanders, a White House spokeswoman, told Fox News on Tuesday that Mr. Trump had reacted after receiving a “clear and direct and very strong recommendation from the deputy attorney general.”Ms. Sanders, on MSNBC the following morning, said the reason for the dismissal was “real simple ... The deputy attorney general made a very strong recommendation.”  Wednesday morning, Vice President Mike Pence, speaking to reporters at the Capitol, repeatedly pointed to Mr. Rosenstein’s letter while describing the president’s decision.
  • 2) The Washington Post reports that Rosenstein threatened to quit over the assertion.  As a result of the "alleged scapegoating", Rosenstein has "threatened to resign after the narrative emerging from the White House on Tuesday evening cast him as a prime mover of the decision to fire Comey and that the president acted only on his recommendation." With the WaPo once again quoting an unnamed person "close to the White House, who spoke on the condition of anonymity because of the sensitivity of the matter" one should as usual take this with a grain of salt.
  • 3) The Justice Department denies that this happened, on the record.  CNN's @LauraAJarrett - DOJ on the record: Rosenstein did not threaten to resign
  • 4) President Trump then admits in an Interview with NBC News that he would have fired him no matter what the view of Rosenstein and Sessions.
  • 5) The Wall Street Journal, citing unnamed sources, then reiterates the story from earlier that Rosenstein did threaten to quit and demanded that The White House clear up the timeline - to avoid making him a scapegoat. Mr. Rosenstein left the impression that he couldn’t work in an environment where facts weren’t accurately reported, the person said. The deputy attorney general objected to statements by White House aides citing Mr. Rosenstein’s critical assessment of Mr.Comey’s job performance to justify the firing. Mr. Rosenstein grew more distressed when, in television interviews that evening, White House advisers reiterated that the decision was made in response to the Justice Department’s recommendation.
  • 6) The White House spokesperson Sarah Huckabee Sanders admits that she didnt have all the facts when she released the detailed timeline yesterday.

Rosenstein meets with Senate Intel leaders after Comey firing - POLITICO: Deputy Attorney General Rod Rosenstein was seen arriving at the Senate Intelligence Committee's secure office spaces Thursday afternoon. Sources told POLITICO Rosenstein had requested to meet with the Intelligence Committee leaders, Chairman Richard Burr (R-N.C.) and Vice Chairman Mark Warner (D-Va.), who both hastily left an open, televised committee hearing for what Burr said was a meeting "we can't push off." The meeting was pre-scheduled, but Rosenstein's office reached out confirm it after President Donald Trump unceremoniously fired FBI Director James Comey on Tuesday. The president cited a three-page letter from Rosenstein questioning the director’s fitness to serve. The meeting also came amid reports that Rosenstein, a well-regarded federal prosecutor, was furious over the White House’s characterization of his apparent recommendation and even threatened to quit. It’s unclear whether Rosenstein made the request to the committee unilaterally, or took his request through officials channels at the Department of Justice. He arrived with a security detail. Burr said the meeting with Rosenstein was pre-scheduled. However, sources say DOJ reached back out to the committee after the Comey matter.Rosenstein is also doing outreach with other senators. The deputy attorney general's aides reached out to Senate Minority Leader Chuck Schumer (D-N.Y.), who has been highly critical of Rosenstein's handling of the Comey matter, for a private meeting, according to a source familiar with the interaction. But Schumer declined, the source said, because he wants Rosenstein to first meet with all senators and brief them on Comey's dismissal. 

With James Comey Gone, These Three FBI and DOJ Officials Are Running the Russia-Trump Probe - To serve under Donald Trump is to be a disposable commodity whose value fluctuates with the master’s moods. This was true on “The Apprentice” and it’s true in the administration, where personnel matters have taken on a gameshow quality. Turnover has been especially rapid among those responsible for heading up the investigation into ties between Trump’s circle and the Russian government. This week, FBI Director James Comey joined Mary McCord, Sally Yates, and Preet Bharara as senior law enforcement officials who either resigned under Trump or were fired outright. As new officials are appointed to take their places, it’s getting hard to keep track of who is responsible for the Trump-Russia investigation. Two of these key officials (Dana Boente and Rod Rosenstein) are Trump appointees; the third (Andrew McCabe) will likely be replaced by a Trump pick soon. (detailed profiles)

Gaius Publius: Trump – A Nation in Crisis, Again - naked capitalism - Yves here. The media’s fixation on the scary Putin monster takes energy away from opposing Trump on real issues: health care, climate, dropping life expectancy, the surveillance state, to name a few. It also validates the effort of the CIA and certain elements of the military to meddle in domestic politics in a shockingly open manner, which is a terrible precedent. As Lambert wrote, “If we can’t win on the facts, we do not deserve to win.” Gaius’ post focuses on how the “get Trump on Russia” campaign has gone down a series of rabbit holes and his opponents are now likely to shift to “extra-Constitutional means” to remove him. In the face of all of media fixation on Trump and Russia, it’s important to keep in mind:

  • 1.Extraordinary claims require extraordinary proofs. Both the strong form claim that many seem to believe about Trump (“Trump is a Russian agent”) or its weaker form variant (“Trump under Russian influence”) extraordinary, since both amount to charges of treason.  Yet despite months of press and pundit yammering, nothing has come within hailing distance of proving either claim, despite Trump being the object of extensive oppo by the Republicans, then the Democrats, and throughout, one presumes, by members of the military/surveillance state that badly want to escalate a conflict with Russia (both in the United Kingdom, and this country). It is hard to fathom how the Russian government could get influence over a US billionaire based on Trump officiating at a beauty pageant and setting up some legal vehicles for licensing deals that never got done. And the other theories of how Russia would have sway over him don’t hold up to scrutiny.  Trump is seriously underlevered on his major real estate holdings, so the idea that he has been under financial stress in the election time frame is also quite a stretch. He could borrow $1 billion out of his major properties without much difficulty if he needed cash. Selling condos to foreigners does not give them influence over you. Does the person to whom you sold your house have any influence over you? Some readers pointed to a report by a sportswriter that Eric Trump said Trump was financing golf courses using Russian money. This golf course claim is ludicrous when you look at Forbes and see how little debt financing of any type was used on these properties. Trump has no debt on his three Irish and Scottish golf courses and owns them 100%. He has 10 golf courses in the US which he also owns outright. Even with the value of the US courses dropping from $297 million in 2015 to $225 million in 2016, the debt against them is a mere $18.5 million, an inconsequential amount.
  • 2. Trump by virtue of being a billionaire and separately having hastily assembled a political team (and churned though quite a few operatives) will have relationships all over the world through the people in his very large immediate circle, who by nature themselves will be very well connected.  But any of them conducting business with Russia, or even close ties, does not translate into influence over Trump. Both legs of the argument would need to be proven. The first is that the member of Trump’s circle didn’t just do business somehow in Russia, but that the Russian government had “influence” over them. That is a strong claim right there. The second is that that individual was able to sway Trump and on a consistent basis too. Trump’s famously erratic behavior alone makes the second leg a very high bar to surmount. We’ve been looking at this for months. Perhaps readers can come up with something closer to a smoking gun, but none of these appear to be one:

First on CNN: Senate Russia investigators ask Treasury for Trump team financial information-- Senate Russia investigators have sent a request to the Treasury Department's criminal investigation division for any information related to President Donald Trump, his top officials and his campaign aides, the top Democrat on the Senate intelligence committee told CNN Tuesday. "We've made a request, to FinCEN in the Treasury Department, to make sure, not just for example vis-a-vis the President, but just overall our effort to try to follow the intel no matter where it leads," Sen. Mark Warner told CNN. "You get materials that show if there have been, what level of financial ties between, I mean some of the stuff, some of the Trump-related officials, Trump campaign-related officials and other officials and where those dollars flow -- not necessarily from Russia." FinCEN is the federal agency that has been investigating allegations of foreign money-laundering through purchases of US real estate. The news comes just a few days after the revelation that Senate investigators sent broad-based requests for documents to four key potential witnesses in their probe: former Trump campaign chairman Paul Manafort, former national security adviser Michael Flynn, former adviser Roger Stone and former foreign policy adviser Carter Page. Warner added that until the Treasury Department responds with documents, that he will withhold his support for Trump's nominee to oversee terrorism and financial at the Treasury Department, Sigal Mandelker. "Chairman Burr and I requested that information -- until we get it, I'm not going to support the administration's nominee for undersecretary of Treasury finance, for terrorism and finance, because they owe us these documents first," Warner said.

Russia probe: Senate requests Trump documents from agency that monitors money laundering - The Senate panel has requested information about President Donald Trump and his top aides from a financial intelligence unit in the Treasury Department that imposed a $10 million civil penalty on Trump Taj Mahal in 2015 for multiple violations of money-laundering laws. The Senate Intelligence Committee wants to see any information relevant to its Russia investigation the Treasury agency has gathered, including evidence that might include possible money laundering, according to a committee aide who spoke on condition of anonymity. Also at issue: to what extent, if at all, people close to Vladimir Putin have invested in Trump's real estate empire. The request, made in recent weeks, comes as part of the Senate's investigation into whether Trump associates colluded with Russian meddling in the U.S. election. The FBI is also investigating that issue, but that probe is now under a cloud after Trump fired FBI Director James Comey. White House spokesman Michael Short said the president is confident the investigation will exonerate his campaign. "There's a process, and that process is moving forward, and we're confident that once it's complete everyone will again see that there is no `there,' there when it comes to alleged collusion."Treasury's Financial Crimes Enforcement Network has assisted in the ongoing FBI counterintelligence investigation into Trump administration ties with Russia, multiple U.S. officials have said. A former senior Treasury official said that agency would have the authority to demand from any bank with a U.S. branch, including foreign banks, relevant records of transactions by Trump, his family members or his associates. FinCEN also maintains databases of reports of suspicious and cash transactions. 

Was Comey Fired Because the FBI’s Sights Were Turning Toward Trump’s Russian Mobster-Connected Business Ties? -- What is President Donald Trump trying to hide? That’s the question on everyone’s mind since Trump fired FBI director James Comey on Tuesday. What’s been learned since that Watergate scandal-invoking bombshell dropped has only underlined the question. Comey had been seeking more funds to go where the investigation was taking the FBI, media reported Wednesday. The Justice Department called this assertion “totally false,” affirming that whatever trail Comey’s FBI was following will likely go no further. There are also several federal and state grand jury investigations underway, it was revealed Wednesday, first reported by two bloggers—Claude Taylor with ties to the Democratic Party and Louise Mensch with ties to right-wing sites. What these panels are specifically looking at is not known, although foreign surveillance search warrants reportedly have been issued. The presumption is they are tracing the Trump campaign’s collusion with Russia to win the presidency. Meanwhile, Republican Senate Majority Leader Mitch McConnell said Wednesday there would be no independent prosecutor to pick up where Comey’s FBI left off, slickly saying that would “impede current work.” And there was also news that New York Attorney General Eric Schneiderman has launched a grand jury investigation. As the details around all these developments swirl—including claims by Republicans there is nothing to all of this—a tantalizing observation is emerging from investigative reporters who have been following Trump’s organized crime ties for months. What if the FBI investigation was heading into Trump’s mobster-connected business empire, including his partnerships with Russian oligarchs, where the president has broken racketeering, money-laundering and organized crime laws? This is the FBI’s expertise, not the murkier and harder-to-prove charge of Russian campaign collusion.

FinCEN to Share Information with Senate Intelligence Committee -- As noted in Wednesday’s post, FinCEN — the Treasury’s Financial Crimes Enforcement Network — was asked by the Senate Intelligence Committee about information regarding connections between Russia and Trump and his associates. News reports indicate that FinCEN will provide the requested information. From Reuters:A unit of the U.S. Treasury Department that fights money laundering will provide financial records to an investigation by the Senate into possible ties between Russia and President Donald Trump and his associates, the Wall Street Journal reported on Friday, citing people familiar with the matter.The Senate Intelligence Committee asked for the records from the Treasury’s Financial Crimes Enforcement Network, or FinCEN, late last month, the Journal cited the people as saying. ( One person said the records were needed to decide whether there was collusion between Trump associates and Russia during the 2016 campaign, the Journal said.

Treasury's Financial Crimes Unit Will Share Records In Trump-Russia Probe -- During his interview with NBC News' Lester Holt, Donald Trump again pleaded innocent to colluding with Russia and said that "I want to find out if there was a problem with the election having to do with Russia.... If Russia or anybody else is trying to interfere with our elections I think it’s a horrible thing and I want to get to the bottom of it." He may get this opportunity soon because according to the WSJ the Treasury Department's unit that specializes in combating money-laundering and financial crimes will share its financial records with the Senate in the expanding probe into possible ties between Russia and President Donald Trump and his team.The Senate Intelligence Committee requested the records from Treasury’s Financial Crimes Enforcement Network, or FinCEN, late last month, the WSJ reports although it did not elaborate on the nature of the records. One person cited by the WSJ said that without them the committee wouldn’t be able to reach a conclusion on whether there was collusion between Trump associates and Russia during last year’s campaign.Sen. Ron Wyden said in an interview Friday that he is "particularly interested in information about shell companies, money laundering and the use of property transfers that may be germane to the committee’s Trump investigation." The Russia issue, which largely disappeared from the media landscape one month ago after Trump launched cruise missile attacks on Syria, has resurfaced with a vengeance as a major political issue this past week after Trump fired Federal Bureau of Investigation Director James Comey, a sudden move critics have said was an effort to interfere in the Russia probe.  Senate Intelligence Committee ranking member Mark Warner (D-VA) told MSNBC on Friday afternoon that James Comey would not appear in a closed-door session before the Senate Intel Committee next Tuesday. Comey had been invited by Chairman Richard Burr (R-N.C.) and top Democrat Mark Warner of Virginia. Their panel is investigating Russia’s election meddling and allegations of collusion between the Trump campaign and Moscow.

Report: Trump Mulling Spicer Replacement After Press Secretary Fumbles Comey Announcement --National political reporter for Axios, Jonathan Swan, reports that President Trump has been discussing a replacement for Sean Spicer after the White House Press Secretary appeared to have fumbled yesterday's announcement concerning the dismissal of FBI Director James Comey. I can independently confirm reporting that President Trump has been sounding people out about removing Sean Spicer as Press Secretary. 1/2 —The President feels his press team poorly served him yesterday. He believes it was incompetence on their part, not lack of time. 2/2— Jonathan Swan (@jonathanvswan) May 11, 2017 As Newsweek and the Washington Post tell it, Spicer had planned to email a statement announcing Comey's termination Tuesday afternoon - however he was apparently having technical difficulties. Unable to send the announcement, Spicer stood in the doorway of the press office around 5:40 p.m. and ended up "shouting a statement to reporters who happened to be nearby." At 5:41 or so, reporters began to tweet the news - and nine minutes later at 5:50 pm EST, Spicer issued a tweet with the announcement: Statement from @WhiteHouse @PressSec on @FBI— Sean Spicer (@PressSec) May 9, 2017Then, Spicer stepped outside  After a brief interview with Fox's Lou Dobbs, Spicer apparently stepped over to some bushes and ordered reporters to turn their lights off - allegedly refusing to be filmed and "hiding in among the bushes." “Just turn the lights off. Turn the lights off,” he ordered. “We'll take care of this. ... Can you just turn that light off?”

Trump's warning to Comey deepens White House crisis | TheHill: President Trump added fuel to the fire engulfing his White House on Friday by warning now-fired FBI Director James Comey not to reveal anything about their conversations. In an early-morning tweetstorm Friday, Trump suggested there might be recordings of his conversations with Comey that could be used to undercut anything the former director might tell the public. “James Comey better hope that there are no 'tapes' of our conversations before he starts leaking to the press!” Trump tweeted. The stunning pronouncement gave more ammunition to critics who say Trump fired Comey to thwart his bureau’s investigation into whether Trump associates colluded with Russia in the 2016 election. Later Friday, White House press secretary Sean Spicer repeatedly refused to say whether Trump secretly recorded his conversations with Comey — or has done so with any other White House visitors, including members of Congress and foreign dignitaries. “I’ve talked to the president. The president has nothing further to add on that," Spicer told reporters. Democrats quickly demanded that Trump turn over any tapes, if they exist.

Senate panel investigating Russia outraged by Comey firing - POLITICO: The Senate Intelligence Committee is starting to examine potential ties between President Donald Trump’s associates and the Russian government, united in outrage after James Comey’s abrupt firing earlier this week. Trump’s dismissal of Comey — widely seen as a trusted protector of the FBI’s parallel investigation into Russian efforts to manipulate the 2016 election — stunned members of the intelligence panel, and hung like a cloud as the committee worked to insulate its own probe. Neither committee Chairman Richard Burr (R-N.C.) nor Vice Chairman Mark Warner (D-Va.) received a heads-up about Comey’s ouster. Burr called the incident “troubling,” and Warner called for a special prosecutor. The two presented a united front throughout the week, holding a joint, impromptu news conference Thursday and meeting quietly in person almost daily. A day after Comey was fired, the panel announced it was subpoenaing national security adviser Michael Flynn following a unanimous vote. Flynn had refused to cooperate with the committee’s probe without the promise of immunity. Though it was not a direct response to Comey’s ouster — the panel had been weighing issuing the subpoena — the timing signaled a more aggressive posture for an investigation that had been plodding along quietly for months. The Flynn subpoena was meant to “send a signal” that the committee is willing to play tough if needed, according to one official. The panel has sent multiple other requests for information from Trump surrogates. 

Deputy Attorney General Rod J. Rosenstein to brief Senate on Russia investigation - Deputy Attorney General Rod J. Rosenstein has accepted an invitation to brief members of the Senate next week as congressional leaders have raised questions about Rosenstein’s role in President Trump’s decision to fire FBI director James B. Comey. Senate leaders have not yet confirmed the date or time of the briefing, which is expected to be a wide-ranging discussion in which senators will have the chance to ask any questions they wish, according to Senate aides. Rosenstein became a central figure in the controversy over Comey’s firing after Trump cited the deputy attorney general’s guidance in a memo announcing Comey’s ouster. Trump has since refuted his own letter, leaving many in Congress questioning what role Rosenstein played in the decision. “Deputy Attorney General Rosenstein’s office has confirmed to Senator Schumer’s office that Mr. Rosenstein will come to brief the full Senate next week,” said Matt House, a spokesman for Senate Minority Leader Charles E. Schumer (D-N.Y). “The time and date are still being worked out.” Schumer and Senate Majority Leader Mitch McConnell (R-Ky.) both reached out to Rosenstein’s office to schedule a briefing, according to aides for both leaders. Democrats also called on Attorney General Jeff Sessions to schedule a similar meeting Schumer said Thursday. So far, no such meeting has been announced. 

GOP senators won't buck Trump on Comey firing - POLITICO: Democrats who thought the sudden dismissal of FBI Director James Comey would finally jolt Republicans to back a special prosecutor to investigate Russian meddling in the 2016 campaign are going to be sorely disappointed. Even Republicans who’ve criticized the timing behind the abrupt firing aren’t yet willing to trigger a confrontation with the Trump administration by demanding an independent counsel. “I say, let’s see who he nominates to replace Comey,” Sen. Jeff Flake (R-Ariz.), who tweeted after Comey’s firing that he could not find an “acceptable rationale” for its timing, said of a special prosecutor. “You never rule anything out, but I’m not going there. I don’t want to jeopardize the Senate investigation going on.” It’s a familiar dance between Donald Trump and the congressional GOP: Trump does something widely seen as a brazen violation of political norms. Even as some Republicans call him out, most defend Trump’s actions or decline to take action directly challenging his administration. In this case, Republicans are hoping Trump will soon name a new FBI director who's respected by members of both parties, and that congressional investigations into Russian meddling will proceed. To date, only Sens. Lindsey Graham (R-S.C.) and John McCain (R-Ariz.) have called for an independent probe — but they did so five months ago. A growing number of House Republicans are now open to some sort of an independently-led investigation, but that movement hasn’t translated to the Senate.

What Obsessing About Trump Causes Us To Miss -  Andrew Bacevich - How wonderful it would be if President Trump’s ascendancy had coincided with a revival of hard-hitting, deep-dive, no-holds-barred American journalism.  Alas, that’s hardly the case.  True, the big media outlets are demonstrating both energy and enterprise in exposing the ineptitude, inconsistency, and dubious ethical standards, as well as outright lies and fake news, that are already emerging as Trump era signatures.  That said, pointing out that the president has (again) uttered a falsehood, claimed credit for a nonexistent achievement, or abandoned some position to which he had previously sworn fealty requires something less than the sleuthing talents of a Sherlock Holmes.  As for beating up on poor Sean Spicer for his latest sequence of gaffes — well, that’s more akin to sadism than reporting. Apart from a commendable determination to discomfit Trump and members of his inner circle (select military figures excepted, at least for now), journalism remains pretty much what it was prior to November 8th of last year: personalities built up only to be torn down; fads and novelties discovered, celebrated, then mocked; “extraordinary” stories of ordinary people granted 15 seconds of fame only to once again be consigned to oblivion — all served with a side dish of that day’s quota of suffering, devastation, and carnage.  These remain journalism’s stock-in-trade.  As practiced in the United States, with certain honorable (and hence unprofitable) exceptions, journalism remains superficial, voyeuristic, and governed by the attention span of a two year old. As a result, all those editors, reporters, columnists, and talking heads who characterize their labors as “now more important than ever” ill-serve the public they profess to inform and enlighten.  Rather than clearing the air, they befog it further.  If anything, the media’s current obsession with Donald Trump — his every utterance or tweet treated as “breaking news!” — just provides one additional excuse for highlighting trivia, while slighting issues that deserve far more attention than they currently receive.

Fight Brews Over Push to Shield Americans in Warrantless Surveillance — Obscured by the furor over surveillance set off by the investigations into possible Trump campaign coordination with Russia during the election, a major debate over electronic spying that defies the usual partisan factions is quietly taking shape in Congress. The debate centers on the National Security Agency’s incidental eavesdropping on Americans via its warrantless surveillance program, which spies on foreigners abroad whose communications pass through American phone and internet services. Its legal basis, the FISA Amendments Act, is set to expire at the end of 2017. A bipartisan coalition of privacy-minded lawmakers has started to circulate draft legislation that would impose new limits on the government’s ability to use incidentally gathered information about Americans who are in contact with foreign targets. Many of those lawmakers are veterans of a fight two years ago over the U.S.A. Freedom Act, a law that ended an N.S.A. program that gathered Americans’ calling logs in bulk. They won that fight against security hawks because the statute on which the program was based, part of the Patriot Act, was expiring and they were unwilling to extend it without ending the bulk collection. The privacy advocates in Congress are using that same lesson this time around, hoping to leverage their colleagues’ concerns that the program will lapse if they fail to extend the law. But the intelligence and law enforcement communities and their allies in Congress appear determined to extend the warrantless surveillance program law, Section 702 of the FISA Amendments Act, without changes. They are framing the debate as being about a program that is too important to be held hostage to any push for changes, lest gridlock kill it. 

Wall Street’s hopes for deregulation switch from laws to watchdogs - FT - President Trump’s promised bonfire of Obama-era banking legislation is unlikely to happen, according to an emerging consensus among Wall Street bankers, lawmakers and regulators.Instead, bankers are switching their deregulation hopes to a changing of the guard of US bank supervisors, who have considerable scope to loosen the shackles on banks within the bounds of existing law.  Despite progress in Congress last week towards unwinding another of Barack Obama’s reforms — the so-called Obamacare health initiative — senior policymakers and financiers seem now to agree that the “big number” that Donald Trump promised to do on post-crisis Dodd-Frank legislation will not be possible. They believe that little will come of a review by Treasury secretary Steven Mnuchin, due next month, on how financial regulation is constraining the economy.

Wall Street Money Behind New Bill To Repeal Dodd-Frank Act Reforms - The Financial CHOICE Act, a bill to roll back the finance industry regulations and monitoring implemented by the 2010 Dodd-Frank Act, passed in the House Financial Services Committee Thursday — with significant monetary support from Wall Street.  The 34 committee members, all Republican, who voted in favor of the bill, received nearly 80 percent more 2016 election funding from commercial banks and holding companies than the 26 who voted against it, all Democrats, the nonpartisan research organization MapLight found. More specifically, the group noted, the CHOICE Act’s yea-voters received, on average, $72,191 from those finance firms, compared to nay-voters’ average of $40,437.In addition to bankrolling the campaigns of the lawmakers involved, financial industry firms and trade associations collectively spent millions on lobbying efforts related at least in part to the CHOICE Act in the first quarter of 2017, according to the House lobbying database. Among those dozens of lobbying groups and companies were the insurance giant American International Group Inc., which spent $390,000; Bank of America Corp., which spent $680,000; the investment firm BlackRock Capital Management Inc., which also spent $680,000; Credit Suisse’s American arm, which spent $280,000; JPMorgan Chase Holdings LLC, which spent $710,000; the insurance holding corporation MetLife Group Inc., which spent $840,000, and Goldman Sachs Group Inc., which spent $710,000. The bill, which committee Chairman Jeb Hensarling (R- Tex.) introduced April 26 as “an alternative to the failed Dodd-Frank Act,” eliminates a litany of measures that were meant to prevent a repeat of the 2008 financial crisis.

A Dodd-Frank Rewrite That Would Increase the Chance of Bailouts -- Let us assume that the six or eight largest American financial institutions will not be broken into smaller parts, like some modern-day AT&T. Under this assumption, the solution to the “too big to fail” problem must then come from the “failure” side of things, because American financial institutions are still quite big. Which makes the Trump administration’s decision to take a close look at Title II of Dodd-Frank — the so-called orderly liquidation authority — somewhat troubling.  Last Thursday, the House Financial Services Committee approved the Choice Act on a party-line vote. It now goes to the House floor for consideration. The current bank insolvency structure uses bankruptcy first, with orderly liquidation authority backing up the bankruptcy code in times of extreme financial stress, like what we saw back in 2008 and 2009. The Choice Act, sponsored by Representative Jeb Hensarling, Republican of Texas, would rely on bankruptcy only. The problem is that the bankruptcy code, either as it currently stands or as the Choice Act proposes to amend it, would not work in the case of a large-scale financial crisis. Chapter 11 relies on private debtor-in-possession financing to keep the debtor operating during bankruptcy. The proposed Chapter 14 would do the same. But in a major financial crisis, the debtor-in-possession lenders would be the ones in trouble. Who provides the funding then? There would not be any. Thus bankruptcy — whether under current Chapter 11 or the proposed Chapter 14 — would be a liquidation-only choice. In a financial crisis, abruptly pulling the plug on a major financial institution would only make things worse.  So there would be a strong temptation to provide a bailout. Thus, while the current administration has suggested that orderly liquidation authority provides bailouts to “too big to fail” institutions, it is actually the Choice Act that would increase the chance of bailouts. The bankruptcy code needs improvements to ensure it can play its role in Dodd-Frank’s two-step approach to bank resolution. Repealing part of Dodd-Frank is not the way to get there.

Killing Banking Rules Will Invite a Whopper of a Recession -  Thoma - The vote in the House of Representatives to dismantle Obamacare was not the only attempt to undo key legislation from the Obama years that occurred last Thursday. Though it mostly went unnoticed, the House Financial Services Committee voted in favor of the Financial Choice Act. This legislation would substantially weaken the Dodd-Frank financial reforms.  If the Republicans are successful, and that is not assured at this point for either piece of legislation, it will increase economic insecurity for most households. For example, Obamacare has significantly reduced medical bankruptcy, a worry for families who do not have health insurance. If Obamacare is repealed, those worries will return for tens of millions of households and become a reality for many of them.  As for repealing Dodd-Frank, consider this statement by Treasury Secretary Steven Mnuchin. Speaking at the Milken Global Conference last week, which is attended by key people in the financial industry, he boasted, “You should all thank me for your bank stocks doing better.”  What he is saying is that increasing the risk of another financial meltdown and a large recession, which would once again be paid for mainly by all the people who lose their jobs, homes, retirement savings, and so on rather than the wealthy interests benefitting from the change in policy, is worth making bank stocks do better. If the Financial Choice Act is passed, the risk of a deep and prolonged recession, which would once again hurt millions and millions of households, will go up.  Even if Republicans are unsuccessful in their attempts to get rid of Obamacare and Dodd-Frank, these policies are representative of a broader agenda that will make life harder for the poor and the working class. For example, the large tax cuts that are part of the Republican health care plan are likely to be enacted one way or another, and the resulting increase in government debt will give Republicans the excuse they need to weaken social insurance programs that protect people from large economic risks.

Who’s Watching Wall Street? The Feds Turn a Blind Eye to Goldman’s Game - David Dayen - Goldman Sachs is on a shopping spree. Last week, it spent $500 million tobuy 12 percent of Riverstone Holdings, a private equity firm focused on energy investments. This is part of a $2 billion private equity strategy for the vampire squid. Through a couple of subsidiary funds, Goldman has already acquired stakes in private equity players Littlejohn & Co. and ArcLight Capital Partners, and  Accel-KKR, a firm specializing in tech companies.There’s only one problem with these investments: They’re supposed to be illegal under the Dodd-Frank Act. But “the law” is only as good as the men and women willing to enforce it, as Goldman Sachs has discovered to its delight. Big banks have turned one key section of Dodd-Frank into mush, such that Goldman can flaunt its defiance openly without an ounce of fear. It makes me wonder why House Republicans are working so hard to repeal Wall Street reform when regulators have shown so much willingness to repeal by neglect. The Volcker rule, named after former Federal Reserve Chairman Paul Volcker, intended to prevent banks from trading on their own accounts, to reduce what amounts to gambling with depositor funds. One part of the rule sought to stop banks from owning or sponsoring private equity firms and hedge funds. Not only does this segregate depositor money from high-risk activities, but it limits a cheap source of cash for lightly regulated “shadow banks.” Severing the link between potential failures and the broader banking system could prevent toxic contagion from spreading. And we shouldn’t encourage predatory capitalism that hurts workers by throwing government-guaranteed deposits at it. Bank lobbyists weakened the Volcker rule before it was finalized. Then-Senator Scott Brown, the 60th vote for Dodd-Frank in the Senate, inserted a loophole that enabled firms like Goldman Sachs to keep a “de minimis” 3 percent stake in hedge funds or private equity firms. But what Goldman announced with Riverstone equaled four times that number. How is this allowable?

Repealing FDIC resolution powers would be 'dangerous,' Tarullo warns - Repealing or modifying regulators’ authority to take over failing banks may actually increase the risk of taxpayer-funded bailouts, according to a new blog post by former Federal Reserve Board Gov. Daniel Tarullo.  Tarullo said President Trump’s executive order asking the Treasury Department to review the resolution powers laid out in Title II of the Dodd-Frank Act may lay the groundwork to dismantle a set of authorities that regulators need to resolve a failing firm in a way that does not set of a financial panic.

Eliminating OLA is careless and shortsighted | BankThink  - The financial crisis produced the worst economic recession in the United States since the Great Depression, leading to the near-total collapse of the global financial system, wiping out retirement savings and costing millions of Americans their jobs, homes and livelihoods.  In response to the crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, to help make the financial system safer and fairer. Dodd-Frank strengthened oversight of the largest banks, provided a mechanism to ensure supervision of firms like Lehman and AIG that had previously escaped Federal Reserve regulation, created tough new rules for derivatives trading, and bolstered consumer and investor protection. But one of the law’s key measures was the Orderly Liquidation Authority, which for the first time provided the Federal Deposit Insurance Corp. with the tools it needs to deal with the failure of a systemically important firm. Now, President Trump has directed his Treasury secretary to target the OLA, and House Financial Services Committee Chairman Jeb Hensarling has unveiled a plan to scrap it, which passed out of the House Financial Services Committee earlier this month. Eliminating the OLA would be a serious mistake that would recreate the very conditions that made the financial crisis so disastrous for the country. A man leaves Lehman Brothers’ headquarters on Sept. 15, 2008. The investment bank’s bankruptcy caused a seismic shock in the financial system. It would be foolish to rely solely on bankruptcy judges to manage such a failure again. Bloomberg News Why is the OLA important? When a traditional bank or thrift is either failing or on the verge of failure, the FDIC has long had the authority to step in to guide the failing institution through a process that limits collateral damage, and protects taxpayers and the broader economy as a whole. As the financial crisis demonstrated, though, with respect to failing nonbank institutions like Lehman Brothers or AIG, or complex bank holding companies, the only available options were bankruptcy or government bailouts, both of which proved unacceptable. 

 FSOC discusses Volcker Rule as part of reg review — The Financial Stability Oversight Council discussed its designation of certain nonbanks as systemically important and the "efficacy" of the Volcker Rule at a closed-door meeting on Monday, according to the Treasury Department. The discussion of the Volcker Rule, which prohibits banks from engaging in proprietary trading, came as part of talks about an executive order from President Trump asking the Treasury Department to review the regulatory system. Though the Treasury did not provide details of the discussion, banks and Republicans have targeted the Volcker Rule, arguing it is complex and difficult to comply with.

Can the OCC reinterpret the Volcker Rule on its own?  There are barriers to possible efforts by Acting Comptroller of the Currency Keith Noreika to act unilaterally to change the Volcker Rule.  — Acting Comptroller of the Currency Keith Noreika is floating the possibility of unilaterally reinterpreting an interagency ban on proprietary trading, but there are doubts about how far the agency can move on its own and whether that would be a good idea.  Banks have long complained about the Volcker Rule, arguing that it's overly complex and burdensome to comply with, and it has become a prime target of the Trump administration. But the ability of the OCC to move on its own to reinterpret the rule, which required five agencies to implement, is questionable, according to experts.

 Democrats cry foul on new acting OCC head | American Banker - — Democrats on the Senate Banking Committee are raising concerns that a move by Treasury Secretary Steven Mnuchin to replace former Comptroller of the Currency Thomas Curry with acting comptroller Keith Noreika was done to circumvent Senate vetting. "President Trump has not named a nominee for this position. Yet you have chosen to replace the current head with an acting head who is unvetted, has obvious conflicts of interest, and lacks the experience to run an agency that employs almost 4,000 individuals and oversees over 2,000 national banks, both large and small,” wrote the senators, Chris Van Hollen of Maryland, Sherrod Brown of Ohio, Elizabeth Warren of Massachusetts, Robert Menendez of New Jersey, Brian Schatz of Hawaii, Jack Reed of Rhode Island and Catherine Cortez Masto of Nevada.

Interim OCC chief should put fintech charter on ice – BankThink - One thing that Keith Noreika, the new acting head of the Office of the Comptroller of the Currency, could tick off of his to-do list is to pause the OCC’s efforts to develop a fintech charter. Noreika should then take some time to assess whether the charter is developing in a way that best serves the public.  Former Comptroller Thomas Curry deserves major credit for getting the OCC to think about how to encourage innovation in the banking sector. The fintech charter is an important piece of this effort. Unfortunately, based on the most recent information put out by the OCC, it appears that the previous leadership wasn’t thinking sufficiently outside of the box. The charter is shaping up to needlessly mimic many of the requirements of traditional depository institutions, even though those requirements do not make sense in the nondepository context.  The charter also appears to be improperly imposing laws that Congress did not intend for nondepository institutions. Whatever the merits of placing Community Reinvestment Act-like requirements on nondepository institutions, it should be Congress, not the OCC, that makes that call. Implementing a charter with these problems would represent a major missed opportunity to make the financial services industry more innovative and competitive, which would benefit consumers and Main Street businesses alike. Before the process moves further, and before firms make choices or bear costs to pursue such a charter, the OCC needs to allow the new administration to decide what the charter should look like.  However, the OCC should not press pause on its response to the lawsuit filed by the Conference of State Bank Supervisors challenging the charter. The agency should fully contest CSBS’s allegation that the OCC has exceeded its authority. The lawsuit presents an important question, and the case represents as good a vehicle as any to ensure that any questions about the OCC’s authority are fully resolved.

New York regulator files independent lawsuit against OCC's fintech charter — On the heels of a joint state lawsuit opposing the Office of the Comptroller of the Currency’s fintech charter, New York’s banking regulator on Friday filed its own individual lawsuit, asking the courts to block the charter. “The OCC’s fintech charter is lawless, ill-conceived, and destabilizing of financial markets that are properly and most effectively regulated by New York and other state regulators,” Maria T. Vullo, New York’s superintendent for financial services, said in a statement.

Fintechs need regulatory clarity now more than ever - Fintech is no longer a wunderkind. The potent combination of the internet, computing power and big data that once promised to transform banking is now well over a decade old and has evolved significantly from its self-declared disruptive origins. Fintech has produced hundreds of new nonbank online lenders that compete with incumbent banks in consumer finance markets. The online lenders have pioneered accessible online interfaces, novel uses of data for credit scoring and lower costs. But the branding, funding and scale advantages of incumbent banks have proven to be formidable — and many online insurgents, like any startups, have struggled with competitive, growth and legal and regulatory challenges. Moreover, many of online lending’s most fundamental innovations — like algorithmic tests for consumer credit — have never been tested in a recession. They will be. For their part, banks have absorbed some fintech innovations, while quietly providing the increasingly large and vibrant online-lending startup scene with financing, partnerships and acquisitions.  Fintech is, and will continue to be, an increasing influence on banking in the decades ahead. Our major caveat, however, is that key regulatory changes need to be made to encourage fintech viability and continued innovation. Those regulatory reforms, we believe, will prove beneficial not just for consumers and online lenders, but for incumbent banks as well. It’s easy to forget how young the online lending industry is and how rapidly it is evolving. In fact, U.S. regulators have only belatedly begun the information-gathering process to determine what kind of oversight is necessary for online lending. The New York State Department of Financial Services requested information from only 28 online lenders last June, and the previous administration only released a white paper on fintech in the final weeks of the Obama presidency.

Citi joins big-bank brethren in backing blockchain firm Axoni  - Axoni, a distributed ledger tech firm, has scored another big-bank investor in Citigroup.The New York startup would not specify the amount Citi has invested in it, but it now sizes its Series A round at more than $20 million. When the round was announced in December, with Wells Fargo and Euclid Opportunities, ICAP’s fintech investment business, as the lead investors, the total was $18 million. Simple math therefore suggests Citi put in more than $2 million.It is worth noting that the investment is coming from Citi itself, not the company's Citi Ventures fund. Axoni’s other Series A investors include Goldman Sachs, JPMorgan Chase, Thomson Reuters, Andreessen Horowitz, FinTech Collective, F-Prime Capital Partners and Digital Currency Group.The banks' backing of Axoni speaks to a larger trend occurring in the nascent blockchain field: the spreading of bets. Banks are joining — and in some cases, leaving — various projects as they try to pick the winners in the still-evolving technology field.

What Do Governments Want from Bitcoin? - The price of bitcoin just surpassed $1,800, its second all-time high this week. As governments worldwide eye the blockchain technology and ready new cryptocurrency rules, there is no sign bitcoin’s astronomical rise in value, up 81 percent this year, is overAccording to Coindesk’s Bitcoin Price Index, the average price of bitcoin hit $1,839.23 on Thursday after starting the day’s trade session at $1,732.13. That jump of more than $100 follows the historical achievement Tuesday of bitcoin breaking $1,700 for the first time.What’s driving this mega surge? Recent comments and developments from officials in the US, Japan, and Russia, according to CNBC.Though the price of the digital currency had already been steadily mounting, Federal Reserve Bank of Minneapolis President Neel Kashkari spoke favorably of the blockchain technology Tuesday before the record price increase of bitcoin.“I think sentiment has shifted in the markets, in the Fed,” Kashkari told attendees of a technology conference in Minneapolis, Minnesota, according to Reuters. “I would say I think conventional wisdom now is that blockchain and the underlying technology is probably more interesting and has more potential than maybe bitcoin does by itself.” The blockchain is a digital, public ledger on which bitcoin transactions are recorded. Some proponents of the technology say its implications go beyond disrupting government currencies, threatening the status quo in global finance altogether as well as insurance markets and even governments themselves.Last week, Russia announced that bitcoin would be legal by 2019, Cointelegraph reported. And in March, Japan legalized bitcoin for payments, which led to more purchases of the cryptocurrency with yen. Back in the US, the infamous Winklevoss twins, Cameron and Tyler, are waiting to hear back from the U.S. Securities and Exchange Commission as it reviews its original decision to reject a proposal for an exchange-traded fund, or ETF, that facilitates the entry of large institutional investors into the bitcoin market, CNBC reported.

AI may just create the illusion of good credit decisions - BankThink - Let’s apply some natural intelligence to the concept of artificial intelligence. AI has been conflated with big data, machine learning and neural networks. AI is also second only to blockchain technology as the most overused and overhyped term referring to technologies that are taking over banking and finance, particularly in credit decisions.Three years ago, it was fashionable to just nod your head when a company founder or a conference panelist stated that AI and fintech will disrupt the banks; some entrepreneurs even went so far as to state that banks were already obsolete.The founders believed then as they do now that AI is the main component of the disruption. They believe that the technology will make loan officers obsolete (probably true) and lending more consistent and efficient, and safer. The reality is AI will make lending more consistent and efficient; however, it remains to be seen if it will make lending safer. In other words, AI has yet to prove that it is more capable than humans in avoiding both safety and soundness and consumer protection pitfalls related to credit decisions. Indeed, humans will still be involved at key steps in the process.This is because AI relies on data sets to help produce a credit decision outcome. This is as it should be. But a handful of banks will basically be attracting and serving the same general demographic profiles and populations (think Wells Fargo and Bank of America) and therefore using standardized data sets to build their AI systems. How will regulators ever know if the AI algorithms are performing in a nonbiased way? Humans are the programmers of the algorithms, and therefore human biases and tendencies cannot but leak into the overall decision process. As training data is provided and defined for AI algorithms, “machine learning” is supposed to create distance between the technologists and the machine, and in turn between the humans running the credit policies of the bank and the decisions being made. The quote “We don’t know how it makes its decisions” may become increasingly common.

FSOC agrees to put MetLife suit on hold for 60 days — The Financial Stability Oversight Council said Thursday it would agree to delay for 60 days any verdict in its ongoing appeal of a lower court decision vacating its designation of insurance giant MetLife as a systemically important financial institution. MetLife had called for the FSOC’s appeal to be held in abeyance — that is, effectively tabled — for 180 days pending the outcome of the Treasury Department’s presidentially directed review of the process for designating nonbanks as SIFIs. The council said in its May 4 reply to the motion that it has not had an opportunity to deliberate with its members to determine a course of action in the appeal. 

New contender emerges to become Wall Street's top cop: sources | Reuters: David Miller, a white collar defense lawyer and former federal prosecutor, has emerged as a candidate to succeed Preet Bharara as the next Manhattan U.S. attorney, according to people familiar with the matter. Miller, a partner at Morgan, Lewis & Bockius in New York, has in recent weeks spoken with officials in the U.S. Department of Justice and the White House as well as members of Congress about the job, said the people, who spoke on condition of anonymity about the private discussions. The administration's interest in Miller for the prestigious post has not been previously reported. Edward McNally, a partner at Kasowitz Benson Torres, has been viewed as the leading candidate among at least four people said to have been under consideration, according to sources and media reports. It is not clear who is now favored to get the position, which requires the President's nomination and is subject to confirmation by the Senate. Spokespeople for Morgan Lewis, Kasowitz and the Department of Justice declined to comment. The White House did not respond to questions about Miller as a candidate. U.S. Attorney for the Southern District of New York is considered one of the most important posts in the U.S. justice system. It entails overseeing more than 200 prosecutors handling high-profile cases ranging from terrorism to wrongdoing on Wall Street, cyber attacks and corruption.In addition to Wall Street cases, whoever is chosen will inherit the office's investigation into a scandal at Fox News Channel over payments to settle sexual harassment claims and the prosecution of a Turkish gold trader in a politically charged case that has angered Turkey's president Recep Tayyip Erdogan. 

Illinois Bill Targets Carried Interest Loophole - Yves Smith - A rare bit of good news comes via a bill making its way through the Illinois legislature. It seeks to close the carried interest loophole, which is near and dear to private equity and hedge fund kingpins, in that state. The carried interest loophole allows fund managers, who typically have only a 1% to 3% investment in the funds they operate, to treat the prototypical 20% profit share as capital gains income, which is taxed at a lower rate than labor income.  And before you say, “This will never happen,” consider: Tax experts reported that there is widespread acceptance in the tax bar that the break is on its last legs, although if Trump gets his 15% tax rate for “small businesses” that would also happen to enrich super rich fund managers, it would make this effort moot 1 Fund managers can achieve largely similar tax treatment by having a true carried interest, as in borrowing enough so that they’d have a 20% interest in the funds they manage. But that would also entail taking the risk of loss, something they don’t bear now. The Illinois bill does not become effective until similar legislation becomes law in Connecticut and New York…and both state have similar bills moving forward (one has to wonder why the supposed paper of record, the New York Times, has not deigned to take notice) The legislation is among other things meant to embarrass Governor Bruce Rauner, who made his fortune in private equity. The bill will thus get votes from legislators who might otherwise be indifferent but want to put Rauner in a bad light.

 Congressional efforts to kill CFPB prepaid card rule fall short   — The Consumer Financial Protection Bureau's prepaid card rule appears to have survived Republican efforts to reject it using an obscure legislative process that has allowed the GOP to roll back more than a dozen Obama-era regulations. Sen. David Perdue, R-Ga., and Rep. Roger Williams, R-Tex., both introduced legislation earlier this year that would allow Congress to use the Congressional Review Act to scrap the rule with only 51 votes in the Senate. However, a Senate vote on the legislation is unlikely ahead of a statutory deadline this week for Congress to act.

Opinion: This former CEO wants a luxury tax on CEO pay -  Steve Clifford - Marissa Mayer will pocket $186 million when Verizon completes its acquisition of Yahoo, epitomizing corporate America’s affinity for paying CEOs for luck. Yahoo’s core business stagnated under her leadership. However, she inherited Yahoo’s investment in Alibaba, China’s e-commerce colossus. The increasing value of Alibaba caused Yahoo stock to double over her five-year tenure. Hence she deserves $186 million, because CEOs get paid for performance.The average Fortune 500 CEO makes over $20 million a year. This is roughly 300 times what the average employee makes — and this excludes the CEO’s gains on stock options. Add these in and the ratio jumps to 500-to-1.Globalization isn’t the cause. In Japan, the ratio of CEO pay to that of the average worker is 16 to 1.Nor is this the result of market forces. Companies don’t bid against each other for CEOs. To be successful, a CEO needs to understand and manage a single company in a single industry. Such knowledge and skills are seldom portable. That is why 75% of Fortune 500 CEOs are promoted from within. A CEO jumping from one large company to another happens about once a year on average. And when CEOs jump, they usually fail.Instead of a market, boards and compensation consultants have created a Rube Goldberg device that I label the CEO Pay Machine. This bases CEO pay on what other CEOs (their so-called peers) are paid and on whether the CEO surpasses targets negotiated with the board. This produces an annual round of leapfrog. After negotiating easy bonus targets, a CEO vaults over highly paid peers, thereby raising the peer-group base for the next jumper. Pay for American CEOs is now as market and performance-driven as was pay for Soviet commissars in the Brezhnev era. Adjusting for inflation, CEO pay has risen 10-fold since 1980. Suppose companies retained consultants to advise them on insurance. If the cost of insurance rose 10-fold with no change in coverage, some directors would ask questions. If directors would question the consultant-constructed CEO Pay Machine, they would realize it rests on a bed of quicksand.

Buffett Says Money Spent on Plumbers Better Than on Hedge Funds -- Warren Buffett isn’t done criticizing hedge-fund managers for wasting clients’ money. At the annual meeting of his Berkshire Hathaway Inc. he again pressed the argument that, in aggregate, investment professionals aren’t worth their fees -- and that people would be better off sticking their money in a low-cost index fund. He also challenged how hedge fund managers are paid. "If you go to a dentist, if you hire a plumber, in all the professions, there is value added by the professionals as a group compared to doing it yourself or just randomly picking laymen," Buffett, 86, said. "In the investment world it isn’t true. The active group, the people that are professionals in aggregate, are not, cannot, do better than the aggregate of the people who just sit tight." Vice Chairman Charles Munger, 93, said "it’s even worse than that" because some hedge fund managers with a long career in the industry -- known for charging 2 percent management fees and taking 20 percent of profits -- do well, attract money and then lose it. "The investing world is just a morass of wrong incentives, crazy reporting and, I’d say, a fair amount of delusion," Munger said. Buffett also challenged, as he has in previous shareholder meetings, the 2-and-20 compensation model for hedge fund managers. "If you even have a billion dollar fund and get two percent of it, for terrible performance, that’s $20 million," Buffett said. "In any other field, it would just blow your mind." 

BUFFETT: Wells Fargo made 3 huge mistakes during the fake accounts scandal but one ‘dwarfs all the others -- Warren Buffett said that the biggest failure of the Wells Fargo fake accounts scandal should be laid at former CEO John Stumpf's feet. Wells Fargo settled with regulators in September after it was revealed that employees had opened as many as 2 million accounts in the names of customers without their knowledge. This launched a massive investigation, two congressional hearings, and eventually led to former CEO John Stumpf stepping down. During the Berkshire Hathaway annual meeting, Buffett addressed the scandal by breaking down three big problems. "There were three very significant mistakes, but there was one that dwarfs all the others." said Buffett The first mistake was creating an incentive structure that rewarded bad behavior. Wells Fargo advocated cross-selling, in which employees were judged based on how many extra financial products they could sell to each customer. The second, and biggest mistake, according to Buffett was when executives found out about the scandal, former CEO John Stumpf did not do enough about the issue. According to an internal investigation, Stumpf knew about the systemic issue as far back as 2012, but did not take substantial action. "The biggest mistake was, obviously I don't know all the facts, but at some point if there is a major problem will get to the CEO and at that point the CEO has to act," Buffett said. "It had to stop when the CEO learns about it," The third mistake, Buffett said, was that the bank underestimated the fall out and public backlash. "They totally underestimated the impact of what they had done," Buffett said. In the end, however, Buffett said the issue came down to not doing enough about the scandal when they found out about it. "The main problem was they didn't act when they learned about it," the legendary investor concluded. 

Wells Fargo’s Fake Accounts Grow to 3.5 Million in Suit    - Wells Fargo & Co. may have opened as many as 3.5 million fraudulent accounts in the last 15 years, according to consumers who are trying to beef up a settlement with the bank over abusive sales practices. The bank reached a $110 million deal in late March to resolve a national class-action lawsuit over claims that employees may have opened more than 2 million deposit and credit-card accounts without customers’ permission since 2011. After the bank last month agreed to expand the accord to include dates as early as May 2002, lawyers for consumers on Thursday raised their estimate on the number of fake accounts. “This number may well be over-inclusive, but provides a reasonable basis on which to estimate a maximum recovery,” the attorneys said in a filing in San Francisco federal court. The new figure is based on public reports, negotiations and bank documents, according to the filing. Wells Fargo questioned the accuracy of the latest estimate, which comes less than a week before U.S. District Judge Vince Chhabria in San Francisco is slated to consider preliminary approval of the settlement. It was updated last month to provide $142 million.

WTF Chart Of The Day: There Are Now More Indexes Than Stocks --For the first time ever, the number of market indexes now exceeds the number of U.S. stocks... As Bloomberg reports, traditional ones such as the S&P 500 are collections of securities weighted by market value, and index funds mimic them as a low-cost way to deliver the market’s performance. Many new indexes are different: They include stocks based on custom criteria, such as having low volatility or high dividends. The recent explosion in indexes has been driven by demand as many new benchmarks essentially repackage active investment strategies into indexes, says Eric Balchunas, senior exchange-traded fund analyst at Bloomberg Intelligence. They can then be tracked by so-called smart-beta ETFs, which fund companies are rolling out rapidly. Money managers are under pressure to cut costs, says Balchunas, as investors shift their money into funds with low fees. Smart-beta ETFs are generally more expensive than S&P 500 funds but cheaper than actively managed funds. It remains to be seen how well the new funds will perform. As we wrote previously, for now, the debate about the impact of ETFs rages, and will do so inconclusively as long as trillions in central bank liquidity prop up broader risk assets and equity markets. It is only once central banks take start soaking up some $18 trillion in excess liquidity that the true impact of ETFs will be visible.

VIX Crashes To A 9 Handle - Lowest Level Since Feb 2007 -- Amid the 'calmest' market for the S&P 500 since 1964... Traders are shedding protection at a record clip. For the third time in the last week, VIX just traded with a 9 handle - down to 9.73 - the lowest since Feb 2007... And judging by the collapse in realized vol, VIX could have further to fall..

After You Read This Article, Forget About it and Go Back to Sleep -- Bloomberg is reporting on a curious real estate transaction in Chicago and an antenna in an open field, that was erected in order to permit a small group of traders gain a marked advantage over everyone else. Let's have a look, shall we? That nondescript pole on a flat 31 acre plot of undeveloped land is in close proximity to the CME Group. It is owned by a Jump Trading affiliate called 'World Class Wireless', who purchased the lot for twice the going rate, or $14m. The high tech microwave antenna is able to intercept data coming out of the CME before it makes its way to the east coast -- creating an arb situation that last microseconds. It is the definition of cheating, rich, powerful people using their position to jimmy rig trades in their favor, all but guaranteed. It's like having a time machine that can go a microsecond into the future and see prices and then trade off of the knowledge using very sophisticated high speed quants.  Nothing at all wrong with that, right? Another virtuous firm, McKay Brothers LLC just won approval to build a microwave tower diagonal to the CME data center -- under the name Piece Broadband LLC -- a harmless little telecom company. The approval gives them the right to build a 350ft antenna 600ft closer than their existing one -- which could mean all the difference in the world, when attempting to remove pennies from the penny tray.   Webline Holdings is another penny tray grabber -- with a 'license' to operate a microwave network stretching from the data center all the way to Carteret, NJ, where the Nasdaq data center is located. The trick here is to intercept the signal in Chicago before it gets to New Jersey. This could all be negated if the CME simply placed a microwave antenna on their roof -- all but rendering nearby antennas meaningless. But for some odd reason, they continue to relay data to nearby microwave antennas outside of the data center, which is then stolen by the aforementioned companies about, all for the purposes of rigging markets. Please explain to me how this is legal?

Should Free Markets Govern the Bond Rating Agencies? -  Gretchen Morgenson - There’s a lot not to like in the Financial Choice Act, the deregulatory construct put forward by House Republicans on April 28. Dubbed by its creators the “alternative to the failed Dodd-Frank Act,” it aims to repeal the 2010 law’s prohibition against banks engaging in risky trading for their own accounts. It also seeks to gut the Consumer Financial Protection Bureau, one of the more effective agencies in Washington. What hasn’t received much attention is how the bill would change the rules governing credit ratings agencies — but it should. What the Choice Act would require is bad, both in how it would roll back the law and in what it would keep. But the bill also misses a big opportunity to change the ratings industry for the better.First, a little history. The ratings agencies — Moody’s Investors Service, Standard & Poor’s Financial Services and Fitch Ratings are the major ones — played a central role in the financial crisis. They assigned high grades to mortgage securities that quickly collapsed, leaving investors with billions in losses. The ratings agencies failed abjectly to assess the credit risk in these securities, which were brimming with poisonous loans. That was their job. After the crisis, the ratings agencies paid big fines to settle government inquiries. Still, the ratings agencies did not have to change their business models, in which the issuer of the debt instrument being analyzed pays for the grade it receives.  This is an obvious conflict of interest. But rather than changing the pay model, regulators responded to the crisis by heightening their scrutiny of the ratings agencies that are registered with the Securities and Exchange Commission. The agencies must disclose certain information, for example, about their performance measurement statistics and the procedures they use to determine debt grades. Ratings agencies must also establish an “effective internal control structure governing the implementation of and adherence to policies, procedures, and methodologies for determining credit ratings” according to the S.E.C.

 IMF Report: U.S. Corporate Debt Could Be Trump’s Waterloo -- Pam Martens --  As U.S. equity markets continue to price to perfection a grab bag of promised corporate giveaways from their Best Forever Friend, President Donald Trump, a group of researchers at the International Monetary Fund (IMF) had the temerity to ask last month – what could possibly go wrong.  In their April 2017 “Global Financial Stability Report,” IMF researchers methodically pare back the rosy lenses of the U.S. equity market and focus on the warning signs in the U.S. corporate debt market. Two particular findings have the power to potentially jolt the equity markets out of their euphoric stupor. The researchers note: “The [U.S.] corporate sector has tended to favor debt financing, with $7.8 trillion in debt and other liabilities added since 2010…” “The number of [U.S.] firms with very low interest coverage ratios—a common signal of distress—is already high: currently, firms accounting for 10 percent of corporate assets appear unable to meet interest expenses out of current earnings. This figure doubles to 20 percent of corporate assets when considering firms that have slightly higher earnings cover for interest payments, and rises to 22 percent under the assumed interest rate rise.  As for the windfall from President Trump’s promised slashing of the corporate tax rate, the IMF researchers have this to say:“While positive effects of tax stimulus on cash flow could be considerable, they would be insufficient for firms in a number of cash-constrained sectors to finance increased capital spending. These sectors— energy, utilities, and real estate—are particularly important as they have contributed to nearly half of overall capital spending among S&P 500 firms over the past few years. The cash flow boost from a cut to the statutory tax rate may be insufficient to spur the nearly $140 billion needed to boost capital expenditure to the level prevailing before 2000. Adding in changes to tax treatments of interest expense and capital expenditures, along with repatriation, would attenuate—but likely not eliminate—financing needs for these sectors.”

Domestic Retail Buyers Are Propping Up the U.S. Credit Market --  American buyers have been gorging on corporate debt after also stepping up their presence in the Treasury market. As such, investment grade credit spreads remain tight by historical standards largely thanks to a resurgence in U.S. retail enthusiasm as international demand wanes. "The real delta in terms of demand for U.S. investment grade credit this year is not any particular foreign buyer base, but instead the domestic mutual fund and exchange-traded fund segment, which is enjoying a banner year of inflows," wrote Wells Fargo Securities strategists led by Nathaniel Rosenbaum in a recent note. "These funds have garnered over $100 billion in just four months, almost double the prior record for this point in the year." While institutional players have been making greater use of ETFs, the vehicles associated with these inflows point to buying from individual investors as a major source of support for U.S. corporate credit.This pickup in domestic demand has been sorely needed: The six-month moving average for net monthly foreign purchases of U.S. corporate debt has declined to less than $5 billion, its lowest level since October 2014. The so-called "electronics for bonds" trade -- how Bank of America Merrill Lynch has characterized the U.S. trade deficit in this consumer goods segment and its mirror image, foreign bond purchases -- has been losing some of its luster due to relatively elevated hedging costs. This has added to worries that the asset class, facing slipping fundamentals and uncertain effects of tax reform on demand and issuance activity, may be prone for a correction."We have argued since the end of last year that the record foreign demand for U.S. credit observed in 2016 is unlikely to recur in 2017, as we expected divergent central bank policies to begin a gradual convergence, led by a resurgent euro-zone economy," the analysts wrote. "In our view, foreign demand is very tightly linked to the USD, whereby a high (or rising) dollar is positive for foreign demand and conversely a weak (or falling) dollar is negative for foreign demand."

Business Demand For Bank Loans Was Weaker In The First Quarter, Fed Survey Finds –  Demand for bank loans from commercial and industrial firms was weaker in the first quarter, the Federal Reserve said Monday in its senior loan officer survey. That came in a quarter when standards for loans were basically unchanged. The officers said that they continued to tighten standards for commercial real estate, a process that economists said started in late 2015. Many officers cited regulatory reasons for tightening commercial real estate standards. There was also weaker demand for auto loans and credit cards. The survey found a moderate tightening of standards for auto loans for the second straight quarter. But bank officers reported that they eased standards for credit-card loans.

Senior Loan Officer Survey shows slight loosening, validating forecast of Chicago Fed indexes: Several weeks ago when I introduced coverage of the Chicago Fed's Financial Conditions Indexes, (  ) I noted that they appeared to be a very good and much more timely proxy for the quarterly Senior Loan Officer Survey. Here is the graph I used then: As a test I made the following forecast: "[The Financial Conditions indexes] have been below zero for the last six months. This suggests that when the Senior Loan Officer Survey is reported next month, it is at very least likely to be neutral, and more likely than not will show a slight loosening of credit." Yesterday the Senior Loan Officer Survey for the first Quarter of 2017 was released, and that forecast was validated, as lending conditions for both large and small firms showed slight loosening: While the Survey only has about a 30 year history, it has functioned as a long leading indicator throughout that time. The first Quarter's report is evidence that no recession can be expected within the next year. With the exception of significant tightening for commercial real estate loans, other types of lending standards were also near neutral: On the demand side, demand for commercial loans was slightly lower: While this does show weakness, note that these kind of readings continued for several years in the last expansion before turning significantly lower in advance of the last recession. Consumer loans also showed some weakness, but with only a five year history, we have no way of putting this in historical context:Taken together, both loan standards and demand for loans are close to neutral, and show neither a strongly expanding economy nor one on the cusp of a contraction.

Feds Shut Down Guaranty Bank, Closing Branches In Walmart, Kroger Stores -- Consumerist -  Last week, the Office of the Comptroller of the Currency shut down Guaranty Bank, which also did business as BestBank. While the shutdown and transfer process is supposed to be relatively simple for bank customers, they’re facing long lines at the remaining banks. The bank had branches in Georgia, Illinois, Michigan, Minnesota, and Wisconsin, with the banks in Georgia and Michigan doing business as BestBank. The issue for customers is that the majority of its branches were inside Walmart stores and Kroger-owned supermarkets, but the only branches that will reopen as First Citizens Bank & Trust are the free-standing ones. “When did banks start failing again?” you might ask. “Should we start the Recession Watch back up?” No, banks fail more often than we realize. Guaranty is the fifth bank to fail so far in 2017.The Milwaukee Journal-Sentinel reports that the bank was still dealing with after-effects of bad loans made during last decade’s housing crisis.The government closed the bank late on Friday, with the OCC saying in a statement that “the bank had experienced substantial dissipation of assets or earnings due to unsafe or unsound practices,” and that Guaranty “was significantly undercapitalized and failed to submit a capital restoration plan acceptable to the OCC.” Yet an investment banker told the Journal-Sentinel that his clients were planning to invest $100 million in the bank, which would have brought its levels of capital above the level needed to protect against loans gone bad. He called the shutdown “a horrendous case of government overreach,” and claimed that bank regulators were aware of the investment plan.

CFPB makes first move toward small-biz data requirements -The Consumer Financial Protection Bureau plans to launch an inquiry into small-business lending, the first step toward crafting a rule for the collection and reporting of small-business lending data.  The agency said in a request for information to be released Wednesday that it is seeking input on the availability of credit, financing needs and application process for small businesses. The request was issued just before the start of an agency field hearing in Los Angeles on small-business lending.

Bankers raise fears on new CFPB small biz collecting effort  - — The U.S. Chamber of Commerce and Union Bank urged the Consumer Financial Protection Bureau on Wednesday to narrow its approach to collecting data on small-business lending, fearing it could add costs and compliance burdens. The agency has yet to release a proposal on data collection efforts, but took its first step early in the day by releasing a white paper calling for a deeper investigation into the small-business lending landscape. At a field hearing here, minority- and women-owned businesses described the difficulties they have had in getting traditional bank loans while consumer advocates cited the lack of data on what loans are being originated and by whom.

Wal-Mart Asked to Pay $300 Million to Settle U.S. Bribery Probe - U.S. officials will ask Wal-Mart  (WMT) to pay $300 million to settle a five-year investigation into foreign bribery activities, sources told the Wall Street Journal. That offer would be a fraction of the $1 billion settlement the Obama administration, the Securities and Exchange Commission and Justice Department had sought before Barack Obama left office.  Wal-Mart has spent about $840 million on its own internal investigation, according to company filings, into the allegations that it paid bribes the Mexican officials in order to get the go ahead to build stores there.

Auto Loan Fraud Soars in a Parallel to the Housing Bubble -- Borrower fraud in U.S. auto loans is surging, and may approach levels seen in mortgages during last decade’s housing bubble, according to a startup firm that helps lenders sniff out bogus borrowers. As many as 1 percent of U.S. car loan applications include some type of material misrepresentation, executives at data analytics firm Point Predictive estimated based on reports from banks, finance companies and others. Lenders’ losses from deception may double this year to $6 billion from 2015, the firm forecast. Those fraud rates are coming closer to the over-1-percent level for mortgages in 2009, when the financial crisis was boiling and more lenders started reporting incidents to one another, Frank McKenna, chief fraud strategist at the firm, said in an interview. While those losses will sting lenders, the impact on the overall economy will likely be much more muted than with the housing crisis, just because there’s less car debt outstanding. Even so, “We see an extraordinary amount of parallels between the auto and mortgage industries, in terms of the rising levels of hidden fraud,” McKenna said. For home loans, it’s hard to know how widespread the deception was before 2009, because lenders often didn’t report information to one another and may not have even investigated incidents of probable lying much on their own, McKenna said. 

Lawyer with Responsibility for Mortgage Crisis Appointed to Take Care of Mortgage Banks - Real News Network interview and transcript - with Bill Black -  Donald Trump is distinguishing himself as a president unconcerned with traditional protocols of running the government - in particular, appointing people to key positions within his administration who either have no government experience or has a particular disdain or disqualification for the agency or position of which they have been passed to work in. This has been true with his picks to head the Department of Education, the Environmental Protection Agency, Housing and Urban Development, and several others, including the man who has been tasked to fix the mortgage giants Freddie Mac and Fannie Mae, both of which remain in a [inaudible 00:00:45]. His name is Craig S. Phillips.  Who is Craig Phillips? Well, here to tell us, we're joined with Bill Black. Bill is an associate professor of economics and law at the University of Missouri at Kansas City. He's also a white collar criminologist and a former financial regulator, author of the book titled The Best Way to Rob a Bank is to Own One, and he's a regular contributor here on the Real News. He joins us today from Minnesota.

SEC said to plan no action on Deutsche Bank MBS trade - The Securities and Exchange Commission isn't planning to bring an enforcement action tied to Deutsche Bank's losing nearly $550 million on mortgage-bond trades, after the lender's own probe found no evidence of wrongdoing, according to people with knowledge of the findings. A whistle-blower had told the SEC that a former top trader at the bank, Troy Dixon, had inflated the value of mortgage securities on his books in the years after the 2008 financial crisis and masked losses, Bloomberg reported last year. The trading losses came in 2013, after Deutsche Bank decided to scale down its exposure to the securities. The lender's internal probe found no evidence of inflated values and masked losses, the people said. Instead, they said, the bank determined that the red ink was caused by a failed hedging strategy and because, after Dixon left the firm, it decided to liquidate the bonds quickly. The U.S. agency is not formally closing its investigation, and may return to it if more information emerges, but it is not actively seeking more detail, the people said, asking not to be named because they aren't authorized to speak publicly. The decision was made inside an agency that has been facing possible budget cuts under President Donald Trump. The SEC has eliminated dozens of contractors who were hired to help root out Wall Street fraud. It also now has a new chairman, Jay Clayton, a former lawyer for Sullivan & Cromwell who was questioned during his nomination hearings about his Wall Street clients, which include Deutsche Bank. Clayton would have to recuse himself for a year from matters involving Sullivan & Cromwell and companies he represented. In response to questions, Clayton told lawmakers that he was "100% committed to rooting out any fraud and shady practices in our financial system." Representatives for the SEC, Deutsche Bank, and Dixon declined to comment. Valuing complicated securities like mortgage bonds has subjective elements, said Jaidev Iyer, chief executive officer of J-Risk Advisors and formerly a top risk manager for UBS Group and Citigroup Inc. "In a crisis or in a liquidation scenario you may find that your valuations were too optimistic," Iyer said. "You may be able to get out, but at prices that were much farther away than you wanted or thought."

SEC probes rental home values in private-equity bond deals -- U.S. securities regulators are investigating whether bonds backed by single-family rental homes and sold by Wall Street's biggest residential landlords used overvalued property assessments.  Radian Group Inc.'s Green River Capital unit is one of the market participants that received a request for information from the Securities and Exchange Commission in March about broker price opinions, or BPOs, the company said in a regulatory filing late Friday. Green River provides BPOs that are used to value real estate in securitizations.The agency has been looking at whether BPOs were wrongly inflated, and similar letters were sent to other companies, potentially serving as a starting point for an industrywide probe, according to a person with knowledge of the matter. The person asked not to be identified because the matter is private.Green River is one of several firms that provide BPOs to the units of private-equity firms and other investors who bought up hundreds of thousands of properties in cities across the U.S. after the housing bubble burst. Many of them focused on distressed homes whose owners were evicted during the Great Recession.The company, a subsidiary of Clayton Holdings, the real estate risk-management arm of Radian, said in the disclosure that the SEC was seeking information from "market participants." Radian, the second-biggest mortgage insurer, said it routinely gets such requests from regulators, and the disclosure didn't indicate that Green River was the focus of the agency's inquiry. An SEC spokeswoman declined to comment. "We believe that our company processes are both robust and comprehensive, and we stand behind our work," Radian said in an emailed statement to Bloomberg. "We have solid quality control processes in place, including for our property valuation services, and those processes have been reviewed and validated by both internal and external sources."

Fannie Mae Will Pay $2.8B to Treasury After Profit -- Fannie Mae said it expects to make a $2.8 billion dividend payment to the U.S. Treasury in June after reporting a first-quarter profit driven by a relatively stable mortgage market and a continued decline in delinquencies.The payment will come after the mortgage-finance giant reported net income of $2.8 billion for the first quarter, according to its earnings release on Friday. The profit was an increase from the $1.1 billion the Washington-based company posted a year ago, but a significant decline from the $5 billion it reported for the fourth quarter of 2016.Fannie Mae said its income declined from the fourth quarter mainly because interest rates were relatively flat between January and March, while they increased significantly in the fourth quarter of last year. To protect against interest-rate risk, Fannie Mae uses derivatives that rise and fall in value with rate changes, though the long-term economic impact of the hedging is negligible.The company and McLean, Va.-based Freddie Mac have been under U.S. control since the 2008 financial crisis. They received $187.5 billion in taxpayer aid to sustain them before they returned to profitability. The current terms of their bailouts require them to turn over virtually all profits to the Treasury, and the money doesn’t count as repayment for the government’s aid. Freddie Mac said on Tuesday that it will pay $2.2 billion in June after reporting a first-quarter profit. With next month's payments, the two companies will have returned about $271 billion to taxpayers.

 BlackRock says don't recap and release Fannie and Freddie - One of the largest mortgage-bond investors says it would be a mistake for the federal government to relinquish control of Fannie Mae and Freddie Mac without first making major changes to the nation's housing-finance system. In a white paper released Friday, BlackRock Inc. cautioned against what's known as recap and release, a proposal pushed by some hedge funds and advocacy groups that calls on the U.S. Treasury to quickly sell its shares in Fannie and Freddie after allowing the companies to build up capital. Such a move could trigger major disruptions for mortgage securities because investors wouldn't have confidence of the government backstopping the market in a crisis, BlackRock said. The paper broadly outlines principles BlackRock supports. The world's largest money manager is the latest party to weigh in on the housing-finance system as Congress prepares for a renewed debate on whether and how to reform Fannie and Freddie, which underpin about half of the mortgage market. The government took over the companies during the 2008 financial crisis, eventually providing $187.5 billion in bailout money. Fannie and Freddie have since become profitable and paid the Treasury more in dividends than they took, but policy makers have struggled to agree on a permanent solution on what to do with the companies. In the past year, lenders, think tanks, former policy makers and others have issued proposals to change Fannie and Freddie or release them into the private market. The ideas run the gamut from turning them into shareholder-owned utilities to merging them into a single government-owned corporation. Investment firms that own Fannie and Freddie shares — and are eager to get their hands on the companies' profits — have been among the most aggressive advocates of letting them preserve capital. 

Fannie-Freddie Watchdog Says He Can't Let Capital Go to Zero -- The head of Fannie Mae’s and Freddie Mac’s regulator told lawmakers Thursday that he can’t take the risk of letting the companies run out of capital. Investors in Fannie’s and Freddie’s mortgage bonds might begin to doubt the safety of their holdings if the companies need more bailout money, Federal Housing Finance Agency Director Mel Watt said at a Senate Banking Committee hearing. Such a scenario could disrupt the housing market and cause rates to rise, he said. Spiraling losses triggered a taxpayer rescue of Fannie and Freddie during the 2008 financial crisis, and prompted them to be put under government control. The bailout terms require the mortgage giants to make quarterly dividend payments to Treasury and face declining capital buffers slated to fall to zero next year. Unless the arrangement is changed, the companies would have to seek new aid to cover any quarterly loss. The FHFA “cannot risk the loss of investor confidence” that would result from Fannie and Freddie running out of capital, Watt told senators. In response to questions, he declined to specify how much of a buffer was sufficient but said he had discussed the issue with the Treasury Department. Watt also emphasized that Congress, not the FHFA, should determine the future of Fannie and Freddie. He said that if he did change the dividends, it shouldn’t be interpreted as a step toward recapitalizing the companies with the aim of freeing them from government control. The companies, since returning to profitability, have paid about $266 billion to the Treasury. Any changes would be highly controversial, and would put Watt in direct opposition to President Donald Trump’s administration, which has said the payments should continue.

 Commercial Real Estate Loan Delinquencies Rise Again -- There is a slow creep in delinquent credit that is starting to get noticed. The special-servicing and delinquency rates for securitized commercial mortgages rose again last month,Commercial Mortgage Alert first reported. While the rise was reasonably contained, it is the trend of commercial underperformance that is causing a mild degree of concern. The data on Commercial Real Estate comes as investors are closely watching the prospects for retail malls across the country. The percentage of commercial mortgage-backed security (MBS) loans in special servicing hit 6.6% to close April, Commercial Mortgage Alert reported, citing Trepp data. The five basis point move higher from March came as the past-due rate on Fitch-rated commercial mortgage-backed securities (CMBS) climbed by nine basis points to end April at to 3.5%.Both MBS and CMBS rates hit their highest levels since 2015.“The shrinking CMBS universe, which has long contributed to a steady rise in both rates, had a far more substantial impact on Trepp’s tally,” the Commercial Mortgage Alert analysis pointed out.Special services loan volume dropped by $438.4 million, to $27.2 billion, a drop that was “overshadowed by a $9.5 billion plunge in the aggregate balance of outstanding CMBS.” This plunge, as a result, reduced the denominator in Trepp’s calculation to $411.9 billion as of April 30.Big office property delinquencies in the Southwest also drive the numbers.  Driving that data was a number of idiosyncratic situations. The biggest mortgage added to the CMBS reporting involved office properties in the Southwest. The $198.5 million fixed-rate loan to Crystal River Capital of New York was noted on three properties in Arizona and Texas: a 724,000-square-foot office building and an adjacent 1,905-space garage in Phoenix and a 429,000-sf office building in Houston. Fully $819 million of mortgages were added to Fitch’s past-due roll last month. That number was notably greater than the $544 million of loans that moved off the list after being sold, modified or otherwise resolved. When paydowns are considered, Fitch’s tally of 60-day late loans payments or deals in foreclosure or maturity default rose to $12.4 billion, higher by $283 million during April.

Leading Index for Commercial Real Estate Decreases in April -- This index is a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.  From Dodge Data Analytics: Dodge Momentum Index Loses Steam in April The Dodge Momentum Index fell 5.1% in April to 133.8 (2000=100) from its revised March reading of 140.9. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. April’s decline was due to a 12.0% drop for the institutional component of the Momentum Index, while the commercial component rose a meager 0.1%. Since early 2016, the Momentum Index has gained substantial ground, albeit in a saw-tooth pattern, increasing by over 20% through March this year. Despite April’s decline, the broad upward trend for the Momentum Index remains present, suggesting that construction activity still has further room to grow in 2017. The planning data’s strengthening over the past year stands in stark contrast to the 2014-2015 period, when the Momentum Index saw little improvement, gaining just 4.0% in that 24-month span.

Foreclosure Filings Drop 23% from a Year Ago - ATTOM Data Solutions on Thursday released its April 2017 U.S. Foreclosure Market data, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 77,049 U.S. properties in April, down 7% from the previous month and down 23% from a year ago to the lowest level since November 2005. "Foreclosure activity continued to search for a new post-recession floor in April thanks in large part to the above-par performance of mortgages originated in the past seven years," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "Meanwhile we are seeing an elevated share of repeat foreclosures on homeowners who often fell into default several years ago but have not been able to avoid foreclosure despite the housing recovery." Nationwide one in every 1,723 housing units had a foreclosure filing in April 2017.States with the highest foreclosure rates were New Jersey (one in every 562 housing units with a foreclosure filing); Delaware (one in every 706 housing units); Maryland (one in every 776 housing units); Connecticut (one in every 956 housing units); and Illinois (one in every 1,083 housing units).Among 217 metropolitan statistical areas with a population of at least 200,000, those with the highest foreclosure rates in April were Atlantic City, New Jersey (one in every 237 housing units with a foreclosure filing); Fayetteville, North Carolina (one in every 615 housing units); Trenton, New Jersey (one in every 620 housing units); Rockford, Illinois (one in every 668 housing units); and Philadelphia (one in every 733 housing units).  Counter to the national trend, the District of Columbia and seven states posted year-over-year increases in foreclosure activity, including New Jersey (up 1%); Connecticut (up 29%); and Massachusetts (up 3%).

Cleveland, Akron have among worst rates of homes underwater - A decade after the housing collapse began, Cleveland and Akron are among the worst large cities in the nation for homes that are worth way less than the mortgages on the properties. In fact, among 88 metropolitan areas with populations of 500,000 or more, Cleveland has the largest percentage of seriously underwater properties, according to a new report from Attom Data Solutions of California, which compiles property databases. Further, among the five worst cities in the nation, all but one were in Ohio. Behind Cleveland at No. 1 is Las Vegas at No. 2, followed by Akron, Dayton and Toledo. In all cases, at least 20 percent of the homes with mortgages are seriously underwater. Attom defines "seriously underwater" as homes whose owners owe at least 25 percent more than the estimated market value of the property. Myra White, a vice president at Howard Hanna Real Estate in Shaker Heights, says "the fraudulent exploitation of 1998 to 2008, resulted in these heartbreaking numbers." Greater Cleveland was the epicenter of the predatory lending/subprime lending disaster that led to homeowners refinancing their homes for substantially more than the home was worth, often at exorbitant interest rates and with huge balloon payments that required the loan to be paid off after a few years. In other cases during that decade, people bought homes they couldn't afford after lenders forged or disregarded loan documents. Lenders often didn't care whether the homeowners later defaulted, because by that time, the lender would have sold the loan to another bank. Even among the strongest borrowers who bought homes in 2006-08 with at least 20 percent down, it was not uncommon for those homes to lose 30 to 50 percent in the next few years. In part because of unethical lending, and in part because of the sour economy, one out of every six homeowners in Ohio was at least a month behind on his mortgage payments in 2009. In addition, about one of every 20 Ohio homeowners with a mortgage was in foreclosure at that time. Unethical appraisers who inflated home values helped cause the financial crisis. Now, White said, it seems many homes are being undervalued.  

MBA: Mortgage "Mortgage Applications Increase in Latest Weekly Survey" --From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey Mortgage applications increased 2.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 5, 2017.  .. The Refinance Index increased 3 percent from the previous week. The seasonally adjusted Purchase Index increased 2 percent from one week earlier to its highest level since October 2015. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 6 percent higher than the same week one year ago. ...  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.23 percent, with points decreasing to 0.31 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990. Refinance activity remains low - and will not increase significantly unless rates fall sharply. The second graph shows the MBA mortgage purchase index.  Even with the increase in mortgage rates late last year, purchase activity is still up year-over-year.

Zillow faces lawsuit over ‘Zestimate’ tool that calculates a house’s worth -- It was bound to happen: A homeowner has filed suit against online realty giant Zillow, claiming the company’s controversial “Zestimate” tool repeatedly undervalued her house, creating a “tremendous road block” to its sale.The suit, which may be the first of its kind, was filed in Cook County Circuit Court by a Glenview, Ill., real estate lawyer, Barbara Andersen. The suit alleges that despite Zillow’s denial that Zestimates constitute “appraisals,” the fact that they offer market-value estimates and “are promoted as a tool for potential buyers to use in assessing [the] market value of a given property,” shows that they meet the definition of an appraisal under state law. Not only should Zillow be licensed to perform appraisals before offering such estimates, the suit argues, but it also should obtain “the consent of the homeowner” before posting them online for everyone to see. In an interview, Andersen told me she is considering bringing the issue to the Illinois attorney general because it affects all property owners in the state. She has also been approached about turning the matter into a class action, which could touch millions of owners across the country.

Just Released: 2017 SCE Housing Survey Finds Increased Optimism about Home Price Growth - NY Fed-  The Federal Reserve Bank of New York’s 2017 SCE Housing Survey indicates that expected home price growth over the next year has increased compared with twelve months earlier, and is at its highest level since the survey’s inception in 2014. Five-year growth expectations have also risen, albeit more modestly. In line with these findings, the majority of households continue to view housing as a good investment. Respondents expect slightly larger increases in mortgage rates than they did in last year’s survey. Renters’ perceived access to mortgage credit continued to ease. This latest survey marks the fourth installment of the SCE Housing Survey, which has been fielded annually every February since 2014 and is part of the broader Survey of Consumer Expectations. Results are presented in the SCE Housing Survey interactive web feature, which presents time trends for variables of interest for the overall sample as well as for various demographic groups. As in previous years, we are also releasing a detailed background report that describes the sample and presents summary statistics for a larger number of questions. The primary goal of the SCE Housing Survey is to provide rich and high-quality information on consumers’ experiences, behavior, and expectations related to housing. The survey, among other things, collects data on households’ perceptions and expectations for home price growth, intentions regarding moving and buying in the future, and access to credit. For homeowners, it collects detailed information on their mortgage debt, past actions and experiences—such as foreclosure or refinancing—and expectations regarding future actions—such as taking out new debt or investing in the home. For renters, among other things, the survey elicits preferences for owning and perceptions regarding the ease of obtaining a mortgage.  Below, we discuss three findings from this year’s survey.

 Nearly 40 percent of 18 to 34 year olds live with mom and dad in California. Most are working but just do not earn enough to rent let alone buy a home. -- A record number of young people are living at home with mom and dad in California even in the midst of a very low unemployment rate and record in the stock market.  Millennials in particular are carrying large levels of debt and many are still struggling to get out into a rental, let alone purchasing a home.  There is a housing apocalypse for young Americans and in California, many Millennials are simply waiting until their baby boomer parents kick the bucket so they can own a piece of the California Dream.  But Taco Tuesday baby boomers are not going away and many are angry that their offspring are unable to buy a home like they did when housing wasn’t consumed by house horny buyers and prices were actually affordable.  The numbers are startling because when we brought attention to the issue a few years ago the number was at 2.3 million young adults living at home.  Today it is now up to 3.6 million – if we combined these people it would be the third largest city in the U.S. There was this “fake news” narrative that many young Americans would be the second wind that would keep the housing market going strong.  That never materialized.  What did happen is that you had investors, foreign money, and wealthier older households buying the slim inventory available in the market.  In California where rent prices are high and housing prices on crap shacks are insane, many are simply living at home. And yes, this time it is different when it comes to young people living at home:

Fed Reports Unexpected Collapse In Credit Card, Auto Loan Demand -- Two weeks after we reported that the consumer credit card default rate as tracked by S&P/Experian Bankcard had surged to the highest level since June 2013..... we were looking forward to the latest Fed Senior Loan officer survey for more details about changing loan dynamics within US society.What the report revealed was troubling: while on the surface, the Loan Officer Survey characterized loans to businesses as "basically unchanged" from the previous survey, it did remark that standards for commercial real estate (CRE) loans had tightened.According to the report, "banks reported tightening most credit policies on Commercial Real Estate loans over the past year.... On balance, banks reported weaker demand for CRE loans in the first quarter."More concering was the continued drop in demand for C&I loans among small, medium and large corporations, with "inquiries for C&I lines of credit remained basically unchanged" staying at a modestly depressed rate. This helps explain, once and for all, the recent collapse in Y/Y commercial bank loan creation, both total and C&I, and indicated that contrary to Goldman's take, the steep drop has nothing to do with calendarization or a base effect, and everything to do with declining demand for the product among America's businesses, a concerning deterioration in an economy that is reportedly improving, and where companies would be willing to take out new credit to fund expansion.

Michigan Consumer Sentiment: May Preliminary Remains High -- The University of Michigan Preliminary Consumer Sentiment for May came in at 97.07, up from the April Final reading of 97.0. had forecast 97.0.Surveys of Consumers chief economist, Richard Curtin, makes the following comments: Consumer sentiment remained on the high plateau established following Trump's election, with the early May figure nearly identical with the December to May average of 97.4. The Trump bump was relatively small given that the Sentiment Index averaged 91.8 in the comparable six month period a year ago and 94.5 in the same period two years ago. The recent stability in consumer sentiment, however, masks two important underlying shifts in the components as well as in the partisan divide. More favorable income gains and low inflation meant that consumers held the most favorable real income expectations in a dozen years. Buying plans, however, were mixed: household durables rose to a decade peak, while vehicle buying conditions slipped to a three year low. Home buying conditions were viewed less favorably, but were offset by the most favorable views about home selling in more than a decade. The partisan difference in the Expectations Index is still huge, but the gap between Democrats and Republicans narrowed slightly to 55 Index points from 65 three months ago, mainly due to Democrats expressing diminished fears of an immediate recession and lessened concerns about personal financial setbacks. Overall, personal consumption expenditures are expected to advance at about a 2.3% pace in 2017. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.

Profits From Store-Branded Credit Cards Hide Depth of Retailers’ Troubles -- Department stores and big name retailers are increasingly making the hard sell to sign up customers for credit cards at the register. The store cards promise deep discounts on clothing, furniture and electronics, and are tough for shoppers to resist.For some retailers, those credit cards are not just a sales tool, but also an essential way to bolster their struggling businesses — a trend that has worrisome implications for the industry and its customers.The store cards, with steep interest rates that are often twice that of the average credit card, generate a rich profit stream for retailers at a time when many of America’s traditional retailers are losing the battle for sales against Amazon and other e-commerce rivals. Those profits on plastic are helping obscure the true extent of the industry’s pain, a major pressure point for a piece of the economy that employs one in 10 Americans.Weak consumer spending, digital competition and changing shopping habits have already roiled retailers. In recent months, the industry has shed tens of thousands of workers, making it one of the job market’s weakest links. Macy’s reported a sharp drop in earnings on Thursday, sending its stock spiraling and dragging down the rest of the industry.

Retail Sales increased 0.4% in April - On a monthly basis, retail sales increased 0.4 percent from March to April (seasonally adjusted), and sales were up 4.5 percent from April 2016.
From the Census Bureau report: Advance estimates of U.S. retail and food services sales for April 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $474.9 billion, an increase of 0.4 percent from the previous month, and 4.5 percent above April 2016. ... The February 2017 to March 2017 percent change was revised from down 0.2 percent to up 0.1 percent. This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).Retail sales ex-gasoline were up 0.4% in April.The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by3.8% on a YoY basis. The increase in April was below expectations, however sales for March were revised up. A decent report.

Retail Sales: April Increase, But Below Expectations - The Census Bureau's Advance Retail Sales Report for April released this morning showed an increase over the March figures. Headline sales came in at 0.4% month-over-month to one decimal and the March number was revised upward from -0.2% to 0.1%. Today's headline number was below the consensus of 0.6%. Core sales (ex Autos) came in at 0.3% MoM and the March Core was revised upward. Here is the introduction from today's report: Advance estimates of U.S. retail and food services sales for April 2017, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $474.9 billion, an increase of 0.4 percent (±0.5 percent)* from the previous month, and 4.5 percent (±0.9 percent) above April 2016. Total sales for the February 2017 through April 2017 period were up 4.7 percent (±0.7 percent) from the same period a year ago. The February 2017 to March 2017 percent change was revised from down 0.2 percent (±0.5 percent)* to up 0.1 percent (±0.2 percent)*. Retail trade sales were up 0.4 percent (±0.5 percent)* from March 2017, and up 4.5 percent (±0.7 percent) from last year. Gasoline Stations sales were up 12.3 percent (±1.4 percent) from April 2016, while Nonstore Retailers were up 11.9 percent (±1.8 percent) from last year.  (* The 90 percent confidence interval includes zero. There is insufficient statistical evidence to conclude that the actual change is different from zero.) [view full report] The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.

 Consumer Price Index: Core CPI At 1.9% -- The Bureau of Labor Statistics released the April Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.20%, down from 2.38% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.88%, down from the previous month's 2.00%. Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in April on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.2 percent before seasonal adjustment.Increases in indexes for shelter, energy, tobacco, and food all contributed to the monthly increase in the all items index. The energy index rose 1.1 percent, with all 3 of its major component indexes rising. The food index rose 0.2 percent, mostly due to a sharp increase in the index for fresh vegetables.The index for all items less food and energy rose 0.1 percent in April after declining in March. The shelter index increased 0.3 percent, and the tobacco index increased sharply over the month. However, many indexes declined in April, including those for wireless phone services, medical care, motor vehicle insurance, apparel, used cars and trucks, recreation, and new vehicles.The all items index rose 2.2 percent for the 12 months ending April. While a smaller increase than the 2.4 percent rise for the 12 months ending March, this is still a larger rise than the 1.7 percent average annual increase over the past 10 years. The index for all items less food and energy rose 1.9 percent over the last 12 months; this compares to a 1.8 percent average annual increase over the past decade. The energy index rose 9.3 percent over the last year, while the food index increased 0.5 percent. [More…] was looking for a 0.2% increase MoM in seasonally adjusted Headline CPI and 0.2% in Core CPI. Year-over-year forecasts were 2.3% for Headline and 2.0% for Core. The first chart is an overlay of Headline CPI and Core CPI (the latter excludes Food and Energy) since the turn of the century. The highlighted two percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index.

  April Producer Price Index: Final Demand Up 0.5% --Today's release of the April Producer Price Index (PPI) for Final Demand came in at 0.5% month-over-month seasonally adjusted, up from last month's -0.1%. It is at 2.5% year-over-year, up from 2.3% last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at 0.4% MoM, up from 0.0% the previous month and is up 1.9% YoY. MoM consensus forecasts were for 0.2% headline and 0.2% core.  Here is the summary of the news release on Final Demand:  The Producer Price Index for final demand advanced 0.5 percent in April, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices edged down 0.1 percent in March and climbed 0.3 percent in February. (See table A.) On an unadjusted basis, the final demand index rose 2.5 percent for the 12 months ended April 2017, the largest increase since moving up 2.8 percent for the 12 months ended February 2012. In April, almost two-thirds of the advance in the final demand index is attributable to prices for final demand services, which moved up 0.4 percent. The index for final demand goods climbed 0.5 percent. Prices for final demand less foods, energy, and trade services increased 0.7 percent in April. For the 12 months ended in April, the index for final demand less foods, energy, and trade services climbed 2.1 percent. More… The BLS shifted its focus to its new "Final Demand" series in 2014, a shift we support. However, the data for these series are only constructed back to November 2009 for Headline and April 2010 for Core. Since our focus is on longer-term trends, we continue to track the legacy Producer Price Index for Finished Goods, which the BLS also includes in their monthly updates. As this overlay illustrates, the Final Demand and Finished Goods indexes are highly correlated.

 Stagflation Builds As US Producer Prices Spike Most In 5 Years -- For the 3rd month in a row, US Producer Prices have risen at a faster rate than The Fed's mandate. April healdine PPI rose 2.5% YoY - the most since Feb 2012, and well above the highest analyst estimate, despite disinflationary credit impulse pressures from China being seen in industrial metals. The biggest driver is surging costs for investment advice!Core PPI (ex food and energy) rose 1.9% YoY - also above highest estimates - to the highest since Dec 2014.The full breakdown shows that over a quarter of the April advance in the index for final demand services is attributable to prices for securities brokerage, dealing, investment advice, and related services, which increased 6.6 percent. The indexes for guestroom rental; loan services (partial); machinery, equipment, parts, and supplies wholesaling; portfolio management; and airline passenger services also moved higher.In April, the index for cigarettes moved up 2.2 percent. Prices for gasoline, fresh and dry vegetables, fresh fruits and melons, residential natural gas, and pharmaceutical preparations also advanced. Conversely, the index for jet fuel fell 6.1 percent. Prices for carbon steel scrap and oilseeds also declinedIn contrast, margins for fuels and lubricants  retailing dropped 14.6 percent. The indexes for food and alcohol retailing and for deposit services (partial) also fell.

U.S. wholesale inventories rise in March, sales flat | Reuters: - U.S. wholesale inventories increased in March amid flat sales, confounding the government's initial estimate of a modest dip. The Commerce Department said on Tuesday wholesale inventories rose 0.2 percent after increasing 0.3 percent in February. The department reported last month that wholesale inventories slipped 0.1 percent in March. Auto inventories increased 1.9 percent. Wholesale stocks of electrical goods surged 2.3 percent, the biggest gain since January 2015. Professional equipment inventories rose 1.0 percent in March. The component of wholesale inventories that goes into the calculation of gross domestic product - wholesale stocks excluding autos - were unchanged in March. A report last week showed inventories at factories were flat in March after rising 0.2 percent in February. Inventory investment subtracted 0.93 percentage point from GDP in the first quarter, helping to hold down the economy to a 0.7 percent annualized growth pace, the weakest performance in three years. Inventories had contributed to GDP growth for two straight quarters. Sales at wholesalers were unchanged in March after climbing 0.7 percent in February. Sales of electrical goods fell 0.3 percent while those of professional equipment tumbled 1.8 percent. At March's sales pace it would take wholesalers 1.28 months to clear shelves, unchanged from February. The ratio has declined from 1.36 months in January and February last year, which was the highest since January 2009.

U.S. business inventories rise in March on jump in auto stocks | Reuters: - U.S. business inventories rose in March as declining sales of motor vehicles continued to boost stocks, government data showed on Friday. The Commerce Department said business inventories increased 0.2 percent after a similar gain in February. Inventories are a key component of gross domestic product. Retail inventories increased 0.5 percent in March instead of the 0.4 percent increase reported in an advance report published last month. Retail inventories rose 0.3 percent in February. Motor vehicle inventories increased 0.9 percent after jumping 1.0 percent in the prior month amid declining sales. Retail inventories excluding autos, which go into the calculation of gross domestic product, increased 0.3 percent instead of the 0.2 percent increase reported last month. They fell 0.1 percent in February. Inventory investment subtracted 0.93 percentage point from GDP in the first quarter, helping to hold down economic growth to a 0.7 percent annualized pace, the weakest performance in three years. Inventories had contributed to GDP growth for the two previous quarters. Business sales were unchanged in March after rising 0.2 percent in February. At March's sales pace, it would take 1.35 months for businesses to clear shelves, unchanged from February.

"Flood Of Off-Lease Vehicles" Set To Wreak Havoc On New Car Sales -- The percentage of new car 'sales' moving off dealer lots via leases has nearly tripled since late 2009 when they hit a low of just over 10%.  Over the past 6 years, new leases, as a percent of overall car sales, has soared courtesy of, among other things, low interest rates, stable/rising used car prices and a nation of rental-crazed citizens for whom monthly payment is the only metric used to evaluate a "good deal"...even though leasing a new vehicle is pretty much the worst 'deal' you can possibly find for a rapidly depreciating brand new asset like a car...but we digress.Of course, what goes up must eventually come down.  And all those leases signed on millions of brand new cars over the past several years are about to come off lease and flood the market with cheap, low-mileage used inventory.  As Reuters noted, the flood of used vehicles is already starting to impact used car dealers:Recently, though, a computer search for available used vehicles within 150 miles of Reel revealed an eye-popping figure: 668 Escapes. That's enough to put more than 40 percent of the inhabitants of this small northeastern Ohio town, population 1,600, into the popular crossover.A search for the Chevrolet Equinox, a comparable crossover, showed 461 available."The automakers have flooded the market," said Reel, owner of Reel’s Auto in Orwell, Ohio, about 40 miles east of Cleveland.

U.S. Trade Deficit Stable in Q1 -  The U.S. trade deficit did not change much in the first quarter. The real (price adjusted) goods deficit that is. Oil prices were a bit higher in q1 than q4 (they are now back below their q4 levels, but that will impact the June and July data) The quarterly real non-petrol deficit has basically been constant—with a soybean specific story explaining the fall in the Q3 deficit. The non-petrol deficit excluding agriculture hasn’t moved much. Frankly I am a little surprised. I would have expected the lagged impact of the 2014 rise in the dollar (the broad real dollar is up 18 percent since mid 2014) to still be having a bit of an impact on the 2017 data—and also to see an ongoing drag on exports so long as the dollar stays at its current (appreciated) level. But that didn’t obviously happen in the first quarter.Though I would argue that the real trade deficit is slowing getting bigger if you look past the impact of the q3 soybean export surge, albeit at a much slower pace than in 2015.The relative stability of the trade deficit in early 2016 came from weakness in U.S. real imports. That offset the weakness in US real exports. In the last couple of quarters, the story has changed a bit. Real imports have started to flow, but so too have real exports.A plot of the cumulative contribution of net exports to U.S. GDP growth since the start of 2014 makes this clear. Net exports over this time have, mechanically, subtracted about 1.5 percent from U.S. growth—with most of the deterioration coming in late 2014 and early 2015, just after the dollar strengthened. There hasn’t been much further deterioration. Net exports knocked about 20 basis points off growth over the course of 2016, and were basically flat. I am inclined to stick to my original forecast, one based on the expectation that there is still a bit more deterioration in the U.S. trade balance baked in because of the dollar’s past appreciation. I would expect a 18 percent move in the real exchange rate to raise the real trade deficit by a bit more than 2 percent of GDP over three or so years (a standard rule of thumb is that a 10 percent move in the real effective exchange rate changes the non-oil trade balance by between 1 and 1.5 pp of GDP; the Fed’s trade model for example suggests that a 10% exchange rate move knocks 1.5 percent off net exports. That is also the IMF’s central estimate).* I expect the trade deficit to widen a bit in the next few quarters.

LA area Port Traffic increased in April -- Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.  From the Port of LA: Port of Los Angeles April Cargo Volumes Set New Record April cargo volumes surged 8.9 percent at the Port of Los Angeles compared to the same month last year. It was the best April in the Port’s 110-year history.  From the Port of Long Beach: Port of Long Beach Sees April Boost  More ships calling at the Port of Long Beach in April thanks to new business and changes to vessel deployments helped to push container volumes 16.5 percent higher compared to the same month last year.The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).   To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average

 NFIB Small Business Survey: Index Dips Again in April, Still High -- The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for April came in at 104.5, down 0.2 from the previous month's 104.7. The index is at the 97th percentile in this series. Today's number came in above the forecast of 104.0. Here is an excerpt from the opening summary of the news release. The NFIB Index of Small Business Optimism posted another historically high reading in April, but expectations for future business conditions plunged by eight points, a sign that business owners were shaken by Congress’ failure at the end of March to repeal and replace Obamacare. “Small business owners were measurably shaken when Congress failed to address one of their most important concerns,” said NFIB President and CEO Juanita Duggan. “Obamacare has crushed small businesses. Small business owners expected the White House and Congress to address that problem. Their failure to do so caused volatility in the Optimism Index.” The Index dipped 0.2 points April, settling at 104.5. April was the sixth straight month for historically high optimism, a hot streak not seen since 1983. Five of the Index components posted a gain, reaching levels not seen since before the previous administration. Three of the components declined, and two were unchanged. Nearly all of the slight decline was attributable to an 8-point plunge in expected business conditions. Most of the data were collected immediately after Congress failed to repeal and replace Obamacare.The first chart below highlights the 1986 baseline level of 100 and includes some labels to help us visualize that dramatic change in small-business sentiment that accompanied the Great Financial Crisis. Compare, for example, the relative resilience of the index during the 2000-2003 collapse of the Tech Bubble with the far weaker readings following the Great Recession that ended in June 2009.

 Weekly Initial Unemployment Claims decrease to 236,000 --- The DOL reported: In the week ending May 6, the advance figure for seasonally adjusted initial claims was 236,000, a decrease of 2,000 from the previous week's unrevised level of 238,000. The 4-week moving average was 243,500, an increase of 500 from the previous week's unrevised average of 243,000.  The previous week was unrevised.  The following graph shows the 4-week moving average of weekly claims since 1971.

The Labor Market Conditions Index Inched Down in April -- The latest update of the Labor Market Conditions Index for April is at 3.5, down from March's revised 3.6. The LMCI is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. The cumulative index (discussed below) is currently at its post-recession peak. The indicator, designed to illustrate expansion and contraction of labor market conditions, was initially announced in May 2014, but the data series was constructed back to August 1976. Here is a linear view of the complete LMCI. We've highlighted recessions with callouts for its value the month recessions begin and for the latest index value.As we readily see, with the exception of the second half of the double-dip recession in the early 1980s, sustained contractions in this indicator is a rather long leading indicator for recessions. It is more useful as a general gauge of employment health. Note that in the most recent FOMC minutes for March 14-15, the phrase "labor market conditions" was used ten times. Maximum employment, after all, is one of the Fed's twin mandates.

BLS: Job Openings "little changed" in March From the BLS: Job Openings and Labor Turnover Summary The number of job openings was little changed at 5.7 million on the last business day of March, the U.S. Bureau of Labor Statistics reported today. Over the month, hires and separations were also little changed at 5.3 million and 5.1 million, respectively. ...  The number of quits was little changed at 3.1 million in March. The quits rate was 2.1 percent. The number of quits was little changed for total private and for government.  The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.
This series started in December 2000. Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for March, the most recent employment report was for April. Note that hires (dark blue) and total separations (red and light blue columns stacked) are pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.   Jobs openings increased in March to 5.743 million from 5.682 million in February.  Job openings are mostly moving sideways at a high level. The number of job openings (yellow) are down 2% year-over-year. Quits are up 6% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").This is another solid report.

 U.S. JOLTS: Job Openings Rise, but Hiring Dips - The Bureau of Labor Statistics reported that the total job openings rate of 3.8% during February increased m/m, but remained below July's peak of 4.0%. The private-sector job openings rate improved to 4.1% versus 4.0% during all of last year. In the government sector, the job openings rate held steady m/m at 2.2%, down from 2.5% three months ago. These figures are from the Job Openings & Labor Turnover Survey (JOLTS).Movement in the job openings rate by sector was mixed in February. The job openings rate in leisure & hospitality rose to 4.9%, the highest rate since March of last year. In education & health services the rate jumped to a near-record 5.2%. The factory sector job openings rate improved to 2.9%, up m/m and up from last year's 2.7% average. In construction, the openings rate rose to 2.4%, but was down compared to 3.4% in September. To the downside, in professional & business services, the openings rate fell m/m to 4.7% and was down from the 6.1% high in March 2016. The rate in retail trade declined m/m to 3.3% and was lower than the 3.9% during all of last year. The job openings rate is the number of job openings on the last business day of the month as a percent of total employment plus job openings. The actual number of job openings increased 2.1% (3.2% y/y) to 5.743 million, but was lower than the July high of 5.973 million. Private-sector openings improved 2.0% to 5.235 million, up 2.8% y/y. Construction job openings jumped 19.0% (-12.4% y/y), but remained 29.0% below last July's high. Professional & business services openings rebounded 13.8% m/m following sharp declines since July. Job openings in leisure & hospitality surged 10.8% (4.3% y/y). The number of openings in education & health services increased 8.5% (19.7% y/y). Factory sector job openings jumped 6.4% (4.6% y/y), but government-sector job openings declined 9.4% y/y.

 Income Stagnation Has Hit the Young Harder Than the Old - Kevin Drum - Max Ehrenfreund points us today to a new paper by a quartet of researchers that looks at lifetime incomes of various age groups. They find that middle-class income has stagnated and income inequality has gone up over the past few decades. None of that should come as a surprise. But there's an interesting twist. Here's their key chart for men. It's busy and intimidating looking, but don't worry. It will all make sense.  First off, look at the pink circles at the bottom. Those show the earnings of 25-year-old men who are just entering the labor market. Starting around 1973, their earnings began to plummet, from $35,000 to $25,000. Now look at the gray diamonds at the top. Those show the earnings of 55-year-old men. They've gone up and down, but basically have stayed right around $55,000 the whole time. In other words, the decline in lifetime earnings among men is almost entirely because the average earnings of young men have declined. They end up at the same place as earlier cohorts by the time they retire, but they never make up for the dismal earnings of the first ten or fifteen years of their working careers.Don't get too hung up on the precise numbers here. The authors use Social Security data, which they show is roughly equivalent to overall income data. However, if you use different data, or different measures of inflation, or different measures of income that include health benefits, you'll get somewhat different results. However, the basic stagnation picture doesn't change, and the difference between the earnings of young and old don't change. If this data is accurate, it means that we have one big cohort—roughly 25 to 40 years old—that's struggling worse and worse every year, and another big cohort—roughly 40 to 65 years old—that's stagnating but not declining. To the extent that economic stress among men helped power Donald Trump to the White House, it's that younger cohort that should have done it. And this is indeed the cohort that Hillary Clinton struggled with the most.

Employers steal billions from workers’ paychecks each year: Survey data show millions of workers are paid less than the minimum wage, at significant cost to taxpayers and state economies -- What this report finds: This report assesses the prevalence and magnitude of one form of wage theft—minimum wage violations (workers being paid at an effective hourly rate below the binding minimum wage)—in the 10 most populous U.S. states. We find that, in these states, 2.4 million workers lose $8 billion annually (an average of $3,300 per year for year-round workers) to minimum wage violations—nearly a quarter of their earned wages. This form of wage theft affects 17 percent of low-wage workers, with workers in all demographic categories being cheated out of pay.  Why it matters: Minimum wage violations, by definition, affect the lowest-wage workers—those who can least afford to lose earnings. This form of wage theft causes many families to fall below the poverty line, and it increases workers’ reliance on public assistance, costing taxpayers money. Lost wages can hurt state and local economies, and it hurts other workers in affected industries by putting downward pressure on wages. What can be done about it: Strengthen states’ legal protections against wage theft, increase penalties for violators, bolster enforcement capacities, and protect workers from retaliation when violations are reported.

IT worker who trained H-1B-holding replacement aims for Congress | Computerworld - Craig Diangelo was an IT worker at Northeast Utilities in Connecticut until he completed training his H-1B-visa-holding replacement. He was one of about 200 who lost their jobs in 2014 after two India-based IT offshore outsourcing firms took over their work at what is now called Eversource.Diangelo, at first, was quiet, bound by severance agreements signed with the company. Then he started speaking out. Craig Diangelo Craig DiangeloNow, Diangelo is running for Congress. offering up a first-hand perspective on IT outsourcing that resonates with many other workers in his state."I've seen the injustices that have been done to us," said Diangelo, who is not optimistic lawmakers will deliver on H-1B reform. "You can't let this matter die down, because when you stop talking about it nothing seems to get done."Diangelo isn't a one-issue candidate or political novice. He previously served two terms as an alderman in his hometown of New Britain and remains involved in city planning work.

  Sold For Parts: Exploitation and Abuse at the Chicken Plant -- A Guatemalan immigrant, Osiel was just weeks past his 17th birthday, too young by law to work in a factory. A year earlier, after gang members shot his mother and tried to kidnap his sisters, he left his home, in the mountainous village of Tectitán, and sought asylum in the United States. He got the job the Case Farms chicken plant in Canton, Ohio, with a driver’s license that said his name was Francisco Sepulveda, age 28. The photograph on the ID was of his older brother, who looked nothing like him, but nobody asked any questions. Osiel sanitized the liver giblet chiller, a tublike contraption that cools chicken innards by cycling them through a near-freezing bath, then looked for a ladder, so that he could turn off the water valve above the machine. As usual, he said, there weren’t enough ladders to go around, so he did as a supervisor had shown him: He climbed up the machine, onto the edge of the tank, and reached for the valve. His foot slipped; the machine automatically kicked on. Its paddles grabbed his left leg, pulling and twisting until it snapped at the knee and rotating it 180 degrees, so that his toes rested on his pelvis. The machine “literally ripped off his left leg,” medical reports said, leaving it hanging by a frayed ligament and a five-inch flap of skin. Osiel was rushed to Mercy Medical Center, where surgeons amputated his lower leg. Back at the plant, Osiel’s supervisors hurriedly demanded workers’ identification papers. Technically, Osiel worked for Case Farms’ closely affiliated sanitation contractor, and suddenly the bosses seemed to care about immigration status. Within days, Osiel and several others — all underage and undocumented — were fired. Though Case Farms isn’t a household name, you’ve probably eaten its chicken. Each year, it produces nearly a billion pounds for customers such as Kentucky Fried Chicken, Popeyes, and Taco Bell. Boar’s Head sells its chicken as deli meat in supermarkets. Since 2011, the U.S. government has purchased nearly $17 million worth of Case Farms chicken, mostly for the federal school lunch program.

 Texas governor signs into law bill to punish 'sanctuary cities' | Reuters: Texas Republican Governor Greg Abbott signed into law on Sunday a measure to punish "sanctuary cities," despite a plea from police chiefs of the state's biggest cities to halt the bill they said would hinder their ability to fight crime. The Texas measure comes as Republican U.S. President Donald Trump has made combating illegal immigration a priority. Texas, which has an estimated 1.5 million illegal immigrants and the longest border with Mexico of any U.S. state, has been at the forefront of the immigration debate. “As governor, my top priority is public safety, and this bill furthers that objective by keeping dangerous criminals off our streets,” Abbott said in a statement. The law will take effect on Sept. 1. The Republican-dominated legislature passed the bill on party-line votes and sent the measure to Abbott earlier this month. It would punish local authorities who do not abide by requests to cooperate with federal immigration agents. Police officials found to be in violation of the law could face removal from office, fines and up to a year in prison if convicted. The measure also allows police to ask people about their immigration status during a lawful detention, even for minor infractions like jaywalking. Any anti-sanctuary city measure may face a tough road after a federal judge in April blocked Trump's executive order seeking to withhold funds from local authorities that do not use their resources to advance federal immigration laws. Democrats have warned the measure could lead to unconstitutional racial profiling and civil rights groups have promised to fight the Texas measure in court. "This legislation is bad for Texas and will make our communities more dangerous for all," the police chiefs of cities including Houston and Dallas wrote in an opinion piece in the Dallas Morning News in late April.

Chicago police issue bulletin on gangs, high-powered weapons (AP) -- Chicago police issued a bulletin Monday warning its officers about gangs armed with high-powered weapons, after three people were shot to death over the weekend - including two attending a memorial for the earlier victim. Department spokesman Anthony Guglielmi said the three people who were killed in the shootings Sunday were all members of the same street gang. A shooting early in the day left one man dead, and the two others were killed and eight people were injured in a spray of more than two dozen shots from two guns while attending a makeshift memorial for him. Police suspect they were all shot by members of a rival street gang in the same neighborhood on Chicago's southwest side. The department beefed up patrols after the morning shooting of 26-year-old Daniel Cordova, who was found dead between parked cars in the Brighton Park neighborhood. The other shooting happened some 12 hours later, about a block away. Given the very real possibility that the gang war has not played itself out, the department has saturated the same area with officers and tactical teams, Guglielmi said. It also has issued a warning about gunmen with weapons powerful enough to pierce bullet-proof vests. "Given the type of shootings and the incident last week (in which two offers suffered gunshot wounds about two miles away) we have put out an officer safety bulletin," said Guglielmi. Guglielmi said the incident in which two officers were shot while sitting in a car does not appear to be connected to the bloody gang feud that erupted Sunday. Combined, however, they are the latest examples of what they have seen as a greater willingness of arm themselves with weapons most associated with soldiers in battle. 

Public Corruption in the U.S. States and Its Impact on Public Debt Pricing - This study evaluates the levels of public corruption in the American states and their impact on the prices of public debt sold by underwriting banks to retail investors. Results suggest that the markups paid by retail investors to underwriters decrease significantly with the incidence of public corruption. The relationship remains significant even when existing anti-corruption enforcement efforts are taken into consideration. Extant literature shows that the issuers of public debt from relatively more corrupt jurisdictions receive lower prices from underwriting banks in wholesale transactions. We develop and empirically show the mechanism through which this can occur. We offer the first evidence that the public debt market exerts disciplining pressures on the American states with greater levels of public corruption. When purchasing state-issued public debt, retail buyers appear to demand narrower markups by factoring in public corruption. This, we argue, is an important reason why underwriting banks offer lower prices when dealing with less disciplined fiscal sovereigns.

 Our Bankrupt Policy for Puerto Rico - David Dayen - The endgame for Puerto Rico’s debilitating fiscal crisis has begun. Unable to manage a $74 billion debt that has accompanied a decade of recession, spikes in poverty, and a mass exodus of citizens, the island will now turn to federal courts to approve a resolution with its creditors.But in many ways nothing has changed for Puerto Rico. The congressionally-imposed fiscal oversight board, known locally as the junta, remains in control as lead negotiator in restructuring talks. Whether Puerto Rico’s three million citizens get a fair deal or a continuation of harsh austerity depends almost entirely on seven unelected, unaccountable technocrats.Frustrating journalists everywhere, what Puerto Rico did on Wednesday cannot be called “bankruptcy,” because Congressional Republicans who passed last year’s PROMESA law didn’t want to be saddled with such language. But the process under Title III of that law uses the Federal Rules of Bankruptcy Procedure to allow a court to administer and sanction restructured compensation for Puerto Rico’s creditors. Like a Chapter 9 bankruptcy, the judge can force bondholders to take a haircut, even if they don’t consent to the agreement. The result will amount to the largest-ever municipal not-bankruptcy bankruptcy in the United States.But there are some key differences between Title III and a normal bankruptcy process. First of all, under Section 308(a) of PROMESA, the decision for who hears this case, bizarrely, is up to Chief Justice John Roberts. He selected U.S. District Court Judge Laura Taylor Swain to preside. While Swain has some experience in financial cases, including the prosecution of five former employees of Bernie Madoff, she's not a bankruptcy judge. And this puts the case in the heart of New York City, the nation's financial center, rather than Puerto Rico. In addition, the elected government of Puerto Rico plays almost no role in this fight. The junta, an appointed body ushered in by PROMESA, actually filed the Title III order, and serves as the government’s “representative” in court. Only the junta can introduce or modify “adjustment plans” for the $73 billion in debts. They will be the sole negotiator with bondholders, not anyone approved by the Puerto Rican people through a formal vote.

 Trump is planning to kill the office that has traditionally spearheaded the 'War on Drugs’ -- The Trump administration plans to cut 96% of the budget of the Office of National Drug Control Policy (ONDCP), effectively eliminating the federal agency that has traditionally been used to spearhead the war on drugs, according to multiple media reports. The White House Office of Management and Budget's proposed fiscal year 2018 budget reduces the funding request for ONDCP from $388 million in 2017 to $24 million, according to a leaked memo first reported by CBS News. The cuts would eliminate approximately half ONDCP's staff, around 33 employees, as well as "intelligence, research and budget functions at the agency, as well as the Model State Drug Laws and Drug Court grant programs," CBS reported Friday."These cuts are frankly heartbreaking and, if carried out, cause us to lose many good people who contribute greatly to ONDCP's mission and core activities," Acting Director Richard Baum wrote in an email to ONDCP staff obtained by CBS.Baum added that news is "discouraging," but told staff "not to panic" and that "events are unfolding." In addition, the budget proposes to eliminate multiple grant programs administered by ONDCP, including the High Intensity Drug Trafficking Areas (HIDTA) program and the Drug-Free Communities Support program, which the memo called "duplicative of other efforts across the Federal government and supplant State and local responsibilities."

Partner Paper with Public School Parents in LA: Out-of-Town Billionaires and Trump Backers Attempt to Hijack Local School Board Election -- The California Charter School Association (CCSA), directly and through its network of entities, has been the biggest spender in the 2017 election for Los Angeles Unified School District (LAUSD) school board members to represent Districts 4 and 6, having spent over $4 million to-date.  Nearly all of CCSA’s political campaign funding comes from millionaires and billionaires.  Out-of-town billionaires make up the bulk of this funding. Between July 2016 – December 2016, out-of-town billionaires like Doris Fisher, Co-Founder of The Gap, Alice Walton, heiress to the WalMart fortune, and Michael Bloomberg, New York financier and former Mayor, all made big political contributions to the California Charter School Association Advocates (CCSAA) Independent Expenditure Committee. The combined net worth of these three out-of-town billionaires is $125.5 BILLION.  Doris Fisher lives in San Francisco, Alice Walton lives in Bentonville, Arkansas and Michael Bloomberg lives in New York City. Additionally, numerous contributors to the CCSAA political fund are Trump supporters, a position that puts them out-of-sync with the majority of Los Angeles voters. Alice Walton and the WalMart family, for example, donated to the Super PAC that worked to elect Trump, donated to Mike Pence, Jeff Sessions, and to the Alliance for School Choice, an organization that Trump’s Education Secretary Betsy DeVos helped to lead. Richard Riordan, who gave $1 milion to CCSAA to then launch an independent expenditure committee working to elect Melvoin and Gonez, is a Trump supporter and donor. [i]  Many others CCSAA donors are as well. CCSA has poured money into these school board races directly through its Independent Expenditure Committee, [ii] and has also acting as a pass through for three other independent expenditure committees that are involved in the race.

Chicago Shows How Charter School Profiteering Undermines Bleeds Public Schools Without No Performance Improvement and Higher Segregation -- Chicago’s public school system has become a showcase for the negative effects of K-12 privatization, according to a new report that tracks how the city replaced struggling local schools with dozens of charters that didn’t perform better, yet deprived traditional schools of funds, students and public accountability. The report, “Closed by Choice: The Spatial Relationship between Charter School Expansion, School Closures and Fiscal Stress in Chicago Public Schools,” tracks 108 charter schools that opened between 2000 and 2015, a period when Chicago Public Schools (CPS) was shutting struggling schools, cutting district funding and reducing staff. It details and confirms what many charter critics have long said, that lobbying from pro-privatization forces swayed the city’ political leaders to impose top-down reforms that riled neighborhoods, undermined traditional K-12 schools, increased segregation and did not lead to schools with better academic results. Perhaps most insidiously, the report describes in great detail how the CPS system aggressively shut down struggling schools in neighborhoods where student numbers were dwindling, while allowing better-funded charters to open up nearby, taking a greater share of taxpayer funds that might have been used to rescue struggling schools. The report was written by Roosevelt University’s associate professor of sociology Stephanie Farmer, Loyola University PhD candidate Ashley Baber and University of Illinois PhD candidate Chris Poulos. “CPS’ approach to saturating neighborhoods with declining school-age population with new charter schools is stripping all middle- class, working-class and lower-income children, families, and communities of education security, where schools are rendered insecure by budgetary cuts, deprivation, or closure,” the report’s conclusion begins. “Education insecurity is the product of the school reform agenda focused on cannibalizing the neighborhood public schools in order to convert CPS into a privatized ‘choice’ school system.”

Anti-climate change booklets are landing in the mailboxes of thousands of teachers (PBS)  Science teacher Matthew Fox approached the climate change materials he had received in his school mailbox in the same way he had taught his students to think like scientists — with an objective frame of mind. Fox was part of the first wave of 25,000 science teachers in March who received an unsolicited package from the Heartland Institute, a libertarian think tank, which casts doubt on the role humans play in climate change.  The package contains a booklet, ‘Why Scientists Disagree About Global Warming,’ a DVD, and a cover letter, which encourages educators to teach their students that a lively debate over climate change continues to take place among scientists. “None of my colleagues were fooled. I think we are all very aware of the limitations of what we know now, because it obviously is a relatively new subject,” said Fox, an oceanography and earth science teacher at Troy High School in Fullerton, California. “But what they are proposing in this is just ludicrous.” The booklet states that a scientific consensus–the often cited 97 percent of climate scientists who say humans are the primary cause of climate change–does not exist. It also cites multiple climate change studies pointing out their flaws. “When someone says there’s no debate and there shouldn’t be a debate, they’re actually denying the scientific method,” said Lennie Jarratt, Heartland’s manager of the Center for Transforming Education. Scientists constantly review and revise their research, he added. Reactions to the mailings have been mixed, Jarratt said. “A ton of vitriol of people calling us crazy, and teachers requesting more books so they can give them to other teachers.” The materials continue to be sent out with the goal of reaching 300,000 public and private school science teachers as well as college professors across the country, according to Jarratt.

Tennessee makes community college free for all adults - Tennessee is about to become the first state in the nation to make community college free for all adults. Lawmakers approved legislation Wednesday that will expand the Tennessee Promise program that launched in 2014. It made tuition and fees free for recent high school graduates enrolled in a community college or technical school. Now, adults who don't already have an associate's or bachelor's degree can go for free, too, starting in the 2018 fall semester.Governor Bill Haslam is expected to sign the bill into law. He proposed the legislation in his State of the State address earlier this year. It's a cornerstone of his initiative to increase the number of residents with a college education to 55% by 2025. Last year, less than 39% of residents had gone to college. "If we want to have jobs ready for Tennesseans, we have to make sure that Tennesseans are ready for jobs, and there is no smarter investment than increasing access to high-quality education," Haslam said in a statement. To be eligible, students must have been a state resident for at least a year before applying, maintain a 2.0 GPA, enroll in enough classes to be a part-time student, and complete the Free Application for Federal Student Aid.  Expanding the free-tuition program will cost about $10 million once fully implemented. But it will be funded by the state's lottery account, just like the rest of Tennessee Promise. Students will save about $3,700 a year, which is the average cost of tuition and fees at Tennessee's 13 community colleges. If they already receive a need-based Pell Grant from the federal government, Tennessee will cover any remaining cost.  Since Haslam, a Republican, pushed for the Tennessee Promise program in 2014, the idea of tuition-free college has gained some traction. Oregon has made community college free for recent high school grads and GED recipients, too. San Francisco will make community college free for all residents starting this fall.

For-Profit Colleges Are Reinventing Themselves to Profit Off Low-Income Students - Since the mid-1990s, enrollment at for-profit trade schools and colleges has grown by 225 percent. In 2010, 12 percent of those in post-secondary programs attended a proprietary program, getting a Bachelor's or Master's degree or taking courses in fields like cosmetology, medical testing or computer or automotive repair. Today, roughly 1.4 million men and women are enrolled, and it's easy to see why. Ads on Facebook and testimonials on YouTube tout flexible schedules, year-round enrollment, online options and generous financial assistance -- provisions that working adults, returning veterans and single parents need if they are going to complete a certificate or degree program. But for most students enrolled in proprietary programs, the reality of what's offered falls far short of expectations, leaving them in serious debt. Worse, they often end up with an incomplete or even worthless degree. A 5,234-page report compiled by the Senate Health, Education, Labor and Pensions Committee during the Obama administration's second term does not use the word vulture, but it implies as much. Tom Harkin (D-Iowa), the Committee chair, told NPR that the publicly traded companies that run for-profit programs have an average profit margin of 19.7 percent. This is especially good news for the CEOs of said companies, he reported, since their average annual salaries weigh in at a cool $7.3 million. The source of much of this money? You.

Student Loans Just Got More Expensive  - The U.S. government is raising prices for new student debt, adding hundreds of dollars to the cost of the typical federal college loan. Beginning in July, interest rates on new government loans are set to rise by 0.69 percentage point, according to Wednesday figures from the Department of the Treasury. For undergraduates, that could amount to nearly a 20 percent increase in interest charges. New undergraduate loans from the Department of Education are due to carry an interest rate of 4.45 percent, up from 3.76 percent for the academic year ending in June. Rates on some graduate loans are set to rise from 5.31 percent to 6 percent, while rates on loans to parents and guardians are due to experience a jump from 6.31 percent to 7 percent. For example, the cost of a $10,000 loan would increase by about $400, according to an online calculator maintained by That may not seem like a lot of money, but the uptick comes on top of a mountain of student debt. After years of tuition hikes by colleges and relative decreases in U.S. grants, more students and their family members are borrowing from the government to finance higher education. As it is, some 44 million Americans collectively owe $1.4 trillion on their student loans, an average of roughly $32,000 per debtor. About one in six American adults has a student loan. Higher costs to borrow from the U.S. government could help private lenders such as SLM Corp., more commonly known as Sallie Mae, and Discover Financial Services. Both companies lend to households seeking funds to pay for college, but interest rates on their undergraduate loans are generally higher than those offered by the government, according to a review of their websites. Their loans—which lack the protections afforded to Americans with federal loans who subsequently struggle to repay their debt—could be more attractive to borrowers if their rates stay steady while the feds raise prices.

U.S. Universities Fear Losing International Students - Incidents like the February shooting in Olathe, Kan., of two Indians by a white man who allegedly had yelled, “Get out of my country!”, and anti-immigration rhetoric and policies coming out of the Trump administration, have made Glassman’s job recruiting internationally much harder. That’s a political problem -- and a  fiscal one. In an era when practically every state has cut financial support for higher education, public colleges and universities from the University of Washington to the University of Florida have come to depend on the money international students bring in. The students often pay double or triple the tuition of in-state students, with a surcharge sometimes tacked on. The number of international students on American campuses has exploded over the past decade. During the 2015-2016 school year, their numbers exceeded 1 million for the first time, representing an 85 percent jump from a decade earlier. University officials talk about the importance of diversity and the value of exposing American students to international peers in an era of globalization. Those were the traditional goals of recruiting students from abroad, and they still matter to faculty and deans. “One of the central functions of higher education is to expose people to people other than those they went to high school with,” says Barmak Nassirian, director of federal relations and policy analysis at the American Association of State Colleges and Universities. But campus administrators admit that foreign students are a revenue source they’ve come to count on. “International students definitely contribute to our financial strength and health,” says Renée Romano, vice chancellor of the University of Illinois at Urbana-Champaign. “In some ways, the international students are keeping this place open and keeping it strong.”

Uber and conservative activists on campus - This new Chronicle article by Michael Vasquez on a surreptitious effort by a non-profit organization to get conservatives elected to student government positions is worth reading throughout. There’s absolutely nothing wrong with conservatives organizing to get elected – what’s fishy is the stark contradiction between the organization’s private self-understanding (a “rather undercover, underground operation” to change politics on campus) and its public self description. See further this Amy Binder piece for a description of the background politics – what is happening, more or less, is that bomb-throwing conservative campus organizations are sparring with the more sedate and traditional ones for the money and attention of donors, and winning.But what I wanted to single out was this bit, which very much reads to me as one of those ‘the journalist strongly believes that there is something interesting going on, but hasn’t nailed down interview or documentary evidence’ hanging observations that you sometimes see in news articles (I understand from talking to journalists that such paragraphs are often a way of shaking the tree – if you put something out there, it may encourage others to come forward with more evidence).   Yet there is one policy proposal that almost always shows up with Turning Point’s candidates: promoting Uber.   The ride-sharing service has long been touted by conservative politicians as an example of free-market innovation. Student government can push for Uber in two important ways: lobbying local municipalities to allow Uber service on campus, and setting aside student-government funds for late-night “safe ride” programs that provide free or discounted Uber service to students.

Yale’s Lawless Administration - The global wave of right-wing populism landed in New Haven on May 3, 2017 when Yale University President Peter Salovey issued an executive order, announcing that Yale would defy US labor law. Yale refuses to begin negotiations with UNITE HERE Local 33, which was certified by the National Labor Relations Board as the representative of graduate teachers in eight Yale departments (including English, History, Political Science, and Geology and Geophysics) after union elections in February. Like other populist demagogues, Salovey insists that his view of what is democratic outweighs not only the rights of association of his employees, but the inconvenient legal procedures of the NLRB: “we [the royal we] are deeply troubled by the undemocratic method of department-by-department unionization chosen by Local 33,” he writes. He then laments “Local 33’s non-inclusive strategy” and “its micro-unit approach.” So Salovey imposes his idea of “democracy” by defying democratic labor law. Salovey writes that those who participated in the elections — which included, and I quote the NLRB here, “all teaching fellows employed by the Employer at its New Haven, Connecticut facility who teach in the [specified] Department, including discussion section leaders, part-time acting instructors, associates in teaching, lab leaders, and grader/tutors, but excluding all other employees, managers, guards and supervisors as defined in the Act” — was limited to “only 228” graduate teachers. To get a sense of the scale of the election, consider that the total number of tenure-track faculty at Yale is 199 (according to Yale’s own most recent figures for the Faculty of Arts and Sciences). Thus, the graduate teachers in just nine departments outnumbered the total junior faculty at Yale. This not only reveals how much of Yale’s teaching—particularly at the introductory level—is done by graduate teachers, but underlines the importance of the union election that took place.

Up to 7,000 bodies could be buried on Medical school campus -- At least 7,000 bodies could be buried across 20 acres of a plot of land the University of Mississippi Medical Center Campus (UMMC) wants to use for an expansion of their facilities. The remains are former patients of Mississippi's first mental hospital, called the Mississippi State Lunatic Asylum, built in 1855. Officials say that underground radar shows the coffins cover 20 acres where the school was planning to develop. However, the university has run into a small problem in exhuming the bodies. It could cost up to $3,000 to exhume and rebury each body, and that could run up to $21 million, according to USA Today.  Now, UMMC is studying an alternative plan that would be cheaper. The alternative plan would preserve the remains in-house, at around $400,000 a year. And adding a memorial, including a visitors center and laboratory would allow for the study of the remains as well as the remnants of clothing and other artifacts found in the coffins. Ralph Didlake, who oversees UMMC’s Center for Bioethics and Medical Humanities, thinks the innovative plan would create the first lab in the country devoted to studying life in an insane asylum in the 1800s and early 1900s.

The Class of 2017 - Economic Policy Institute - After years of elevated unemployment and depressed wages, young graduates’ economic prospects have finally begun to brighten. Members of the Class of 2017 have better job prospects than their peers who graduated in the aftermath of the Great Recession. Unemployment rates for young high school and young college graduates have returned to within one percentage point of their pre-recession levels and wages are continuing to slowly recover. While young high school graduates on average are still paid less than they were in 2007 (adjusted for inflation), the average wages of young college graduates have finally surpassed the 2007 level. Yet the economy of 2007 is a low bar for economic opportunity. Relative to the full employment economy of the late 1990s and 2000, the shares of young graduates who are unemployed and underemployed, and generally “idled” by the economy (neither working nor in school), are still quite high. And economic growth has not yet reached all corners of the labor market. Unemployment rates for young black and Hispanic graduates entering the workforce are still substantially higher than that of their white peers. Young female graduates are paid less than their male peers directly out of school, when they have fairly comparable labor market experience. We need the economy to continue toward full employment in order to ensure healthy job prospects and decent wages for all young graduates.

How Financialization and the “New Economy” Hurt Science and Engineering Grads -- Yves Smith - This note comments on Eric Weinstein’s, “How and Why Government, Universities, and Industries Create Domestic Labor Shortages of Scientists and High-Tech Workers,” posted recently on INET’s website. At the outset of his paper, Weinstein argues that: Long term labor shortages do not happen naturally in market economies. That is not to say that they don’t exist. They are created when employers or government agencies tamper with the natural functioning of the wage mechanism. The contention, written from the perspective of the late 1990s, is that in the first half of the 1990s an oversupply (“a glut”) of science and engineering (S&E) labor that depressed the wages of PhD scientists and engineers was primarily the result of the promotion of a government-university-industry (GUI) agenda, coordinated by the National Science Foundation under the leadership of Erich Bloch, head of the NSF from 1984 to 1990. Beginning in 1985, the NSF predicted a shortfall of 675,000 S&E personnel in the U.S. economy over the next two decades. According to a study by the NSF’s Policy Research and Analysis (PRA) division, quoted by Weinstein, salary data show that real PhD-level pay began to rise after 1982, moving from $52,000 to $64,000 in 1987 (measured in 1984 dollars). One set of salary projections show that real pay will reach $75,000 in 1996 and approach $100,000 shortly beyond the year 2000. Weinstein argues that the GUI agenda (inspired by Reaganomics) sought to prevent these salary increases. He contends that the legislation that enabled this oversupply was the Immigration Act of 1990 that expanded the H-1B nonimmigrant visa program and instituted employment-based immigration preferences. Given that most of these foreigners came from lower-wage (Asian) nations, it is assumed that they were attracted to work in the United States by what for them were high wages, whereas Americans with S&E PhDs began to shun S&E careers as the salaries became less attractive.1   There is a lot missing from Weinstein’s perspective….

 Harvard To Hold Blacks-Only Graduation Ceremony As Progressives Embrace Segregation -- Apparently racial segregation is now an enlightened, progressive policy...just ask the elitist administrators of Harvard University who, in their infinite wisdom, have decided to hold a "Blacks Only" graduation ceremony this spring.  According to BET, the ceremony is intended to recognize the indisputable fact that graduating from Harvard is simply harder for black students than white students because the "outer pressures of society make the already challenging coursework even more difficult." Getting a diploma from Harvard is one of the biggest accomplishments a person can achieve, but for some, it can come as a bigger task than for others.Aside from studying and taking grueling tests, if you’re a minority, the outer pressures of society make the already challenging coursework even more difficult. Knowing this, Black members of the class of 2017 decided to form an individual ceremony. It’s the first of its kind at the school in recent memory and took nearly a year to plan. The separate graduation is an effort to highlight the aforementioned struggles and resilience it takes to get through those. “This is an opportunity to celebrate Harvard’s Black excellence and Black brilliance,” Michael Huggins, a soon-to-become Masters graduate from Harvard’s Kennedy School, told The Root. “It’s an event where we can see each other and our parents and family can see us as a collective, whole group. A community.”

Harvard Endowment Liquidating $2.5 Billion In Assets -- Back in January, Harvard's Endowment stunned the investing world when it announced that the investing vehicle which manages $36 billion in assets, would undergo a "radical overhaul" in the way the world’s wealthiest school invests its money by outsourcing management of most of its assets and lay off roughly half the staff in the process. As the WSJ reported at the time, about half of the 230 employees at Harvard Management Company would depart as part of a sweeping change by the university’s new endowment chief, N.P. “Narv” Narvekar. The endowment would also shut down its internal hedge funds and let go traders by the middle of the year. Additionally, the internal team in charge of direct real-estate investments was expected to spin out into an independent entity that Harvard would invest with. Following the restructuring, only management of Harvard’s natural resources portfolio and passively managed exchange-traded funds will remain in house.So with this major overhaul taking place, it is hardly a surprise that the Harvard Endowment is quietly seeking to liquidate some $2.5 billion in private equity, venture capital and real estate investments, as Axios reported on Monday. The website notes that the secondary offerings include just under $1 billion of PE/VC partnership positions plus around $1.6 billion of real estate positions. Harvard has hired Cogent Partners, a unit of Greenhill to seek bidders in the secondary market and to executive the sale.According to Axios, unlike the last time Harvard tried to offload PE stakes under former HMC CEO Jane Mendillo, this time around secondary buyers are "flush with cash and Harvard can be choosy." And some trivia: if Harvard is successful at selling all the offered $2.5 billion in assets at NAV, it would be the largest endowment secondary sale of all time.

The System To Collect Defaulted Student Loans Is No Longer Functioning - Consumerist. Consumers who expected their student loan payments to be deducted from their bank accounts this month have reportedly found the funds untouched, and their calls to the companies unanswered thanks to a Department of Education’s order prohibiting the debt collection companies from working on default accounts in response to two lawsuits against the agency.The system used by the Dept. of Education to collect on defaulted student loans came to a standstill last month, leaving an estimated 91,000 accounts in limbo, when the agency ordered debt collectors under contract to stop making collections on accounts.The order was in response to a U.S. District Court judge’s emergency order on Mar. 29 that prohibited the department from sending any newly-defaulted student loans to its other debt collection firms.Judge Susan Braden has extended the emergency order [PDF] several times since then, noting that it was made to “preserve the status quo to protect the interests of all parties and to afford the government an opportunity to reach a global solution” to two lawsuits against the Dept. of Education.The cases, filed separately by several debt collection firms, claim that the Dept. of Education unfairly terminated their contracts with the companies.More recently, the Dept. of Education ordered servicers to stop work on defaulted accounts. The actions, the companies argued in court filings [PDF], “fundamentally alter the status quo and are not fiscally responsible to the borrowers or to the federal taxpayers.” “Thus, the well-documented student loan crisis will become a pandemic not because this Court ordered that result, but because [Dept. of Education] thinks that is what this Court expects,” the companies argue.

How The Student Loan Collection System Ground To A Halt For more than a week, calls to student loan debt collectors have gone unanswered across the country, and pleading, confused voicemails have been ignored. Work shifts have been cancelled, and money slated to pay off loan balances sits in borrowers' bank accounts, untouched. A crucial part of the student loan system — affecting tens of thousands of borrowers and billions in loan debt — has essentially ground to a halt, the bizarre result of a low-profile lawsuit against the Education Department. "Essentially, the Court has shut down the Government’s defaulted student loan collection program," an Education Department lawyer said in a court filing. Lawyers for some debt collection companies have warned the judge overseeing the case that a massive student debt backlog is growing: 91,000 borrowers and counting who have stopped paying their loans, but haven't been put in programs meant to help them get out of default. The strange turn of events began with a lawsuit filed by two debt collection companies, who claim they were unfairly were fired by the Obama-era Education Department for poor performance. On March 29, the judge issued a temporary restraining order that prevented any new defaulted borrowers from being assigned to debt collectors and put into rehabilitation programs. Instead, the borrowers have piled up inside the department's system, waiting. On April 21, the government ordered the debt collectors involved in the suit to stop work altogether on defaulted accounts: no phone calls, no withdrawals from student accounts, nothing. The Education Department and the Justice Department are partly to blame for "unnecessarily" throwing a wrench into the entire defaulted loan system, one attorney with knowledge of the case told BuzzFeed News, because they've been unable to come to a resolution that allows the loan system to kick back into gear. "There's no fix in sight."

The Wrong Way to Fix Student Debt - The New York Times - Tens of millions of Americans together owe more than a trillion dollars in student debt. For the financial health of their households and the entire economy, ensuring a fair and smoothly functioning student loan system is critically important. But with a series of regulatory changes, the Trump administration is taking us in the wrong direction, making student loans riskier, more expensive and more burdensome for borrowers. First, the Education Department has weakened accountability for the companies that administer student loans. Second, it has made it more difficult for borrowers to apply for, and stay enrolled in, income-based payment plans. Third, Betsy DeVos, the education secretary, has given banks more leeway to charge borrowers high fees — as much as 16 percent of the balance owed — if they fall behind. Federal Student Aid, the agency within the Education Department that oversees student loans, outsources loan servicing to private companies. The largest of them is Navient, formerly a part of Sallie Mae. Companies like Navient are the face of the student loan system, and often the source of enormous frustration for borrowers. The Consumer Financial Protection Bureau has documented thousands of cases in which loan companies have misdirected payments, lost paperwork and charged the wrong interest rate on loans.Federal Student Aid allocates business to contractors based on their collection performance, using outcome-based metrics like the default rate on the loans they handle. But the agency did not consider whether a contractor had engaged in illegal behavior until the Obama administration directed it to do so. The Education Department, which has not responded to requests for comment for this article, reversed the Obama directive. This turnaround particularly helps Navient, which has faced a series of regulatory and legal challenges for its dealings with borrowers. The Consumer Financial Protection Bureau has protested this turnabout, stating that borrowers deserve to be protected from illegal actions.

"Boomerang Kids": Adult Millennials Returning Home Is Crushing Baby Boomer Budgets - We've noted several times in recent months that, despite the 'economic recovery', a record number of young 'adults' are moving back home with mom and dad after college and staying there well into their 30's.  Now, as confirmed by a recent study conducted by Fidelity and the Stanford Center on Longevity, the added stress of caring for all those 'adult' children is putting a severe emotional and financial strain on Baby Boomers with over 75% saying their adult children are cutting into their budgets and over 50% saying they're generally less happy about life.  Per Fidelity: Adult children who move back home is a common event mdash; one in nine Boomer parents surveyed said their kids returned "to the nest" in the past year. And it's taking a toll: 68 percent of parents reported they are more stressed, and more than half said they are less happy (53 percent), less satisfied (54 percent) and have less leisure time (53 percent). Those new housemates come at a cost: 76 percent of parents said they face higher expenses. The health impacts are significant for women, as 46 percent reported sleeping worse and 40 percent reported gaining weight.At one point in time in America, living at home with mom and dad after crossing out of your teenage years and into your 20s was embarrassing and something that was generally avoided at all costs.  And while hard times come and go, 20-somethings who were forced back into their parents' care worked their tails off until they could save up enough money to once again regain their freedom.That said, these Boomer parents shouldn't expected their basement-dwelling snowflakes to leave the nest, for the second time, anytime in the near future because, as we pointed out a few weeks ago, roughly one-third of all millennials live at home with their parents and one-fourth of them can't be bothered with enrolling in school or finding a job. According to the following chart from Bloomberg, there are 2.2 million millennials who live at home with mom but neither attend classes nor have a job.  Of those, 40% of them are already in their 30's, they're predominantly white and have a high school diploma of less.

 74% Of Americans Plan To Work Past Retirement Age - For those wondering about the true strength of the US economy, look no further than Americans' post-"retirement" plans revealed in the latest Gallup survey, according to why only 25% of Americans plan to stop working past retirement age. Meanwhile, nearly two in three employed U.S. adults, or 63%, responded they plan to work past retirement age on a part-time basis, while an additional 11% said they will work full time once they hit retirement age. These results come from Gallup's Economy and Personal Finance survey, conducted April 5-9. As in 2011 and 2013, the two previous times Gallup asked this question, working adults are most likely to say they intend to "continue working, and work part time." As one would expect, over the same time period, the percentage who say they plan to "stop working altogether" has ticked up. However, in a surprising twist, of those who say they will continue working, but only full time, the majority plan to do so because they want to, not because they have to.Regardless of their retirement-age plans -- whether they work full time, work part time or stop working -- employed adults mostly say their choice is out of preference rather than necessity. The vast majority of those who plan to stop working say it is because they want to rather than will need to. Also, by a better-than 2-to-1 ratio, those who plan to continue working part time say it is something they want to do, rather than will have to do. Still, whatever the underlying dynamics, the trend is stark. Nonretired U.S. adults are split on when their "retirement age" actually will be, but the greatest percentage (39%) say they expect to retire after age 65, about the same as last year. Roughly one in four expect to retire at exactly age 65, while 29% believe they will retire before then. While the trends has remained relatively consistent this decade, there has been a seismic shift since 1995 in the age at which nonretirees believe they will retire. In two polls conducted that year, an average of 14% said they expected to retire after 65 and 49% before 65. These percentages have flipped in the last two decades, as the age to start collecting Social Security has risen to 67 and more Americans feel a financial need to stay in the workforce.

ACA exchange premium rates could rise by an average of 20 percent in Virginia next year -- Health insurance plans on the Affordable Care Act’s individual and small group markets in Virginia could cost an average of 20 percent more in 2018, according to initial rate filings with the state’s Bureau of Insurance. While the rates must be further reviewed by the bureau before they become final, the filings show that almost all insurers offering plans on the exchange expect premiums to increase. Last year, premium rates on the exchange increased by an average of about 16 percent. “All these increases equate out to tremendously large premiums, which we thought were large last year,” said Del. Kathy J. Byron, R-Bedford, during a Health Insurance Reform Commission meeting Tuesday. “So if nothing happens with any reforms or changes in Washington, these are pretty dramatic premium increases that people are going to be facing.” Some plan premiums on the individual market could go see prices nearly triple. Others expect increases as low as 1.7 percent and as high as 20.4 percent. Only two filings showed a decrease in premium costs over last year: Group Hospitalization and Medical Services, Inc., and Kaiser Foundation Health Plan of the Mid-Atlantic States, which are both selling plans in the small business health options program, or SHOP exchange. But in addition to higher premiums, Virginia residents will also see sparser options in the ACA marketplace next year. Four fewer insurers are offering plans on the individual exchange compared to last year, while two have exited the small group exchange. Two of the biggest insurers in the country, UnitedHealthcare and Aetna, pulled out of the individual exchanges.

Health insurance companies seek rate hikes up to 40 percent in DC — Insurance companies offering individual health care plans in D.C. want to increase premiums from 13 percent to nearly 40 percent on average. Four major insurance companies have submitted health insurance rates for 2018 to the D.C. Department of Insurance, Securities and Banking for review. This will be the fifth year of open enrollment on DC Health Link, the District’s health insurance marketplace under the Patient Protection and Affordable Care Act, better known as Obamacare. Aetna, CareFirst BlueCross BlueShield, Kaiser Permanente and Untied Healthcare filed rate requests for individuals, families and small business plans. A total of 184 plans were filed, up from 171 last year. The vast majority of them are small group plans, with 26 individual plan requests submitted. In the individual market, CareFirst has proposed an average rate increase of 39.6 percent for HMO plans and 19.7 percent for PPO plans. Kaiser proposed an average increase of 13 percent. For small group plans, CareFirst is requesting an average increase of 9.5 percent for HMO plans and 15.3 percent for PPO plans. Kaiser small group rates show an average rate increase of 5 percent. Aetna filed for an average group rate increase of 7.38 percent for PPO plans and 9.38 percent for HMO plans. United Healthcare is seeking an average increase for its small group plans of 9.5 percent for its PPO and HMO plans.

Obamacare rate increase requests up 18-59 percent in Md.  — Health insurance companies have submitted average rate increase requests for the individual plan markets for 2018 to the Maryland Insurance Administration that range from 18 percent to nearly 59 percent. The insurance administration will issue decisions about 2018 rates in late summer, after reviews and public input. The largest rate increase request is for the CareFirst of Maryland Inc. and Group Hospitalization and Medical Services Inc. PPO (both CareFirst companies), seeking an average increase of 58.8 percent, or a monthly premium average before any subsidies of $715. The smallest rate increase request comes from Kaiser Foundation Health Plan of the Mid-Atlantic HMO, seeking an average increase of 18.08 percent, or $359 a month before subsidies.“It is important to remember that these rates are what companies have requested, and not necessarily what will be approved,” said Insurance Commissioner Al Redmer Jr. “There will be a thorough review of all the filings. As in years past, we may require changes.” Before any approvals, the administration reviews all of the carriers’ statistics and assumptions, and considers public comments as part of the review process. By law, rate requests it determines are excessive in relationship to the benefits offered, or are unfairly discriminatory, are not approved.

Conn. Health Insurance Request Average Premium Rate Hikes as High as 52% - Health care insurers in Connecticut have requested premium rate hikes as high as 52.1 percent, according to the state's insurance administration.The state has just two insurers participating in the Obamacare exchanges in 2017. Both have requested rate hikes in the double digits.Anthem Health Plans, which covers 35,000 individuals on the exchanges, requested a minimum rate hike of 19 percent and a high of 52.1 percent. On average, the company requested a rate hike of 33.8 percent.For employers with 50 or fewer workers, Anthem requested an average rate increase of 31.6 percent.ConnectiCare Benefits Inc., which serves 50,907 individuals in the state, requested a minimum rate increase of 8.4 percent, a max of 18.7 percent, and an average hike of 15.2 percent.Insurers said cost drivers include the Health Insurance Tax, accounting for 2 to 3 percent of premiums, rising health care costs such as prescription drug prices, higher demand for medical services, deteriorating claims experience, lack of enforcement of the individual mandate, and lack of stability in the risk-adjustment program. Insurers operating off the exchanges requested an average rate hike ranging from a low 3.6 percent to a high of 26.3 percent in the individual and small group markets.

2018 Obamacare Premium Estimates Are Surging Again Leaving Obama's "Legacy" On Life Support - Maryland, Virginia and Connecticut are the first three states to make their 2018 Obamacare premium estimates public and they paint a very bad picture for the future of Obama's crowning legislative achievement.  On average, premiums for individual insurance are expected to increase 33% over 2017 with Maryland's 4 insurers requesting a staggering 45% YoY increase.  Per Bloomberg: Of course, 2018 premium hikes are only half the story because they come on top of staggering increases in 2017 as well.  Combined, residents of Connecticut, Maryland and Virginia are looking at total premium increases of 59%, 81% and 41%, respectively, over just a two-year period.  As a reminder, here is where rate increases came in, by state, for the 2017 plan year: Of course, the panicked mainstream media is eagerly trying to pin the 2018 premium increases on the Trump administration rather than simply admitting that Obamacare was doomed from the start.  For 'Exhibit A' just look at this spin from Bloomberg: Health insurers are asking for sharp increases in the cost of their Obamacare plans next year, thanks to instability in the law’s coverage markets that’s been compounded by the Trump administration. The increases can be blamed in part on uncertainty among insurers about the strength of the law’s requirement that people carry insurance. The Trump administration has raised doubts about whether it will enforce what is considered by some insurers to be an already insufficient penalty. "Failure to enforce the individual mandate makes it far more likely that healthier, younger individuals will drop coverage and drive up the cost for everyone,” Chet Burrell, Chief Executive Officer of CareFirst, said in a statement. The insurer is asking for an at least 50 percent increase in premiums in Maryland. Burrell said uncertainty over the mandate played a “significant role” in the insurer’s rate requests.

 Aetna Is Latest Health Insurer to Quit Obamacare Markets - Aetna Inc. will leave the few remaining states where it had been selling Obamacare plans next year, making it the latest health insurer to pull out of the health law as Republicans attack the program as failing and work to dismantle it.While the move is likely to attract outsize political attention, the decision affects just Delaware and Nebraska. The Hartford, Connecticut-based insurer already said last year it would pull out of 11 states, and in the last month announced plans to exit Iowa and Virginia.“At this time have completely exited the exchanges,” Aetna said in a statement Wednesday. The insurer will also stop selling non-Obamacare individual plans in Delaware and Nebraska.Aetna had indicated it might pull out earlier this month, when Chief Financial Officer Shawn Guertin said the company would take steps to limit its financial losses in the program. Aetna has said it expects to lose more than $200 million on individual health plans this year in the four states where it’s still selling Affordable Care Act plans. Obamacare’s markets are becoming increasingly vulnerable as major health insurers exit, citing financial losses. Some insurers have stayed in, but raised the premiums they charge customers by double-digit percentages.Some of the instability has been going on for years, as fewer people than expected have signed up for plans and many have been sicker than insurers accounted for. Those problems have been further pushed by Republicans, who are considering legislation in Congress to repeal and replace large portions of the health law, and by President Donald Trump, who has threatened to withhold support from key portions of the law that keep the markets functioning. Aetna’s decision could leave Nebraska with just one insurer, Medica. Medica has pulled back as well, saying it may exit the program in Iowa, leaving much of the state without insurance options under Obamacare.

Some Medicare prescription drug plans cost more than we think -- Many studies have demonstrated what economics theory tells us must be true: When consumers have to pay more for their prescriptions, they take fewer drugs. That can be a big problem. For some conditions — diabetes and asthma, to name a few — certain drugs are necessary to avoid more costly care, like hospitalizations. This simple principle gives rise to a little-recognized problem with Medicare’s prescription drug benefit. For sicker Medicare beneficiaries, the Harvard economist Amitabh Chandra and colleagues found, increased Medicare hospital spending exceeded any savings from reduced drug prescriptions and doctor’s visits. Consider patients who need a drug but skip it because they feel the co-payment is too high. This could increase hospitalizations and their costs, which would make them worse off than if they’d selected a higher-premium plan with a lower co-payment. Though just a simplified example, this is analogous to what Medicare stand-alone prescription drug plans do. They achieve lower premiums by raising co-payments. This acts to discourage the use of drugs that would help protect against other, more disruptive and serious health care use, like hospitalization.Studies show that insurers, many of which are for-profit companies after all, are using such incentives to dissuade high-cost patients from enrolling or using the benefit. There’s evidence this occurs for Medicare’s drug benefit, as well as in the Affordable Care Act’s marketplaces. The most popular type of Medicare drug coverage is through a stand-alone prescription drug plan. A stand-alone plan never has to pay for hospital or physician visits — those are covered by traditional Medicare. Another way to get drug benefits from Medicare is through a Medicare Advantage plan that also covers those other forms of health care and is subsidized by the government to do so.

Blood test: $522 or $19? MRI: $750 or $495? Tell us what health care is costing you -- If you've been to the doctor for an annual checkup, you've likely had a CMP blood test done. Short for comprehensive metabolic panel, the test is part of regular heath examinations and measures things like blood-sugar levels and kidney function. At Touro Infirmary in Uptown New Orleans, the test is priced at $522. But many patients may not know that the same blood test can be had for just $19 half-a-block away at Clinical Pathology Laboratories on Prytania Street. Blood tests aren't the only common health procedure with dramatically varying prices within our metro area. A cardiac stress test, in which a person is often put on a treadmill while connected to a heart monitor, is priced at $105 at Ochsner Medical Center on Jefferson Highway. Five miles away, at Tulane Medical Center-Heart Care on Tulane Avenue, the same test goes for $600 - five times more. A similar pattern holds for MRIs. At Stand Up Open MRI Centers of Louisiana, on Loveland Street in Metairie, the price of a lower back MRI without contrast is $750. Just three blocks away, the same procedure costs $495 at Doctors Imaging Services, a saving of $225. In fact, in our metro area, the highest cash price we found for that MRI was $3,106, and the lowest was $350. These wide discrepancies are part of the initial findings in "Cracking the Code: The real cost of health care," a joint project that | The Times-Picayune and WVUE Fox 8 News are launching today (April 5) to help consumers navigate the increasingly murky waters of modern day health care pricing, and to explore what providers, insurers and regulators could do to improve the system. 

Did you know that before 1973 it was illegal in the US to profit off of health care. The Health Maintenance Organization Act of 1973 passed by Nixon changed everything. -  Is the health insurance business a racket? Yes, literally. And this is why the shameless pandering to robber baron corporations posing as “health providers” is such an egregious … and obvious … tactic to do nothing more than plump up insurance company profits. And do you know who’s to blame?   Believe it or not, the downfall of the American health insurance system falls squarely on the shoulders of former President Richard M. Nixon. In 1973, Nixon did a personal favor for his friend and campaign financier, Edgar Kaiser, then president and chairman of Kaiser-Permanente.  Nixon signed into law, the Health Maintenance Organization Act of 1973, in which medical insurance agencies, hospitals, clinics and even doctors, could begin functioning as for-profit business entities instead of the service organizations they were intended to be.  And which insurance company got the first taste of federal subsidies to implement HMOA73 … *gasp* … why, it was Kaiser-Permanente!   What are the odds?  It’s all right here to read for yourself. And to perfectly cement HMOA73 as the profiteering boondoggle that it actually was, the law Nixon mandated also included clauses that encouraged medical providers to not CURE afflictions, but to PROLONG them by only treating the symptoms. There’s no money to be made in CURING sickness.  But the sky’s the limit when it comes to forcing people to endure repetitive doctor visits, endless (and often useless and redundant) tests, and … of course … let’s not forget the ever-increasing demand for American-made prescription drugs!

Doctors warn Minnesota measles outbreak still “early” as cases increase - CBS -  New numbers from the Minnesota Department of Health show the measles outbreak in the state is growing, CBS Minnesota reports. There are now 44 cases reported in Minnesota, which is up from 41 on Thursday. The outbreak is primarily in the state's large Somali-American community, where many parents avoid the measles-mumps-rubella vaccine because of unfounded fears that it causes autism. All but two of the cases involve unvaccinated patients. Health officials are now offering new guidelines for the measles vaccination as new cases become a daily occurrence. "We're very early in the outbreak," said Dr. Shane McAllister, assistant professor in pediatric infectious disease and immunology at the University of Minnesota's Masonic Children's Hospital. "We're going to be seeing this for a while." Preventing the outbreak's spread is a priority at Masonic Children's Hospital in Minneapolis. Signs stand near every entrance warning of the measles outbreak. "There's a lot of interest in measles right now, so we're fielding a lot of questions from concerned families," McAllister said. "We have a large population of potentially-infectable children who are not vaccinated, and we have a disease agent that is extremely contagious." Normally, the measles, mumps and rubella vaccine, or MMR, is administered at age 1 with a second dose between ages 4-6. But MDH accelerated its measles vaccination guidelines this week in three specific counties. The new guidelines call for children in Ramsey, Crow Wing and Hennepin counties get the second vaccination just 28 days after the first dose. "That provides additional protection for children who might not have responded to the first dose," McAllister said. 

Big Pharma's Industrial Pollution Goes Unchecked, Breeds Superbug Crisis - Industrial pollution from Indian pharmaceutical companies making medicines for nearly all the world's major drug companies is fueling the creation of deadly superbugs , suggests new research. Global health authorities have no regulations in place to stop this happening. A major study published May 6 in the prestigious scientific journal Infection found "excessively high" levels of antibiotic and antifungal drug residue in water sources in and around a major drug production hub in the Indian city of Hyderabad, as well as high levels of bacteria and fungi resistant to those drugs. Scientists told the Bureau of Investigative Journalism the quantities found meant they believe the drug residues must have originated from pharmaceutical factories. The presence of drug residues in the natural environment allows the microbes living there to build up resistance to the ingredients in the medicines that are supposed to kill them, turning them into what we call superbugs. The resistant microbes travel easily and have multiplied in huge numbers all over the world, creating a grave public health emergency that is already thought to kill hundreds of thousands of people a year.  When antimicrobial drugs stop working common infections can become fatal, and scientists and public health leaders say the worsening problem of antibiotic resistance (also known as AMR) could reverse half a century of medical progress if the world does not act fast. Yet while policies are being put into place to counter the overuse and misuse of drugs which has propelled the crisis, international regulators are allowing dirty drug production methods to continue unchecked. 

FDA Refuses to Ban Toxic Chemical Used in Baby Food Packaging - The U.S. Food and Drug Administration (FDA) rejected a petition Thursday to ban perchlorate from our food, a chemical known to impair brain development in infants.  While best known as a rocket fuel component, perchlorate is approved for use in packaging for dry food such as baby rice cereal, flour and spices. Unfortunately, it also winds up in the food we eat. Perchlorate is used by food companies to reduce static in dry food packaging, but today, scientists know that perchlorate threatens fetal and infant brain development even at lower levels than previously understood.  Since the FDA approved the use in 2005, the amount of perchlorate that infants and toddlers ingest has increased significantly and more types of food have become contaminated. The use may have contributed to today's high levels of perchlorate in infant rice cereal—often the first solid food infants eat.  A group of health and environmental organizations petitioned the FDA to ban the chemical as a food additive, pointing to the fact that it impairs infant brain development. This concern doesn't end with infants and toddlers: A pregnant woman's fetus is also at risk if the mother eats food tainted with perchlorate—especially in the first trimester—if she is among the 20 percent of women who do not get enough iodine. The agency's decision Thursday, clearly, puts our kids needlessly at risk and should be reversed.

Elevated Cancer Rates Linked to Environmental Quality - Researchers have found a link between environmental quality and cancer incidence across the U.S. "Our study is the first we are aware of to address the impact of cumulative environmental exposures on cancer incidence," said Dr. Jyotsna Jagai of the University of Illinois, who led the research team. For the study , the researchers cross-referenced the Surveillance, Epidemiology, and End Results (SEER) program's state cancer profiles with the Environmental Quality Index (EQI) and determined that the average cancer rate in roughly 2,700 counties was about 451 people in every 100,000 between 2006 and 2010. But in counties with poor environmental quality, the researchers found a 10 percent higher incidence of cancer cases—or an average of 39 more cases per 100,000 people. The higher numbers were seen in both males and females, especially prostate and breast cancer. The authors noted that prior studies on the environment's effect on cancer usually focus on specific environmental factors, such as air, water, land quality, sociodemographic environment and built environment. However, the current study examines how cancer development is dependent on the totality of exposures we face, including social stressors. "This work helps support the idea that all of the exposures we experience affect our health, and underscores the potential for social and environmental improvements to positively impact health outcomes," Dr. Jagai said. "Therefore, we must consider the overall environment that one is exposed to in order to understand the potential risk for cancer development."

U.S. Steel Chemical Spill Exceeds Allowable Limit by 584 Times --A U.S. Steel plant in Portage, Indiana spilled nearly 300 pounds of a cancer-causing chemical into Burns Waterway last month , documents from the Indiana Department of Environmental Management (IDEM) revealed.   The release of hexavalent chromium was 584 times the daily maximum limit allowed under state law, the Times of Northwest Indiana reported, citing the documents. The plant is permitted to release only a maximum of 0.51 pounds daily.  The toxic industrial byproduct was made infamous by the environmental activist and 2000 movie of the same name, " Erin Brockovich ."   The leak occurred between April 11 and April 12 and forced the closure of several Lake Michigan beaches and Indiana American Water's intake in Ogden Dunes. Burns Waterway is a tributary that flows into Lake Michigan, a drinking water source for nearby Lake, Porter and LaPorte counties.   Following the spill, U.S. Steel has committed to sampling and monitoring lake water on a weekly basis to ensure it is safe through the swimming season, a U.S. Environmental Protection Agency (EPA) spokesperson said. The discharge was reportedly caused by a pipe failure.  Sam Henderson, a staff attorney for the Hoosier Environmental Council , denounced the spill.  "If U.S. Steel had set up its system responsibly, it wouldn't have been possible for a single mechanical failure to dump nearly 300 pounds of hexavalent chrome into Lake Michigan," Henderson told the Times of Northwest Indiana.

Report: Puerto Rico has worst drinking water violation rate -  The U.S. territory of Puerto Rico has the worst rate of drinking water violations of any U.S. jurisdiction, with dangerous contaminants in recent years ranging from lead to disinfectants to coliform bacteria, an environmental group said Wednesday. Nearly the entire island was supplied in 2015 with water from systems that violated the U.S. Safe Drinking Water Act, according to a report from the Natural Resources Defense Council, which used the most recent statistics available. Most of the violations were for failure to test the water's safety or failure to report issues to the public or health authorities as required, the group said. "Millions of people in Puerto Rico consume water daily confident in its quality and purity, but that is far from the truth," said Hector Claudio Hernandez, one of the report's co-authors. The group said many of the violations have occurred for years, noting that there were nearly 34,000 violations from 2005 to 2015. In 2015 alone, nearly half of more than 400 water systems across the island violated federal health standards, according to the environmental group. Eli Diaz-Atienza, the newly appointed executive president of Puerto Rico's Aqueduct and Sewer Authority, told The Associated Press that updated tests show there is currently no lead in the island's drinking water. He also said the 146 water systems that the agency operates out of the island's total of 466 systems meet federal standards. "Right now we understand there's no threat to the public health of Puerto Rico," he said, adding that he would provide copies of those tests. He noted the violations of certain contaminants occurred under previous administrations, but said he was not making excuses for that. "Just one case of contaminants is a problem for us, and we have to address it responsibly," he said. 

Even Your Sea Salt Contains Microplastics - Sea salt may be healthy and rich in minerals, but a new study found it is also rich in plastic .   Sea salt , especially pink Himalayan salt, has gained some popularity in the past few years for mega health benefits like increased energy and immunity, and improved skin and dental health. But, a team of researchers tested 17 sea salt brands from eight different countries and found some shocking results.   Published in Scientific Reports , the team found that only one brand was plastic-free. The rest, which were soaked in water and dissolved, left behind a total of 72 particles. Of those 72 particles, 1 in 10 contained microplastics . Overall, 41.6 percent of those were plastic polymers and 23.6 percent were pigments from plastic materials. The most common plastic polymers were polypropylene and polyethylene, both of which are considered safe plastics by the U.S. Food and Drug Administration.   But, what's most concerning about microplastics is their prevalence in the ocean. Microplastics come from cosmetic products (think, exfoliating microbeads) or break down from larger plastics over time or through chemical processes. It is estimated that there are about 8 million tonnes of plastic entering the oceans every year. These particles enter the food chain because small organisms like plankton eat the plastic. Microplastics have been found in shrimp, salmon and even whales and seals.  The growing problem caused the United Nations to form a global initiative in February to encourage companies to reduce their use of microplastics . California is also taking the lead on banning microbeads and other states are following suit, like Connecticut, Hawaii, Oregon and Washington.

There are diseases hidden in ice, and they are waking up - BBC -  Throughout history, humans have existed side-by-side with bacteria and viruses. From the bubonic plague to smallpox, we have evolved to resist them, and in response they have developed new ways of infecting us.We have had antibiotics for almost a century, ever since Alexander Fleming discovered penicillin. In response, bacteria have responded by evolving antibiotic resistance. The battle is endless: because we spend so much time with pathogens, we sometimes develop a kind of natural stalemate.However, what would happen if we were suddenly exposed to deadly bacteria and viruses that have been absent for thousands of years, or that we have never met before? We may be about to find out. Climate change is melting permafrost soils that have been frozen for thousands of years, and as the soils melt they are releasing ancient viruses and bacteria that, having lain dormant, are springing back to life. In August 2016, in a remote corner of Siberian tundra called the Yamal Peninsula in the Arctic Circle, a 12-year-old boy died and at least twenty people were hospitalised after being infected by anthrax.The theory is that, over 75 years ago, a reindeer infected with anthrax died and its frozen carcass became trapped under a layer of frozen soil, known as permafrost. There it stayed until a heatwave in the summer of 2016, when the permafrost thawed. This exposed the reindeer corpse and released infectious anthrax into nearby water and soil, and then into the food supply. More than 2,000 reindeer grazing nearby became infected, which then led to the small number of human cases. The fear is that this will not be an isolated case.

Court ruling is a first step toward controlling air pollution from livestock farms -- Editor’s note: Most livestock farming in industrialized countries takes place on large enclosed farms, known in the United States as Concentrated Animal Feeding Operations (CAFOs), that house hundreds or thousands of animals. Many environmental and public health groups say CAFOs are major air and water polluters and should be regulated more stringently. Farmers and trade organizations typically respond that CAFOS already are adequately regulated and do not threaten nearby communities or the environment. On April 11, 2017, the U.S. Court of Appeals for the D.C. Circuit struck down a rule, issued by the Environmental Protection Agency in 2008, that exempted livestock farms from reporting hazardous air emissions from animal waste. Unless EPA appeals to the Supreme Court, these farms will have to report releases of substances such as ammonia and hydrogen sulfide starting later this year. For perspective on this decision and CAFO regulation, we offer views from three scholars who were not involved in the recent court case.

Monsanto PCBs May Leave Orca Pod 'Doomed to Extinction' - The Guardian reported last Tuesday that Lulu, the full-grown whale who died, "was a member of the UK's last resident pod and a postmortem also showed she had never produced a calf. The pollutants, called PCBs , are known to cause infertility and these latest findings add to strong evidence that the pod is doomed to extinction ." The levels of PCBs , or polychlorinated biphenyls, found in Lulu's blubber were "more than 100 times the 9mg/kg limit above which damage to the health of marine mammals is known to occur," the Guardian noted. Lulu had 950mg/kg in her blubber. The average orca in the North-Atlantic ocean has 150mg/kg. Polychlorinated biphenyls were first used in the 1930s until they were banned by the U.S. government in 1979. According to the Agency for Toxic Substances and Disease Registry (ATSDR), PCBs are synthetic organic chemicals found in "old fluorescent lighting fixtures, electrical devices or appliances containing PCB capacitors made before PCB use was stopped, old microscope oil and old hydraulic oil." When released into the environment, they take long periods of time to break down.  They have been found to cause damage to human health. As ATSDR notes, "Some studies in workers suggest that exposure to PCBs may also cause irritation of the nose and lungs, gastrointestinal discomfort, changes in the blood and liver and depression and fatigue."  "PCBs, which cause cancers and suppress the immune system, are especially harmful to top predators because they accumulate in fat up the food chain. Killer whales can live for many decades, meaning they can end up with very high levels of PCBs."

Monsanto Hires Internet Trolls to Cover Up Roundup’s Cancer Risk - Internet trolls, paid for by Monsanto , have been scouring the internet to hide the ugly truth about the herbicide Roundup and the dangers of glyphosate , while the chemical giant worked with government regulators to declare the product safe to use, even though it "probably" causes cancer. According to court documents, Monsanto hired third parties to search out negative comments about their products and counter them with pseudo-scientific research commissioned by the company itself. Mike Papantonio, of America's Lawyer, predicts that Monsanto will pay heavily in a jury trial and describes how the company even has trolled The Ring of Fire , while manipulating the U.S. Food and Drug Administration and the U.S. Environmental Protection Agency (EPA) . While Monsanto's despicable practices are nothing new, the latest round of accusations stem from new research confirming that chemicals in Roundup are carcinogenic. In March of 2015, the International Agency for Research on Cancer (IARC), an arm of the World Health Organization (WHO), declared that glyphosate , the key ingredient in the popular weed killer, "probably" causes non-Hodgkin's lymphoma, a form of cancer. Monsanto quickly attempted to discredit the report, demanding that the WHO explain their findings.  In the wake of that report, Monsanto stepped up their efforts to keep the public in the dark about the dangerous product. Dr. William Moar, a Monsanto executive, said at a conference in 2015 that the company had "an entire department" with the sole purpose of "debunking" science that threatened their bottom line, like the IARC report.

GMO Field Trials and the Deliberate Contamination Campaign - The British government has approved the Sainsbury lab’s application for open air field trials of GM potatoes which not only have not been subjected to controlled greenhouse tests but don’t yet even exist. As I wrote a few weeks ago, Sainsbury’s application for an as yet nonexistent product, and its invitation to the regulator to assure the public of the safety of this product which doesn’t yet exist, is the best commentary on the fact that everything the corporate system tells us about GMOs, in addition to being always a lie, is always a pure fabrication. The corporations and governments tout nothing but the idea of “GMOs” as such, while in reality the actual GM crops are always poorly-designed, shoddy, backward, failure-prone products. This is also the best commentary on the fact that field trials have no scientific basis or purpose, but rather are propaganda exercises. They propagate the fraud that GMOs are tested for environmental safety and agronomic performance when in reality the tests are designed to give no meaningful information on either of these, just as corporate feeding trials test nothing but industrial parameters irrelevant to food safety. Therefore field trials are designed to serve as propaganda vehicles. They’re meant to normalize the GMO ideology as such and to impress upon the people the sense of the alleged ubiquity and necessity of GMOs and the alleged inevitability of GMO domination. We see how GM field trials serve as a stage of the GM propaganda process just as they comprise a stage of the GM crop development process. We can sum up what we know:

Judge: EPA's Approval of Bee-Killing Pesticides Violated Federal Law -- A federal court has ruled that the U.S. Environmental Protection Agency (EPA) systematically violated the Endangered Species Act—a key wildlife protection law—when it approved bee-killing insecticides known as neonicotinoids . In a case ongoing for the last four years, brought by beekeepers, wildlife conservation groups and food safety and consumer advocates, Judge Maxine Chesney of the U.S. District Court for the Northern District of California held that EPA had unlawfully issued 59 pesticide registrations between 2007 and 2012 for a wide variety of agricultural, landscaping and ornamental uses. "This is a vital victory," George Kimbrell, Center for Food Safety legal director, said. "Science shows these toxic pesticides harm bees , endangered species and the broader environment. More than fifty years ago, Rachel Carson warned us to avoid such toxic chemicals, and the court's ruling may bring us one step closer to preventing another Silent Spring." Seeds coated with bee-killing neonicotinoid insecticides are now used on more than 150 million acres of U.S. corn, soybeans, cotton and other crops—totaling an area bigger than the state of California and Florida combined—the largest use of any insecticides in the country by far. Additional proceedings have been ordered to determine the correct remedy for EPA's legal violations, which may lead to cancelling the 59 pesticide products and registrations, including many seed coating insecticides approved for scores of different crop uses.

ChemChina clinches landmark $43 billion takeover of Syngenta | Reuters: ChemChina has won more than enough support from Syngenta shareholders to clinch its $43 billion takeover of the Swiss pesticides and seeds group, the two companies said on Friday. The deal, announced in February 2016, was prompted by China's desire to use Syngenta's portfolio of top-tier chemicals and patent-protected seeds to improve domestic agricultural output. It is China's biggest foreign takeover to date. It is one of several deals that are remaking the international market for agricultural chemicals, seeds and fertilisers. The other deals in the sector are a $130 billion proposed merger of Dow Chemical and DuPont, and Bayer's plan to merge with Monsanto. The trend toward market consolidation has triggered fears among farmers that the pipeline for new herbicides and pesticides might slow. Regulators have required some divestments as a condition for approving the Syngenta deal. Based on preliminary numbers, around 80.7 percent of Syngenta shares have been tendered, above the minimum threshold of 67 percent support, the partners said in a joint statement. The agreed offer is for $465 per share. Syngenta shares closed on Thursday at 459 Swiss francs ($464.5), and rose 0.4 percent in early trade on Friday to 461.20 francs. The transaction is set to close on May 18 after the start of an additional acceptance period for shareholders and payment of a special 5-franc dividend to holders of Swiss-listed shares on May 16. Holders of U.S.-listed depositor receipts will get the special dividend in July. Syngenta shares will be delisted from the Swiss bourse and its depository receipts from the New York Stock Exchange.

The Crop That Ate America - Farmers who had long rotated plantings among a diverse group of grains are increasingly turning to a single one. Corn has always been a mainstay of U.S. agriculture, but its increasing profitability has driven up corn's share of total production, while grains such as wheat, oats and sorghum have steadily fallen, according to a Bloomberg analysis of a half-century of crop data. This locks farmers, as well as machinery-makers including Deere & Co., to the rises and falls of one crop, as both domestic and export markets grow more and more tied to the dominant U.S. grain. That exposes farmers to greater volatility and greater trade risk if a major buyer, such as Mexico, were to decide to stop buying U.S. corn. Corn will make up 68 percent of this year’s projected harvest of major U.S. grains and oilseeds this year, according to data the U.S. Department of Agriculture released Wednesday. That’s up from 47 percent in 1968. New markets and technology have made corn more profitable compared to other crops, which is why longtime farmers once devoted to competitive grains have switched to the nation’s number-one source for biofuels and cattle feed.  Kevin Skunes currently raises about 55 percent corn, 45 percent soybeans. This constitutes a big change since Skunes was a child in the 1960s. Back then, the farm was about 2,000 acres of wheat, barley, sunflowers and soybeans, with no corn. Sunflowers disappeared in the 1980s. Skunes raised his last barley crop about 15 years ago, his last wheat about a dozen years ago. But corn’s spread is unstoppable, he said—the economic case remains too strong, even with prices now less than half what they were five years ago.

Edible insects could play key role in cutting harmful emissions -- Eating insects instead of beef could help tackle climate change by reducing harmful emissions linked to livestock production, research suggests. Replacing half of the meat eaten worldwide with crickets and mealworms would cut farmland use by a third, substantially reducing emissions of greenhouse gases, researchers say. While consumers' reluctance to eat insects may limit their consumption, even a small increase would bring benefits, the team says. This could potentially be achieved by using insects as ingredients in some pre-packaged foods. Using data collected primarily by the UN's Food and Agriculture Organization, scientists have compared the environmental impacts of conventional meat production with those of alternative sources of food. It is the first study to do so. Researchers at the University of Edinburgh and Scotland's Rural College considered a scenario in which half of the current mix of animal products is replaced by insects, lab-grown meat or imitation meat. They found that insects and imitation meat -- such as soybean-based foods like tofu -- are the most sustainable as they require the least land and energy to produce. Beef is by far the least sustainable, the team says. In contrast to previous studies, lab-grown meat was found to be no more sustainable than chicken or eggs, requiring an equivalent area of land but using more energy in production.The team says halving global consumption of animal products by eating more insects or imitation meat would free up 1680 million hectares of land -- 70 times the size of the UK. 

Near record amount of April showers drench US last month (AP) — That whole April showers thing went a bit overboard last month in the United States. The National Oceanic and Atmospheric Administration said Monday it was the second wettest April on record, averaging 3.43 inches for the nation, nearly an inch above the 20th century average. Only 1957 had more April rain. Records go back to 1895. Only 5 percent of the U.S. is in drought, the lowest drought footprint the 17-year-old U.S. Drought Monitor has recorded. NOAA calculates that 0.75 percent of the Lower 48 states are considered "very dry." NOAA climate scientist Jake Crouch said many storms kept chugging over the U.S. in April from the Pacific. Crouch said April fits global warming patterns of increasing heavy downpours interspersed with drought.

The injustice of Atlantic City’s floods - A driver plowed a sedan forcefully up Arizona Avenue, which had flooded to knee height during a winter storm as high tide approached. The wake from the passing Honda buffeted low brick fences lining the tidy homes of working-class residents of this failing casino city, pushing floodwaters into Eileen DeDomenicis’s living room. “It wasn’t bad when we first moved in here — the flooding wasn’t bad,” DeDomenicis said on a stormy morning in March, after helping her husband put furniture on blocks. “When somebody comes by in a car, it splashes up. It hits the door.” DeDomenicis has lived in this house since 1982, a few hundred feet from a bay. They’ve seen floods worsen as the seas have risen, as the land beneath them has sunk, and as local infrastructure has rotted away. “It comes in the front door, the back door, and then from the bottom of the house, in through the sides,” DeDomenicis said. “You watch it come in and it meets in the middle of the house — and there’s nothing you can do.” Two miles east of Arizona Avenue, the U.S. Army Corps of Engineers is spending tens of millions of dollars building a seawall to reduce storm surge and flooding risks for Atlantic City’s downtown and its towering casinos, five of which have closed in the past four years. A few miles in the other direction, it’s preparing to spend tens of millions more on sand dunes to protect million-dollar oceanfront homes. But the federal government has done little to protect the residents of Arizona Avenue, or the millions of other working class and poor Americans who live near bays up and down the East Coast, from a worsening flooding crisis. Seas are rising as pollution from fossil fuel burning, forest losses and farming fuels global warming, melting ice and expanding ocean water. With municipal budgets stretched thin, lower-income neighborhoods built on low-lying land are enduring some of the worst impacts. 

Blowing in the wind: why do so many cities have poor east ends? -  From London to Paris, New York to Helsinki, poverty tends to cluster in the east. One study suggests a surprising reason why. To be clear, the mystery is not why every city has its leafy and its grubby sections – it costs money to live in nice places and to avoid nasty ones, which tends to group people into them by wealth. The mystery is why the poor groups always end up in the east. Of course, the true picture is never neat nor simple, but by common consent a British-biased list of cities with poor eastern districts would include: London, Paris, New York, Toronto, Bristol, Manchester, Brighton and Hove, Oxford, Glasgow, Helsinki and Casablanca. No doubt there are some cities where poverty clusters in the west, but they seem harder to find; perhaps Delhi and Sydney? One theory is that it’s all about air pollution. In the middle latitudes where most of the world’s cities can be found, the prevailing winds are westerlies, which means they blow to the east. Crudely, it has long been thought that they might take smoke and odours with them, and now a new study by Stephan Heblich, Alex Trew and Yanos Zylberberg for the Spatial Economics Research Centre suggests this theory might be right.  “This anecdotal discussion about pollution in the centre of cities and smoke drifting to the east is something that we have been documenting very precisely,” Zylberberg tells me. “Basically what we’ve been seeing in the past, because of pollution and wind patterns, is rich people escaping the eastern parts of town, because they were very polluted.” For their research, published last November, Zylberberg and his colleagues built simulations of 70 British cities, including the sites of 5,000 industrial chimneys, as they would have been in 1880. Using mathematical models they claim to have been able to reconstruct the movement of air within the given topography and work out where the pollution would end up. They concluded that areas of high pollution were indeed more likely to become deprived areas, and found that they were generally in the east.

US drought at lowest level in nearly two decades - After years of intense, record-setting drought across the U.S., particularly in the Great Plains and California, the country is now experiencing its lowest level of drought in the 17 years since the U.S. Drought Monitor began its weekly updates. Less than 5 percent of the U.S. was in some stage of drought as of May 4, the most recent update, compared to the 65 percent mired in drought in September 2012. “I have been an author of the U.S. Drought Monitor since 2005 and we have had very few instances where there was so little drought, and to see the changes we have in the last year, especially out West, it does astonish me,” Brian Fuchs, of the U.S. Drought Mitigation Center, said in an email.  The last time drought levels across the country were this low was in July 2010, when 8 percent of the U.S. was in drought — then came a remarkable period of deep, damaging drought that led to billions in crop and livestock losses, spurred major water restrictions, and helped fuel terrible wildfires.

Swath of States Experiencing Hottest Year to Date - For a swath of states from New Mexico over to Florida and up to Ohio, 2017 has been the hottest year on record through April. For the Lower 48 as a whole, the year is the second warmest in records going back to 1895. Several states in the mid-Atlantic had their hottest April on record and a few Southeastern states were near-record warm, according to National Oceanic and Atmospheric Administration data released Monday.The average temperature for the contiguous U.S. through April was 43.7°F (6.5°C), 4.5°F (2.5°C) above the 20th century average, NOAA said. This put the four-month period behind only 2012, which saw major heat waves and drought across much of the central part of the nation.The exceptional heat of February is what’s keeping 2017 so high in the rankings, Jake Crouch, a NOAA climatologist, said in an email. With eight months left, though, it is unclear whether 2017 will stay warm enough to ultimately beat 2012 as the hottest calendar year for the Lower 48.“I think that the potential development of the El Niño and how the drought conditions expand or intensify going into summer will be the two things to watch on determining how warm 2017 ultimately ends up being,” Crouch said. The current forecast slightly favors the development of El Niño in late summer or fall.

The Glaciers are Going -- As can be seen above, the Waggonwaybreen glacier in Svalbard, Norway, has retreated substantially since 1900. Svalbard’s glaciers are not only retreating, they are also losing about two feet of their thickness each year. Glaciers around the world have retreated at unprecedented rates and some have disappeared altogether. The melting of glaciers will affect people around the world, their drinking water supplies, water needed to grow food and supply energy, as well as global sea levels. The Intergovernmental Panel on Climate Change estimates that around the world glaciers (excluding the Greenland and Antarctic ice sheets) will decrease in volume between 15 to 55 percent by 2100 even if we are able to limit global warming to under 2˚C; they could shrink up to 85 percent if warming increases much more. In Earth’s history, there have been at least five major ice ages, when long-term cooling of the planet resulted in the expansion of ice sheets and glaciers. Past ice ages have been naturally set off by a numerous factors, most importantly, changes in the Earth’s orbit around the sun (Milankovitch cycles) and shifting tectonic plate movements that affect wind and ocean currents. The mixture of gases in the atmosphere (such as carbon dioxide and methane) as well as solar and volcanic activity are also contributing factors. Today we are in a warm interval—an interglacial—between ice ages.   More than one-sixth of the world’s population, particularly in China, India and other Asian countries, live in the basins of glacier-fed rivers and depend on them for drinking and irrigation water. A glacier’s mass balance determines if it will advance or retreat. If the amount of snow and ice accumulated during winter is less than the melting that takes place in summer, the glacier is considered to have a negative mass balance and retreats. Today, nearly all glaciers have a negative mass balance due to global warming and changes in precipitation.

Going, Going, Gone: Only 26 Glaciers Left in Glacier National Park -- Warming temperatures have caused glaciers in Montana's iconic Glacier National Park to shrink an average of 39 percent over the past 50 years, with some glaciers losing 82 percent of their mass since 1966, according to the U.S. Geological Survey (USGS).   To be considered glaciers, ice masses must make up at least 25 acres, and USGS scientists say that warming has shrunk the park's 39 major glaciers so much that only 26 can technically still be considered glaciers. Only 26 of 150 glaciers that existed in the late 19th century remain in the park.  "These glaciers are instrumental in maintaining cold water for certain aquatic organisms. The safety net will be gone for those organisms," lead USGS scientist Daniel Fagre told InsideClimate News . "It's an early warning signal of broader ecosystem change. Clearly, the park is not going to have these glaciers past a few more decades."

Oxygen Levels in Oceans Plummet as Planet Warms - U.S. scientists who have been warning that warmer oceans are more likely to be poorer in dissolved oxygen have now sounded the alarm: ocean oxygen levels are indeed falling , and seemingly falling faster than the corresponding rise in water temperature.  In 2013, an international consortium of marine scientists warned that oxygen levels in the oceans could fall by between one percent and seven percent by the century's end. And this could, other scientists predicted, lead to what they politely called " respiratory stress " for some marine life.  Ocean ecologists in the U.S. and Germany warned last year that parts of the deep oceans were already showing signs of oxygen deprivation with corresponding dead zones.  Earlier this year, another research group looked at the computer simulations for the years 1920 to 2100 and predicted that the hazards were likely to increase with warming. Now the team has returned to the issue. They report in Geophysical Research Letters that they looked at data for the last 50 years and found the oxygen levels started dropping in the 1980s, as ocean temperatures began to climb—and falling unexpectedly rapidly. "The trend of oxygen falling is about two to three times faster than what we predicted from the decrease of solubility associated with ocean warming," said Takamitsu Ito , of the School of Earth and Atmospheric Sciences at the Georgia Institute of Technology, who led the study. "This is most likely due to the changes in ocean circulation and mixing associated with the heating of the near-surface waters and the melting of polar ice."  The sea's oxygen content comes from air absorbed at the surface or released by phytoplankton photosynthesis, and carried deeper by ocean currents. But as water warms it becomes more buoyant, which means mixing with cooler subsurface waters becomes less likely. And melting ice delivers more fresh water to the ocean surface, which also interferes with the pattern of circulation.

Climate science: Bad news gets worse - As UN negotiators meet in Bonn to thrash out rules for implementing the climate-rescue Paris Agreement, the stakes have never been higher.Following are some key climate measures that illustrate the risks of global warming. In 2016, Earth's average surface temperature hit a record level for the third consecutive year since records began in 1880.The global average temperature was about 1.1 degree Celsius (1.98 Fahrenheit) over pre-industrial levels, and about 0.06 C above the previous record set in 2015, according to the World Meteorological Organization (WMO). The 21st century has already seen 16 of the 17 hottest years on record.Arctic summer sea ice shrank to 4.14 million square kilometres (1.6 million square miles) in 2016 -- the second-lowest after 2012 when it reached 3.39 million km2.The Arctic Ocean could be ice free in summer as early as 2030.In parts of Arctic Russia, temperatures were 6 C to 7 C higher than the long-term average.On the other extreme of the world, Antarctica, sea ice hit its lowest extent ever recorded by satellites at the end of summer. High-altitude glaciers, meanwhile, declined in surface area in 2015 for the 36th year in a row. The atmospheric concentrations of the three most potent greenhouse gases -- carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O) -- all hit new highs in 2016. Sea level rise, caused when ice melts and warmer water expands, continued and appeared to be accelerating, according to a recent report.The average ocean level was 70 millimetres (2.75 inches) higher in 2015 than the 1993 water mark, having risen as much as 30 percent faster in the ten years to 2015 than in the previous decade. The pace is likely to pick up further as ice sheets and glaciers shed mass, threatening the homes and livelihoods of tens of millions of people in low-lying areas around the world.

CO2 Emissions Soar as Alaska Heats Up - The Alaskan tundra is releasing an increasingly large amount of CO2 due to a warmer climate, new research shows. A study published in the Proceedings of the National Academy of Sciences found that CO2 emitted from the tundra between October and December of each year increased more than 70 percent from 1975 to 2015, likely influenced by season creep and increasingly warmer winters. "There is a lot of potential CO2 from these soils, which worries people," lead author Roisin Commane told the Guardian. "We'd prefer the carbon stays there." The study suggested that the tundra's emissions of CO2 have become greater than its uptake during the spring and summer growing season.  "Tundra soils appear to be acting as an amplifier of climate change ," co-author Steve Wofsy, a Harvard atmospheric scientist, said in a statement issued by NASA. "We need to carefully monitor what it's doing up there, even late in the year when everything looks frozen and dormant."

‘We all knew this was coming’: Alaska’s thawing soils are now pouring carbon dioxide into the air - Even as the Trump administration weighs withdrawing the United States from the Paris climate agreement, a new scientific paper has documented growing fluxes of greenhouse gases streaming into the air from the Alaskan tundra, a long-feared occurrence that could worsen climate change. The new study, published in the Proceedings of the National Academy of Sciences, suggests that frozen northern soils — often called permafrost — are unleashing an increasing amount of carbon dioxide into the air as they thaw in summer or subsequently fail to refreeze as they once did, particularly in late fall and early winter. “Over a large area, we’re seeing a substantial increase in the amount of CO2 that’s coming out in the fall,” said Roisin Commane, a Harvard atmospheric scientist who is the lead author of the study. The research was published by 19 authors from a variety of institutions, including NASA’s Jet Propulsion Laboratory and the National Oceanic and Atmospheric Administration.  The study, based on aircraft measurements of carbon dioxide and methane and tower measurements from Barrow, Alaska, found that from 2012 through 2014, the state emitted the equivalent of 220 million tons of carbon dioxide gas into the atmosphere from biological sources (the figure excludes fossil fuel burning and wildfires). That’s an amount comparable to all the emissions from the U.S. commercial sector in a single year.  The chief reason for the greater CO2 release was that as Alaska has warmed up, emissions from once frozen tundra in winter are increasing — presumably because the ground is not refreezing as quickly. “The soils are warmer deeper, and as they freeze in the fall, the temperature of every soil depth has to come to zero before they hard freeze,” Commane said. “The temperature has to come to zero and equilibrate, for the soils to freeze hard through. And through that whole period you have emissions because the microbe are active.” In particular, the research found that since 1975, there has been a 73.4 percent increase in the amount of carbon lost from the Alaskan tundra in the months of October through December as the climate warmed steadily.

Joe Romm: Carbon pollution is suffocating ocean life and speeding up the next mass extinction - Depletion of dissolved oxygen in our oceans, which can cause dead zones, is occurring much faster than expected, a new study finds. And by combining oxygen loss with ever-worsening ocean warming and acidification, humans are re-creating the conditions that led to the worst-ever extinction, which killed over 90% of marine life 252 million years ago. Researchers at Georgia Institute of Technology reviewed ocean data going back to 1958 and “found that oxygen levels started dropping in the 1980s as ocean temperatures began to climb.” Scientists have long predicted that as carbon pollution warms the globe, the amount of oxygen in our oceans would drop, since warmer water can’t hold as much dissolved gas as colder water. And, Georgia Tech researchers point out, falling oxygen levels have recently led to more frequent low-oxygen events that “killed or displaced populations of fish, crabs and many other organisms.”But what is especially worrisome about this new research is how quickly it is happening. “The trend of oxygen falling is about two to three times faster than what we predicted from the decrease of solubility associated with the ocean warming,” said lead researcher Prof. Taka Ito. “This is most likely due to the changes in ocean circulation and mixing associated with the heating of the near-surface waters and melting of polar ice.” Global warming drives ocean stratification — the separation of the ocean into relatively distinct layers. This in turn speeds up oxygen loss, as explained in this 2015 video. A 2011 study, “Rapid expansion of oceanic anoxia immediately before the end-Permian mass extinction,” found that rapid and widespread anoxia (absence of oxygen) preceded “the largest mass extinction in Earth history, with the demise of an estimated 90 percent of all marine species.”

Logging plays bigger climate change role than US acknowledges, report says  - The U.S. has consistently underestimated the impact that logging has on accelerating climate change and the role that preserving its forests can play in sucking carbon out of the atmosphere. That's the conclusion of a new report that also seeks to rebut the notion that burning wood is a "carbon neutral" alternative to burning coal and oil for electricity. Published by the Dogwood Alliance, a North Carolina-based forest conservation group, the report argues that the U.S. has placed too much emphasis on protecting the world's tropical forests, while ignoring the logging industry's impact on greenhouse gases released from cutting its own natural woodlands, especially older forests. "The U.S. has just failed to acknowledge the role that the logging industry has played in the climate crisis, and has failed to embrace the need to restore old growth, intact forests across the U.S. as a critical piece of the puzzle in solving the climate crisis," said Danna Smith, a co-author of the report. The report comes as the issue of burning wood for energy is getting fresh attention in Washington. This week, Congress, backed by the logging industry, included language in its budget deal that would declare the burning of woody biomass for electricity "carbon neutral," sparking the latest controversy in a long-running debate. "We can't log our way out of climate change," said Kirin Kennedy, associate legislative director for lands at wildlife at the Sierra Club. "Burning wood products actually contributes more toward the increase of emissions into the atmosphere." Smith calculated that annual carbon emissions from logging in the U.S. between 2006 and 2010 amounted to nearly 600 million metric tons, more than the emissions produced each year by all residential and commercial buildings. Smith, agreeing with most climate scientists, said there's little chance of meeting the ambitious target set under the Paris climate agreement of limiting global temperature increases to 1.5 degrees without negative emissions or removing CO2 from the air. "At this point, the best technology we have—the most highly evolved, tried and true—is forests," she said.

 Negative emissions tech: can more trees, carbon capture or biochar solve our CO2 problem? -- In the 2015 Paris climate agreement, 195 nations committed to limit global warming to two degrees above pre-industrial levels. But some, like Eelco Rohling, professor of ocean and climate change at the Australian National University’s research school of earth sciences, now argue that this target cannot be achieved unless ways to remove huge amounts of carbon dioxide from the atmosphere are found, and emissions are slashed. This is where negative emissions technologies come in. The term covers everything from reforestation projects to seeding the stratosphere with sulphates or fertilising the ocean with iron fillings. It’s controversial – not least because of the chequered history of geoengineering-type projects, but also because of concerns it will grant governments and industry a licence to continue with business as usual. But many argue we no longer have a choice. “Most things are not applied yet on larger scales but we have a pretty good feeling of things that will work and we can quantify roughly how much carbon we should be able to remove from the atmosphere with them,” says Rohling.  The scale of the task is staggering, says Dr Pep Canadell, from the global carbon project at CSIRO.  “The models are basically asking for removing carbon dioxide from the atmosphere which will be equivalent of one-quarter of all carbon emissions at present,” he says. This amounts to about 10 billion tonnes of carbon dioxide removed from the atmosphere and disposed of each year.  The least controversial method of doing this is deceptively simple: plant more trees. “We have lost a lot of density of carbon in the landscapes because of deforestation and degradation. We have depleted carbon in the soils in all the problem areas of the world,” Canadell says. “What are the opportunities to bring some of this carbon back?” “We would need as many as three Indias worth of land globally – and good quality land, not marginal land,” Canadell says. Reforestation also needs enough water, and needs to be done in such a way that it enriches the soil and ecosystems, not deplete them.

Large historical growth in global terrestrial gross primary production - Growth in terrestrial gross primary production (GPP)—the amount of carbon dioxide that is ‘fixed’ into organic material through the photosynthesis of land plants—may provide a negative feedback for climate change1, 2. It remains uncertain, however, to what extent biogeochemical processes can suppress global GPP growth3. As a consequence, modelling estimates of terrestrial carbon storage, and of feedbacks between the carbon cycle and climate, remain poorly constrained4. Here we present a global, measurement-based estimate of GPP growth during the twentieth century that is based on long-term atmospheric carbonyl sulfide (COS) records, derived from ice-core, firn and ambient air samples5. We interpret these records using a model that simulates changes in COS concentration according to changes in its sources and sinks—including a large sink that is related to GPP. We find that the observation-based COS record is most consistent with simulations of climate and the carbon cycle that assume large GPP growth during the twentieth century (31% ± 5% growth; mean ± 95% confidence interval). Although this COS analysis does not directly constrain models of future GPP growth, it does provide a global-scale benchmark for historical carbon-cycle simulations.

No country on Earth is taking the 2 degree climate target seriously – Dave Roberts - One of the morbidly fascinating aspects of climate change is how much cognitive dissonance it generates, in individuals and nations alike. The more you understand the brutal logic of climate change — what it could mean, the effort necessary to forestall it — the more the intensity of the situation seems out of whack with the workaday routines of day-to-day life. It’s a species-level emergency, but almost no one is acting like it is. And it’s very, very difficult to be the only one acting like there’s an emergency, especially when the emergency is abstract and science-derived, grasped primarily by the intellect. This psychological schism is true for individuals, and it’s true for nations. Take the Paris climate agreement.In Paris, in 2015, the countries of the world agreed (again) on the moral imperative to hold the rise in global average temperature to under 2 degrees Celsius, and to pursue "efforts to limit the temperature increase to 1.5 degrees." To date, 62 countries, including the United States, China, and India, have ratified the agreement. Are any of the countries that signed the Paris agreement taking the actions necessary to achieve that target? No. The US is not. Nor is the world as a whole.The actions necessary to hold to 2 degrees, much less 1.5 degrees, are simply outside the bounds of conventional politics in most countries. Anyone who proposed them would sound crazy, like they were proposing, I don’t know, a war or something.So we say 2 degrees is unacceptable. But we don’t act like it is.This cognitive dissonance is brought home yet again in a report published in October from Oil Change International (in collaboration with a bunch of green groups). It’s about fossil fuels and how much of them we can afford to dig up and burn, if we’re serious about what we said in Paris. It’s mostly simple math, but the implications are vast and unsettling. Let’s start from the beginning.

Earth could break through a major climate threshold in the next 15 years, scientists warn -- Global temperatures could exceed 1.5 degrees Celsius above their preindustrial levels within the next 15 years, according to a new scientific study, crossing the first threshold under the Paris climate agreement and placing the world at a potentially dangerous level of climate change. The study focuses on a natural planetary system known as the Interdecadal Pacific Oscillation, or IPO (it’s also sometimes referred to as the Pacific Decadal Oscillation). It’s an alternating pattern of ocean temperatures that shifts periodically between warm and cool phases, helping to drive temperature and weather patterns all over the world. During cool, or “negative,” phases, tropical regions of the Pacific Ocean tend to be colder, and the global mean temperature is lower. The system is similar to the El Niño/La Niña cycle, the major difference being that phases of the IPO tend to last much longer — sometimes a decade or more. The phenomenon is believed to be a natural form of climate variability unrelated to human-caused climate change, although it does have the potential to influence the progression of global warming. For most of the 2000s, the IPO has been in a negative phase, and scientists think its cooling effect has helped to slightly offset the effect of climate change, an explanation for the so-called global warming pause in the first part of the 21st century.  Many scientists believe that the planet is now transitioning back into a positive, or warm, phase, which could amplify, rather than offset, human-caused climate warming. This means we could reach milestone temperature thresholds faster than we would if the IPO had remained in its negative phase.  That’s the conclusion of the new study, written by Henley and Andrew King of the University of Melbourne. Using model projections of future climate warming under a business-as-usual scenario, they suggest that the Earth could hit the 1.5-degree temperature threshold as early as 2025, while the continuation of the negative phase probably would delay this event until after 2030.

Why Canada secretly loves climate change -- It's a Canadian tradition: on the first day of spring that actually feels a bit like spring, we pile out of our homes in T-shirts, desperate to feel the sun on our hibernated skin, even if we can still see our breath. Here's a modern spin on the tradition: that day now comes in January instead of May. On a freakishly warm (and increasingly common) winter day this year, I found myself walking the streets of downtown Saskatoon. Every happy soul I walked past was wearing light attire and a bewildered grin. I had different versions of the following exchange with at least three strangers:

  • "Crazy weather, huh?"
  • "Oh, yeah. If this is global warming.....I'll take it!" (wink optional)

Here's our secret: Canadians love climate change. Our climate is miserable, so why wouldn't we want to change it? It's not something we like to talk about. After all, we Canadians pride ourselves on our image as a uniquely progressive nation, a neutral helper to less fortunate countries. And our environment — our majestic woodlands and our rugged rocky mountains — is a big part of the brand.  This puts us in an awkward position, because we are one of the few places on Earth that stands to gain tremendously from global warming.

 Why is the Arctic melting faster than the Antarctic? -- First, the bad news: The Arctic is melting much faster than expected, and could even be ice-free in summer by the late 2030s, a report from the Arctic Council's Arctic Monitoring and Assessment Program suggests. Previous studies had forecast an ice-free North Pole in summer by mid-century. While the outlook is bleak for the Arctic, there is a silver lining for the Antarctic: The ice is melting at a slower rate than previously thought. Although glacier flow has increased since the 1990s, scientists from University of Leeds have found the melting rate to be only around a third of what was previously projected. But the Antarctic is still melting. And a rapidly advancing crack in its fourth-largest ice shelf could soon see the largest icebergs ever recorded in human history break off into the sea.  The Arctic and Antarctic are far from "polar opposites" in the sense that ice at both is melting away in the face of climate change. But why are the Arctic and Antarctic melting at such a different pace? The Arctic is a semi-enclosed ocean and almost completely surrounded by land. This means there is not much space for ice to float around. As a result, ice floes frequently bump into each other and pile up into thick ridges. Arctic ice is thicker, and stays frozen longer during summer. In winter, the sea ice covers up to 15 million square kilometers (6 million square miles), and 7 million square kilometers remain at the end of the summer melt season. The Antarctic is almost the geographic opposite of the Arctic - not just because it's on the other side of the world. The Antarctic consists of land surrounded by an ocean. The sea ice is free to move, and often floats northward into warmer waters where it eventually melts during the southern hemisphere's summer months. In the Antarctic, almost all of the sea ice that forms during winter melts during summer. In the colder months, up to 18 million square kilometers (7 million square miles) of ocean is covered by sea ice, but by the end of the summer, only about 3 million square kilometers of sea ice remains.

Interior removes melting glaciers, wildfires from its website --  The Interior Department has removed from its website sections describing agency efforts to mitigate and manage climate change, an environmental watchdog said.

27 national monuments may have protections cut or curtailed under Trump’s review -- Twenty-seven national monuments, mostly in the West, face the curtailing or elimination of protections put in place over the past two decades by presidents from both parties, the Interior Department said. President Donald Trump ordered the review last month, saying protections imposed by his three immediate predecessors amounted to "a massive federal land grab" that "should never have happened." A list released Friday includes 22 monuments on federal land in 11, mostly Western states, including Bears Ears and Grand Staircase-Escalante in Utah, Nevada's Basin and Range and Katahdin Woods and Waters in Maine. The review also targets five marine monuments in the Atlantic and Pacific Oceans, including a huge reserve in Hawaii established in 2006 by President George W. Bush and expanded last year by President Barack Obama.  Bush, Obama and Bill Clinton were among a host of presidents who protected hundreds of millions of acres under a 1906 law that authorizes the president to declare federal lands and waters as monuments and restrict their use.Trump said the protections imposed by his predecessors "unilaterally put millions of acres of land and water under strict federal control, eliminating the ability of the people who actually live in those states to decide how best to use that land." The land-controls have "gotten worse and worse and worse, and now we're going to free it up, which is what should have happened in the first place," Trump said at a signing ceremony marking the executive order.  Trump accused Obama in particular of exploiting the 1906 Antiquities Act in an "egregious abuse of federal power," adding that he was giving power "back to the states and to the people, where it belongs."

DOE freezes millions in high-tech energy grants and gags staff -- The Department of Energy (DOE) has stopped processing the paperwork on tens of millions of dollars in research that its Advanced Research Projects Agency-Energy (ARPA-E) has agreed to fund. DOE officials aren't saying why they have taken this unusual step, dubbed a “no-contract action.” It went into effect in April and affects more than a dozen projects across four new ARPA-E programs. The move, first reported by Politico Pro, includes a gag order on ARPA-E program managers, leaving investigators in the dark about the status of their grants. The resulting uncertainty is having a devastating impact on research teams, scientists say, and even threatens the viability of small companies for whom these major awards are so important. Representative Eddie Bernice Johnson (D–TX), the top Democrat on the science committee of the U.S. House of Representatives, is concerned that the apparent contracting freeze might violate federal laws requiring agencies to spend appropriations from Congress—in this case, the $291 million that ARPA-E received for the 2016 fiscal year that ended last September. On Wednesday she wrote to DOE Secretary Rick Perry reminding him that “diversion or impoundment of this money would be contrary to law” and asking him whether the agency “is currently subject to a ‘no-contract action’ or similar action and, if so what the parameters are.”  The move may also be hindering research projects already underway. There are reports that DOE is refusing to respond to requests from grantees for routine adjustments in their current projects, which require the agency’s approval. These so-called “no cost” extensions can cover the inevitable delays and complications that accompany the type of risky research ARPA-E likes to fund, or greenlight new research thrusts that don’t require additional funding.

E.P.A. Dismisses Members of Major Scientific Review Board - NYT— The Environmental Protection Agency has dismissed at least five members of a major scientific review board, the latest signal of what critics call a campaign by the Trump administration to shrink the agency’s regulatory reach by reducing the role of academic research. A spokesman for the E.P.A. administrator, Scott Pruitt, said he would consider replacing the academic scientists with representatives from industries whose pollution the agency is supposed to regulate, as part of the wide net it plans to cast. “The administrator believes we should have people on this board who understand the impact of regulations on the regulated community,” said the spokesman, J. P. Freire. The dismissals on Friday came about six weeks after the House passed a bill aimed at changing the composition of another E.P.A. scientific review board to include more representation from the corporate world. President Trump has directed Mr. Pruitt to radically remake the E.P.A., pushing for deep cuts in its budget — including a 40 percent reduction for its main scientific branch — and instructing him to roll back major Obama-era regulations on climate change and clean water protection. In recent weeks, the agency has removed some scientific data on climate change from its websites, and Mr. Pruitt has publicly questioned the established science of human-caused climate change. In his first outings as E.P.A. administrator, Mr. Pruitt has made a point of visiting coal mines and pledging that his agency will seek to restore that industry, even though many members of both of the E.P.A.’s scientific advisory boards have historically recommended stringent constraints on coal pollution to combat climate change. “We want to expand the pool of applicants” for the scientific board, he said, “to as broad a range as possible, to include universities that aren’t typically represented and issues that aren’t typically represented.” Some who opposed the dismissals denounced them as part of a broader push by the E.P.A. to downgrade science and elevate business interests.

EPA Fires Scientists -- The U.S. Environmental Protection Agency ( EPA ) cleaned house on its scientific review board last week, dismissing at least five scientists on its 18-member Board of Scientific Counselors.   The scientists, including professors of natural resource sociology, told multiple outlets they were surprised to receive notices that they would not be asked to renew their tenure on the board, especially after being assured in January that they would retain their positions through the new administration .  A spokesperson for EPA Administrator Scott Pruitt told the New York Times that the agency was considering filling the vacancies with representatives from industry the EPA regulates, in order to include members who "understand the impact of regulations on the regulated community."  Concerned current board members told the Times that the dismissals could be seen as a "test balloon" for further political moves against science.   Robert Richardson, an ecological economist at Michigan State University and one of those dismissed, said, the cuts "just came out of nowhere."  "The role that science has played in the agency in the past, this step is a significant step in a different direction," he said. "Anecdotally, based on what we know about the administrator, I think it will be science that will appear to be friendlier to industry, the fossil fuel industry, the chemical industry, and I think it will be science that marginalizes climate change science." Ken Kimmell, president of the Union of Concerned Scientists , said that the dismal of the scientists "is completely part of a multifaceted effort to get science out of the way of a deregulation agenda."

Scott Pruitt removes scientists from EPA advisory panels to make room for industry advocates - The Environmental Protection Agency has started notifying members of a scientific review board that their terms as EPA advisers would not be renewed, a move experts in the field are calling unprecedented. Scientists who serve on advisory boards at the EPA and other federal agencies typically are allowed to serve two full terms. But late last week the agency, under the leadership of administrator Scott Pruitt, informed several scientists on its 18-member Board of Scientific Counselors that they would not be permitted to serve a second term.Robert Richardson, an ecological economist and an associate professor at Michigan State University’s Department of Community Sustainability, said that in almost all cases, scientists are re-appointed for a second three-year term. In January, Richardson was told that he and the other eight members of the panel who were nearing the end of their first term would have their positions extended for a second term.  “But on Friday, at 6:20 p.m., I received an email saying, ‘We’ve submitted paperwork to request that your appointment be renewed. However, the agency has decided not to renew your appointment,’” Richardson told ThinkProgress.  Pruitt reportedly plans to consider replacing the academic scientists with representatives from industries that the agency is required to regulate. Scientists see potential harm in allocating a certain number advisory panel seats to industry scientists. “Frankly, it represents a fundamental misunderstanding of what the Board of Scientific Counselors does,” Richardson said. “I’ve seen quotes from EPA spokespersons that have said that we need a different mix on this board because they have a heavy hand in approving regulations.” But members of the advisory panels have no authority in approving regulations, don’t review regulations, and don’t make recommendations with regard to regulations, Richardson explained.

 EPA fires members of science advisory board | Science | AAAS: The U.S. Environmental Protection Agency (EPA) fired members of a scientific advisory board yesterday.The agency quietly forced out some members of the Board of Scientific Counselors just weeks after leaders told them their tenure would be renewed, said Robert Richardson, an ecological economist at Michigan State University and one of those dismissed.The board is tasked with reviewing the work of EPA scientists and provides feedback that can be a powerful voice in shaping the agency's future research. The cuts "just came out of nowhere," Richardson said."The role that science has played in the agency in the past, this step is a significant step in a different direction," he said today. "Anecdotally, based on what we know about the administrator, I think it will be science that will appear to be friendlier to industry, the fossil fuel industry, the chemical industry, and I think it will be science that marginalizes climate change science."EPA did not immediately respond to a request for comment.There are two main science advisory boards at EPA, both of which can hold significant sway over policy and regulation. The Trump administration has proposed a major weakening of both.Earlier this year, the White House proposed slashing funding for the Science Advisory Board by 84 percent. Such a cut would essentially cripple the work of the 47-member board of outside scholars.House Republicans have passed legislation to reform the Science Advisory Board, a move critics say is designed to increase the voice of industry in rulemaking. That bill is still awaiting Senate approval.

EPA Puts Politics Over Science  Union Of Concerned Scientists -  On Friday, Scott Pruitt's Environmental Protection Agency (EPA) failed to renew nine members on the Board of Scientific Counselors (BOSC), the advisory committee that reviews the work of scientists within the EPA's Office of Research and Development (ORD) on everything from chemical safety to air pollution to fracking . Despite being told that their positions were being renewed, an EPA spokesman has confirmed that the academics may instead be replaced with industry experts who better "understand the impact of regulations on the regulated community."  Science advice to agencies should be independent. This helps federal agencies make science-based decisions that keep us safe and healthy. But often this advice from scientists, which is based on objective reviews of the best available science, often doesn't provide corporations with their ideal policy prescriptions.  Since this administration has illustrated time and time again its willingness to do industry's bidding , political appointees at agencies are delaying and disrupting the way that these committees are supposed to work: independently and transparently with the public's best interests at the heart of all evaluations. To be clear, committee members are selected based on scientific merit, not political positions. According to a 2013 solicitation for committee members , the way that nominees are evaluated is based on the following:

  • (a) Scientific and/or technical expertise, knowledge, and experience;
  • (b) availability to serve and willingness to commit time to the committee (approximately one to three meetings per year including both face-to-face meetings and teleconferences);
  • (c) absence of financial conflicts of interest;
  • (d) absence of an appearance of a lack of impartiality;
  • (e) skills working on committees and advisory panels; and
  • (f) background and experiences that would contribute to the diversity of viewpoints on the committee/subcommittees, e.g., workforce sector; geographical location; social, cultural, and educational backgrounds; and professional affiliations.

Note that members of the committee must have an "absence" of conflicts of interest , not just a minimization of them. This language will be important to watch as the EPA puts out a call for nominations in the coming months to fill the 13 slots now sitting empty on the committee. Independent science advice must be free from undue political or financial pressure. While the advice coming from scientific advisory committees are not the only consideration for policy makers, the relied-upon science must be objective and independent in order to advance the government policies that best protect our health and safety.

 The US Environmental Protection Agency is slowly turning its back on everything it was set up to protect -  In a move sure to enrage environmentalists, the newly installed head of the US Environmental Protection Agency (EPA), Scott Pruitt, dismissed 12 scientists from a major scientific review board, and is looking to replace them with members who come from industries whose pollution the agency is supposed to regulate.“The administrator believes we should have people on this board who understand the impact of regulations on the regulated community,” an agency spokesman told the New York Times (paywall).Is this an earnest move to curtail the EPA’s overreach, as Pruitt puts it? Or is it more akin to appointing judges who were once thieves, because they better understand the impact of sentences on the sentenced community?Consider some of the EPA’s other actions since Donald Trump became president. Days after Trump’s inauguration, EPA employees were told to stop publicizing taxpayer-funded science. After Pruitt took over, he removed “science” from the mission statement of the agency’s Office of Science and Technology. He scrubbed a climate-science site from public view after two decades of the EPA hosting it online. Pruitt also dismisses more than 100 years of science when he says that he doesn’t believe that carbon dioxide is the primary driver of global warming. As attorney general of Oklahoma, Pruitt was a fierce critic of the EPA and a reliable ally of oil companies lobbying for looser emissions rules. “No one was fired,” an EPA spokesman said. “These folks were appointed for three-year terms, they’re not guaranteed a second three-year term.”    But that’s not how the members of the board took it. Robert Richardson, a researcher at Michigan State University and who was among those removed, told E&E News that the dismissals “just came out of nowhere.”

U.S. environmental chief to recuse himself from court cases | Reuters: U.S. Environmental Protection Agency chief Scott Pruitt has recused himself from several court cases that he pursued against the agency when he was Oklahoma attorney general, according to a recusal statement. Pruitt, who had sued the environmental agency more than a dozen times when he was the oil- and gas-producing state's top legal officer, had pledged during his Senate confirmation that he would step aside from ongoing cases if the agency's ethics panel required it. Environmental groups have contended that his litigation as Oklahoma attorney general may have been influenced by energy companies and industry groups that contributed to his election campaigns. "This recusal statement addresses all of my ethics obligations," Pruitt said in the four-page statement, which was dated May 4. It was first reported by the E&E News website, which obtained the statement under the Freedom of Information Act. Pruitt said he would not participate for one year after his Senate confirmation in matters involving four parties. They include Oklahoma and the Rule of Law Defense Fund, a public policy group involving Republican attorneys general that targeted environmental rules. Pruitt also recused himself from a dozen pending cases involving the EPA. They include lawsuits over the Clean Power Plan and cases in both federal appeals and district courts over the Clean Water Act, which expanded the number of federally protected waterways.

Trump's EPA Just Revived Controversial Pebble Mine -- Friday the U.S. Environmental Protection Agency (EPA) settled a lawsuit with Northern Dynasty Minerals—the Canadian junior mining company behind the proposed Pebble Mine in Bristol Bay, Alaska. The settlement has not yet been filed with the court, but according to EPA and Northern Dynasty press releases it will shelve an Obama-era Proposed Determination to protect Bristol Bay. EPA agrees it will start the process of withdrawing its Proposed Determination and Northern Dynasty Minerals agrees to dismiss the lawsuit.  EPA Administer Scott Pruitt claims the settlement is about providing Pebble a "fair process," but in reality it's putting Pebble Mine first and Bristol Bay second. If he is really serious about "listening to all voices as this process unfolds," then it's time to listen to what the people of Alaska and Bristol Bay want. Spoiler alert: They do not want the Pebble Mine. More than 65 percent of Alaskans , 80 percent of Bristol Bay residents and Native communities, and 85 percent of commercial fishermen oppose the mine.

EPA head says he wants to ‘prioritize’ Superfund cleanups -  Environmental Protection Agency Administrator Scott Pruitt says he plans to prioritize the agency’s Superfund cleanups, even as the Trump administration seeks deep cuts to the program responsible for restoring the nation’s most polluted sites.In a memo to EPA staffers this week, Pruitt wrote that Superfund cleanup efforts “will be restored to their rightful place at the center of the agency’s core mission.” He made clear that he would be more involved in signing off on remediation efforts around the country, particularly on the largest cleanups, those estimated to cost $50 million or more.“We will be more hands-on to ensure proper oversight and attention to the Superfund program at the highest levels of the agency, and to create consistency across states,” Pruitt said in a statement Wednesday. While the memo does not detail any wholesale changes — the head of the EPA has always had ultimate authority over Superfund site decisions — the agency asserted with the statement that until recently “this authority had been delegated many layers into the bureaucracy, resulting in confusion among stakeholders and delayed revitalization efforts. Putting the decision of how to clean up the sites directly into the hands of the administrator will help revitalize contaminated sites faster.”  That remains to be seen, of course.

Inside the White House war over the Paris climate treaty   -- Like Jean Valjean in the sewers, the White House is racing to elude the authorities of Paris, the city that gave its name to the binding 2015 treaty enlisting all nations to address the world's climate change crisis. Put simply, President Donald Trump faces a choice between two routes—one marked rejection, the other revision—as he seeks to fulfill his campaign pledge to "cancel" the treaty. That he has this choice stems from two competing impulses that shaped the text of the Paris climate agreement as nations sought to make it both effective and flexible. The delicate balance they struck was to make the document binding but not compulsory, ambitious but not rigid. Now, that compromise is being manipulated by two factions, the rejectionists and the revisionists, inside the White House. Does the agreement attach Houdini-proof manacles on countries? Leave. Or is it essentially voluntary, inviting all but entrapping none? Stay. How Trump views it may help him decide whether he needs what Secretary of State Rex Tillerson dubbed "a seat at the table'' in order to satisfy the president's America-first instincts. Here are questions and answers about the unfolding debate, based on interviews with insiders and well-informed outsiders.

White House postpones meeting to decide on participation in Paris climate pact | Reuters: A meeting of Trump administration advisers that had been scheduled for Tuesday to decide whether to pull the United States out of the Paris Climate Agreement has been postponed due to scheduling conflicts, a White House official said. Key advisers to President Donald Trump and cabinet officials were due to convene at the White House to resolve an internal debate over whether Trump should keep his campaign promise to pull the United States out of the Paris agreement, according to senior administration officials and several people briefed on the meeting. The White House official did not say when the meeting would be rescheduled. The meeting was meant to lay the groundwork for a formal proposal to Trump, who has promised to announce a decision before a Group of Seven summit at the end of May. Ahead of Tuesday's originally planned meeting, business groups and some lawmakers called on the White House to remain in the Paris agreement, while some conservative policy groups urged the advisers to recommend a withdrawal. Meanwhile, representatives of nearly 200 countries that are party to the Paris agreement are meeting in Bonn this week to discuss technical aspects of implementing the accord.

White House advisers postpone Paris climate deal meeting - POLITICO: A key meeting of White House advisers to discuss the Paris climate change agreement won't happen Tuesday as planned. A source familiar with the issue told POLITICO late Monday night that the meeting has been postponed. A White House spokeswoman confirmed that the meeting is being rescheduled. It's unclear when that will occur. It is the second time that a key meeting to discuss the Paris agreement has been delayed. Trump's advisers remain divided over the accord, which won the backing of 195 nations in 2015. The president is expected to make a final decision on whether to withdraw sometime this month, perhaps as soon as this week. European countries and other U.S. allies are strongly encouraging the U.S. to remain in the agreement, and Trump's daughter Ivanka Trump is also said to support staying, along with others such as Secretary of State Rex Tillerson. But senior White House adviser Steve Bannon and Environmental Protection Agency chief Scott Pruitt have called for the U.S. to withdraw, as Trump had promised during the presidential campaign.

Nations urge Trump to stay in Paris climate agreement | Reuters: Many nations urged U.S. President Donald Trump on Monday to remain in the global agreement to combat climate change, even if he reduces the ambition of U.S. pledges to cut greenhouse gas emissions. Trump's main advisers are due to meet on Tuesday to review his threat to quit the 2015 Paris Agreement to limit global warming, that is backed by governments as diverse as China, OPEC oil producers and the poorest African states. At U.N. negotiations that began on Monday in the German city of Bonn, the chairman of the talks, Moroccan Foreign Minister Salaheddine Mezouar, said global momentum to combat climate change was irreversible and it would be "difficult or foolish" for anyone to defy public pressure for action. At the talks, which run until May 18, almost 200 nations will try to work out detailed rules for the agreement. Delegates called on countries to implement their pledges to cut emissions. When asked about the U.S. position, Yvon Slingenberg, head of the European Commission's delegation, told a news conference: "We do consider that it would be quite important (for the U.S.) to stay at the table," even with Trump's pro-coal policies. Trump's advisers have warned of legal problems if Washington stays in the Paris deal but waters down former president Barack Obama's goal of deep cuts in emissions by 2025. The Paris Agreement's Article 4 says any nation can adjust its goals at any time "with a view to enhancing its ambition". It does not mention an option of reducing ambition and some U.S. legal experts argue that the wording makes it impossible for Trump to stay in the agreement and carry out his promises to promote the high-emitting U.S. coal industry.

Tillerson gives nod at Arctic meet to climate change action | Reuters: U.S. Secretary of State Rex Tillerson signed an agreement recognizing the landmark Paris climate accord at a meeting of Arctic nations in Alaska on Thursday, but said President Donald Trump was not rushing to decide whether to leave or weaken U.S. commitments to the pact. Trump's efforts to dilute U.S. climate policies have made the country an outlier on the issue and put Tillerson in an awkward position at a meeting of the Arctic Council. The council meets every two years to tackle climate change and other problems facing the North. The Arctic is warming at a faster pace than any other part of the world, forcing native villagers on coasts and rivers in the region to move to higher ground as permafrost and glaciers melt and seas rise. Global warming also puts stress on wildlife such as walruses and polar bears as they lose their habitat areas. The Arctic agreement Tillerson signed with foreign ministers from the other seven nations of the council, including Russia, Canada and Norway, made only a passing reference to the Paris pact. It noted "entry into force" of the pact and its implementation and called for global action to reduce greenhouse gas pollution. Still, Tillerson's signing of the document surprised a source close to the State Department. "We'd heard ... that there would likely be a significant U.S. effort to redline or even remove entirely the Paris and climate language," said the source, who spoke on condition of anonymity due to the sensitive nature of the talks. Tillerson came around to the agreement after hours of debate following a dinner the council members ate together on Wednesday night, Denmark's Foreign Minister Anders Samuelsen told Reuters. The ministers stressed to Tillerson the business benefits, as well as the advantages to the environment and Arctic natives, of taking action on climate, Samuelsen said.

Tillerson, in Alaska, Gives No Hint on Paris Climate Accord - Secretary of State Rex W. Tillerson said on Thursday that the United States would “continue to be vigilant” in protecting the Arctic, a region that is undergoing rapid change linked to global warming. But he gave no signal as to whether his government would remain in the Paris climate accord, the international agreement that would go furthest in ensuring that protection. Mr. Tillerson, speaking at a meeting of the Arctic Council that marked the end of the United States’ two-year chairmanship of the intergovernmental organization, reaffirmed that the United States would stay involved in Arctic issues, including safeguarding what he termed the region’s “fragile environment.” He also signed, along with his counterparts from Russia, Canada and the five other nations with Arctic territory, a closing statement that mentioned the impacts of climate change on the region and took note of the Paris agreement. But Mr. Tillerson was noncommittal in addressing the Trump administration’s views on the Paris accord, in which the United States and most other nations have pledged to reduce carbon emissions with a goal of keeping global warming to less than 2 degrees Celsius. The question of whether to leave the Paris deal is the subject of much debate within the White House, with meetings between proponents of each side having been postponed several times. Mr. Tillerson has said he supports remaining in the agreement. 

Trump administration won’t answer foreign countries’ climate questions | TheHill: Trump administration diplomats are declining to answer foreign nations’ questions regarding the future of U.S. climate change policy. In answers submitted to nations like China and Brazil through a formal United Nations process, the State Department repeatedly didn’t provide details about whether or how the country would meet former President Barack Obama’s climate goals set under the Paris agreement. “The administration is reviewing existing policies and regulations in the context of a focus on strengthening U.S. economic growth and promoting jobs for American workers, and will not support policies or regulations that have adverse effects on energy independence and U.S. competitiveness,” U.S. representatives said in response to multiple questions from their counterparts, in a document made public late Thursday.Obama pledged in 2015 that the U.S. would reduce its greenhouse gas emissions 26 to 28 percent by 2025, with an interim goal of 17 percent in 2020, though both targets were non-binding. Foreign nations repeatedly asked how the Trump administration planned to meet the 2020 figure — the goal at issue in the questioning forum — if Trump continues to dismantle nearly all of Obama’s major climate policies. “Could the US provide information regarding the steps taken to ensure targets for 2020 can be met?” the European Union asked, yielding the standard answer about reviewing Obama policies. “Has the U.S. prepared any alternative approaches to mitigate emission of electricity sector in case the [Clean Power Plan] is canceled?” asked China. Brazil got the answer twice when it asked about what measures the U.S. might take beyond Obama’s to comply with the Paris goals. 

Road to Trump’s Climate Change Hell Paved by Obama and Clinton - naked capitalism - Jerri-Lynn here: This Real News Network interview conducted by Paul Jay with Professors Robert Pollin and Gerald Horne reminds us that Trump’s climate change inaction didn’t emerge from a vacuum. As in so many other policy areas, policies pursued by Democrats when in power instead paved the way for the current state of play. So an effective response to the massive challenge posed by climate change is not simply to oppose Trump and his policies– touting one’s role in the “resistance”, as Clinton is doing– or vote him out in 2010 if he indeed chooses to run again. Both Obama and Clinton have recently passed the buck on the urgency of confronting climate change: despite the ostensible Democratic commitment to tepid policy solutions, these leaders have failed on the basic task of educating the public on the urgency of the problem (as survey data discussed during the interview demonstrate).

Obama Takes Private Jet, 14-Car Envoy To His $3.2MM Climate Change Speech -- Just yesterday we noted that President Obama pocketed $3.2 million for a 1.5-hour speaking gig at a climate change conference in exorbitant fee, by anyone's measure, which Dilbert creator Scott Adams most accurately described as a "pre-bribe." And while we're certain that Obama's motivation to appear in Milan had absolutely nothing to do with the money, but rather was born out of a pure concern for Mother Earth, we do find his travel arrangements, in light of that genuine environmental concern, somewhat ironic. Apparently, according to the Independent Journal Review, it takes a private jet, 14-car motorcade, 300 police and multiple helicopters patrolling overhead just to get one man to a conference...quite the carbon footprint.

Barack Obama – Excessive Private Travel For Me, No Meat For Thee -- Former President Obama journeyed to Milan yesterday to give a speech on climate change, blaming “meat consumption” for causing excessive carbon emissions:  Former President Barack Obama warned the world that more people on the planet were eating meat, causing a dramatic rise in climate emissions.“As people want to increase meat consumption, that in turn is spiking the growth of greenhouse emissions coming out of the agricultural sector,” Obama said, pointing to countries that were consuming more meat.The former president shared his views about the growing threat during a conversation about food with his former chef Sam Kass at a food innovation summit in Milan.“People aren’t as familiar with the impact of cows and methane,” Obama said, adding that “as people want to increase more meat consumption, that in turn is spiking the growth of greenhouse emissions coming out of the agricultural sectors.”The amount of cows, Obama explained, were contributing to global pollution, alluding to the amounts of methane gas emissions from cow herds. Has anyone been informed on what exactly Obama’s diet was during this tour?  Did he eat any meat?  Is he a pescatarian all of a sudden? In true Obama fashion, he made sure to decry the rest of the planet for spewing “harmful” carbon into the atmosphere, but only after traveling to Milan via private jet and being shuttled to a $20,000/night suite in the center of the city via a 14-car caravan: He arrived in Italy’s business capital by private jet with his entourage and reportedly took over two floors of the Park Hyatt hotel – where presidential suite rooms cost almost $10,000 a night. Mr Obama seemed to be making the most of his post-presidential work routine as he was ferried through the city with a 14-car convoy on Monday.

US Tax Subsidies For Renewables Now Far Outpace Fossil FuelsRep. Lamar Smith -- The federal government has a long history of meddling in the U.S. energy market.  For almost 100 years, the government has provided tax incentives, subsidies, federal electricity programs, loans, loan guarantees, and funding for research and development to promote the efficient use and production of domestic energy resources. According to data collected by the U.S. Energy Information Administration (EIA), federal tax credits and subsidies for renewable energy increased by 54 percent between 2010 and 2013. Solar energy alone saw federal support increase by 500 percent from $1.1 billion to $5.3 billion. In the same period, federal support for fossil and nuclear energy declined. Federal subsidies and tax incentives for oil and gas declined by 20 percent, while federal support for nuclear energy declined by 12 percent. Just last month, the non-partisan Congressional Budget Office (CBO) provided testimony to Congress on tax preferences provided to energy producers in 2016. According to the CBO, approximately $10.9 billion, or 59 percent, of federal energy tax preferences went to renewable energy. $2.7 billion, or 15 percent, went to energy efficient technologies or electricity transmission, for a combined 74 percent of energy tax preferences. In contrast, $4.6 billion or 25 percent of energy related tax incentives went to fossil fuels. Nuclear energy, which is the only reliable, emissions free energy source, received only 1 percent of tax incentives while facing the toughest regulatory burden. Those figures don’t include federal investment in renewable energy research and development. At the Department of Energy (DOE), the federal government sponsors over $9 billion in civilian science and energy research and development.

Exposing The Renewable Fuels Con -- Most people don’t realize it, but what they’re pumping into their car’s tank isn’t actually gasoline, properly speaking. It’s gasoline mixed with ethanol alcohol – the ratio currently set at 10 percent ethanol and 90 percent gas (E10).“Diesel” often isn’t exactly diesel, either.The real stuff – the petroleum-based stuff – is mixed with bio-diesel, which is derived (like ethanol) from non-petroleum sources, usually vegetable matter.The market isn’t demanding this – but the government is.There is a law called the Renewable Fuel Standard. It  requires the “blending” of oceans of corn con ethanol and biodiesel boondoggle into the general fuel supply – ostensibly, to reduce America’s dependence on foreign (and non-renewable) oil.Like so much that government does, it sounds good – but what it actually does isn’t so good.The RFS has raised refining and distribution costs as well as the cost to motorists, who not only pay more for the Uncle-adulterated fuel but also for the fuel systems in their vehicles, which have had to be modified to be compatible with the not-quite-gas (and sort-of diesel) fuels the government is pushing.These adulterated fuels are also – ironically – less efficient. A gallon of pure gas will take you farther than a gallon of 90 percent gas and 10 percent ethanol because the gallon of gas contains more energy than a gallon of E10.As is almost reflexively true of everything the government mandates, we get less – and pay more for it.But that doesn’t mean someone’s not making a buck – as is also usually true when government intervenes in the market. In addition to the Usual Suspects – the ethanol lobby, for instance – there is a another group of crony capitalists making hay off the RFS mandate. These are the large refiners and chain gas stations, who can leverage – in the lingo of the federal bureaucracy – Renewable Volume Obligation (RVO) credits to gain an unfair competitive advantage over smaller refiners and independent gas stations.

U.S. Democratic senators seek probe into Icahn’s biofuel credit dealings | Reuters: Eight Democratic senators asked U.S. regulators on Tuesday to launch an investigation into billionaire Carl Icahn’s activities in the U.S. biofuels blending credit market, saying the activist investor may have violated trading laws since becoming an adviser to President Donald Trump. "We are writing to request that your agencies investigate whether Carl Icahn violated insider trading laws, anti-market manipulation laws, or any other relevant laws based on his recent actions in the market for renewable fuel credits," the senators said in a letter to the heads of the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Environmental Protection Agency. The letter, a copy of which was seen by Reuters, was signed by Elizabeth Warren of Massachusetts, Sheldon Whitehouse of Rhode Island, Sherrod Brown of Ohio and five others. The agencies are not required to act on it. Efforts to reach Icahn for comment were not immediately successful. There have been months of public outcry from Democratic lawmakers and liberal watchdog groups concerned that Icahn's dual role as a high-powered investor and presidential adviser could lead to conflicts of interest. Trump, a Republican, named Icahn as an unpaid adviser on regulation shortly after November's election, saying the choice could help him slash red tape and bolster economic growth. In February, Icahn submitted a proposal to the White House to change the U.S. biofuels program in a way that would ease its regulatory burden on oil refining companies, already struggling with low profit margins. Icahn owns a majority stake in refining company CVR Energy Inc

Decoupling wealth creation, energy consumption and CO2 emissions - Some recent media articles (examples here and here) have claimed that global GDP growth is no longer being accompanied by growth in energy consumption and CO2 emissions, or in other words that wealth creation and energy have become “decoupled”. Here we look into the question of whether this is the case and find that it isn’t. For the last fifty years or so the world as a whole has been using energy with slowly increasing efficiency, progressively adding more GDP per unit of energy consumed and per unit of CO2 emitted, but this is entirely because of incremental improvements in the richer developed countries. The poorer developing countries, which are growing their economies much faster, are slipping backwards. Decoupling the global economy from  global energy use does not therefore appear to be a realistic expectation at any time in the foreseeable future. The data used in this post consist of primary energy consumption (in million tons of oil equivalent, or MTOE) and CO2 emissions (in millions of tons) from the 2016 BP Statistical Review and nominal GDP (in constant 2010 US dollars) from the World Bank. The estimates are annual and cover 65 countries, the European Union and the world over the period from 1965 through 2015, the last year for which complete data are available. Two basic metrics are used in the analysis:

  • Energy efficiency: Dollars of GDP added per ton of oil equivalent (TOE) consumed. The higher the number the more energy-efficient the economy.
  • Carbon efficiency: Dollars of GDP added per ton of CO2 emitted, with higher numbers again defining higher efficiency. (Note that this is the inverse of “carbon intensity”, which is commonly defined as a country’s annual carbon dioxide emissions divided by the country’s gross domestic product. I inverted the metric so that it moves in the same sense as energy efficiency and because it’s more intuitively understandable this way, at least to me.)

Now to the results. We begin with Figure 1, which plots world energy efficiency over the 1965-2015 period:

What does it take to substitute 4 GtC using low-C electricity? - Euan Mearns - In my recent post called Future Atmospheric CO2 Scenarios [1] I described the effect on atmospheric CO2 of reducing global carbon (C) emissions from 10 to 6 Gt (billion or 10^9 tonnes) per annum by 2050. In this post I examine what it will take to achieve this goal using wind turbines or nuclear power stations. The simple answers are an additional 3,275,492 wind turbines or an additional 1948 nuclear power stations. I also take a look at the implications of BAU for natural gas supplies.The objective of this post is to try and put some ball park numbers on the effort required to reduce FF combustion by 4 GtC / annum come 2050. In doing so I make many generalisations and simplifications, but hopefully the numbers I arrive at are in the right ball park. They do seem rational when compared with the current situation. Why 4 GtC? I arrived at this number since 1990 is the datum year for many of the myriad C reduction targets that have been set. The UK wants to get 57% below the 1990 level, the EU a more modest 40% below the 1990 level. Globally, fossil fuel and cement emissions were running at 6 GtC per year in 1990, hence cutting 4 GtC simply returns the world to 1990 levels and not the dizzy levels imagined by the UK and the EU.

India Added Twice As Much Renewables Capacity As Coal Capacity In 2016-17 -- India witnessed an extraordinary milestone in its power sector, something one would not expect in a developing country and one which is heavily dependent on coal for power generation. India added more renewable energy capacity than thermal power capacity in the financial year 2016-17, the Central Electricity Authority of India has reported. The renewable energy capacity added during the period of April 2016 to March 2017 was nearly twice as much as the thermal power capacity added during the same period.A total of 6,990 megawatts of coal-based power capacity was added in India in FY2016-17 while the thermal power capacity addition during the financial year stood at 7,655 megawatts. In comparison, 14,140 megawatts of renewable energy capacity was added in the same period.Wind and solar power were the largest contributors among the renewable energy technologies in terms of capacity addition in FY2016-17. A total of 5,413 megawatts of wind energy capacity was added, the highest-ever in India’s history. Solar power capacity addition stood at 5,526 megawatts, also the highest ever in India.The share of renewable energy capacity in India’s total installed capacity increased from 14.2% at the end of FY2015-16 to 17.5% at the end of FY2016-17. India targets a 40% share of renewable energy technologies in the installed capacity mix by 2030.  A record 10 gigawatts of solar power capacity is expected to be added in calendar year 2017, and 6 gigawatts of wind energy capacity is expected to be added in FY2017-18. The thermal power sector in India is already feeling the pinch of increase generation capacity in the renewable energy sector. Last year, the Central Electricity Authority reported that thermal power plants were operating at a plant load factor of just 50% due to the increased power generation from renewable energy projects.

If India Succeeds, "King Coal" Will Be Back -- By the end of the next decade -- that would be by 2029 -- India has plans to require that all cars sold in that country will be coal-fired -- Bloomberg. This does not qualify the country for Einstein's definition of insanity because this is something "new" for India -- and something no other country has tried. But still, intuitively, it seems it should make the list. There are two fallacies, of course: one, there won't possibly be enough EVs manufactured to meet India's need, unless Elon Musk ramps up to a gazillion cars/week:India’s potential plan to sell only electric cars by the end of next decade would require nearly eight times the global stock of such vehicles, according to the International Energy Agency. The country would need to sell more than 10 million electric cars in 2030, compared with the almost 1.3 million on the road worldwide in 2015, the agency said in an emailed response to questions. The goal also equals 10 percent of the 2030 target for electric vehicles on the road globally agreed to in the Paris climate talks.Second, it appears the politicians who have thought up this bizarre plan have no idea how inefficient the whole process is, and will require huge amounts of coal: While the details are yet to be worked out, “it is an ambitious plan nonetheless,” the IEA said. “Regardless, the exact formulation of the target and the extent of its long-term achievement, it is a good step that will help India to be among the global leaders in deploying a technology that is crucial to temper increasing oil import needs, local air pollution in cities, and limit CO2 emissions.” EVs may solve their urban problems with regard to smog, but it will simply shift CO2 emissions (for what it's worth) to another location -- namely the power plants that use coal. Of course, the Indian government will eventually put a huge CO2 tax on coal-fired plants that the country has effectively mandated in the first place.

India’s planned coal plants could ‘single-handedly jeopardise’ 1.5C target -- Current plans to build 370 coal-fired power stations in India will gravely undermine the country’s Paris climate pledge, or create “stranded assets” worth billions of dollars. That’s the conclusion of a new paper, published in the American Geophysical Union journal Earth’s Future. These planned plants would increase Indian coal generating capacity by 123%. But there are signs that some may never get built, the paper notes.  Carbon Brief takes a look at the paper’s findings.  The authors use data collected by non-profit CoalSwarm on coal-fired power plants in India, with capacity of at least 30 megawatts (MW) that are either under construction or proposed, as of May 2016. India’s enormous coal reserves, estimated at 87 billion metric tonnes (Gt) have led to it being heavily dependent on coal, making up 63% of India’s electricity capacity in mid-2016, with 28% coming from low-carbon sources, including nuclear. This reliance means India’s emissions intensity – the amount of CO2 emitted per kilowatt-hour (kWh) – is far higher than the global average. In 2012, India’s emissions intensity hit 926 gCO2/kWh, compared to a world average of 533 gCO2/kWh. India’s NDC includes a pledge to reduce the overall emissions intensity of its economy 33-35% on 2005 levels by 2030.  This means India’s emissions can continue to increase over this period. Previous analysis by Carbon Brief has suggested India’s emissions could almost double to around 6.5bn tonnes of CO2 equivalent (GtCO2e) in 2030. They apply a method of assessing “committed” CO2 emissions of power plants over their expected lifetimes. This gives an estimate of the lifetime emissions from India’s planned coal plants, which can then be compared with the country’s climate and energy targets, including its pledge, otherwise known as its Nationally Determined Contribution (NDC), submitted ahead of the Paris climate talks.

If India’s Power Sector Goes Coal All the Way, Then Disaster Awaits - If India builds all its proposed coal-based power plants, then it might not fulfil its promise made under the Paris climate agreement, a recent study conducted by University of California, Irvine (UCI), and CoalSwarm, a coal-tracking portal, has found.To this day, 144 nations have signed the Paris climate agreement and it came into effect in November 2016. It aims to limit global temperature rise to under 2° C above what it was between 1850 and 1890 by the end of this century. A more ambitious target, of limiting the rise to under 1.5°C , doesn’t look likely anymore.Each signatory to the agreement has had to declare its actions and goals to meet the terms through the so-called intended nationally determined contributions (INDCs). These actions include a slew of measures to bring down the emission of greenhouse gases – especially carbon dioxide – that warm the globe and drastically alter the climate.As part of its INDC, India aims to reduce the amount of carbon dioxide released per unit of GDP by 35% of the amount emitted in 2005. The country is currently the fourth-largest emitter of greenhouse gases in the world, and its largely-coal-based energy sector contributes two-thirds of those emissions. Moreover, coal based power plants emit 41% of all carbon dioxide released by human activities, making them the largest carbon dioxide emitters on Earth. At the same time, India also needs this energy to build its infrastructure and improve its citizens’ standard of living. According to the study, published in the journal Earth’s Future on April 25, India has planned 370 coal-based power plants to be switched on by 2025 or sooner. They have a collective capacity of 243 GW. While 65 GW’s worth of them are under construction, 178 GW are still in the planning stage.

Indian solar power prices hit record low, undercutting fossil fuels -  Wholesale solar power prices have reached another record low in India, faster than analysts predicted and further undercutting the price of fossil fuel-generated power in the country.The tumbling price of solar energy also increases the likelihood that India will meet – and by its own predictions, exceed – the renewable energy targets it set at the Paris climate accords in December 2015.India is the world’s third-largest carbon polluter, with emissions forecast to at least double as it seeks to develop its economy and lift hundreds of millions of citizens out of poverty.Ensuring it generates as much of that energy as possible from renewable sources is considered crucial to limiting catastrophic global temperature increases.At a reverse auction in Rajasthan on Tuesday, power companies Phelan Energy and Avaada Power each offered to charge 2.62 rupees per kilowatt-hour (kWh) of electricity generated from solar panels they hope to build at an energy park in the desert state. Last year’s previous record lowest bid was 4.34 rupees per kWh .Analysts called the 40% price drop “world historic” and said it was driven by cheaper finance and growing investor confidence in India’s pledge to dramatically increase its renewable energy capacity.It reduces the market price of solar tariffs well past the average charged by India’s largest thermal coal conglomerate, currently around 3.20 rupees per kWh . Wholesale price bids for wind energy also reached a record low of 3.46 rupees in February.   Kanika Chawla, a senior programme lead at the Delhi-based Council for Energy, Environment and Water (CEEW), said it was encouraging that Rajasthan project bidders were “new players, not the same old market leaders”. “It shows there is enough happening to attract investment, attract interest from companies who have otherwise been cautious,” she said.

The UK Just Switched on an Ambitious Fusion Reactor – And It Works -- The UK’s newest fusion reactor, ST40, was switched on last week, and has already managed to achieve ‘first plasma’ – successfully generating a scorching blob of electrically-charged gas (or plasma) within its core. The aim is for the tokamak reactor to heat plasma up to 100 million degrees Celsius (180 million degrees Fahrenheit) by 2018 – seven times hotter than the centre of the Sun. For this reactor, that’s the ‘fusion’ threshold, at which hydrogen atoms can begin to fuse into helium, unleashing near-limitless, clean energy in the process. “Today is an important day for fusion energy development in the UK, and the world,” said David Kingham, CEO of Tokamak Energy, the company behind ST40. “We are unveiling the first world-class controlled fusion device to have been designed, built and operated by a private venture. The ST40 is a machine that will show fusion temperatures – 100 million degrees – are possible in compact, cost-effective reactors. This will allow fusion power to be achieved in years, not decades.”

Emergency Declared at Nuclear Waste Site in Washington State - The Department of Energy declared an emergency Tuesday morning at a plutonium-handling facility at the Hanford Nuclear Reservation in Washington state after a tunnel partly collapsed. Federal officials said, there was "no indication of a release of contamination at this point." Hundreds of Workers were told to evacuate or take cover as officials responded to reports of "a cave-in of a 20 foot section of a tunnel that is hundreds of feet long that is used to store contaminated materials," according to a statement from the U.S. Department of Energy (DOE). "The tunnel itself was breached. There was a 20-foot wide hole," a spokeswoman for the Department of Energy said by telephone from the Hanford Joint Information Center. The Energy Department said via Twitter that Sec. Perry "has been briefed on the incident." The last update provided, said, crews are continuing to monitor the air as employees are being released early as a precaution. "This is a potentially serious event," Edwin Lyman, a senior scientist at the Union of Concerned Scientists , said . "I can see why the site ordered emergency measures. Collapse of the earth covering the tunnels could lead to a considerable radiological release."  The Hanford site, in southeastern Washington about 170 miles east of Seattle, is known for being the most contaminated nuclear site in the country. The facility made more than 20 million pieces of uranium metal fuel for nine nuclear reactors along the Columbia River. The reactors produced plutonium for America's defense program. Production ended at the facility in the late 1980s, and cleanup began in 1989, after a landmark agreement between the DOE, the U.S. Environmental Protection Agency and Washington state.

Tunnel Collapses at Nuclear Facility Once Called ‘an Underground Chernobyl Waiting to Happen’ -- Managers at the Hanford Site in Washington State told workers to “take cover” Tuesday morning after a tunnel leading to a massive plutonium finishing plant collapsed. The emergency is especially worrisome, since Hanford is commonly known as “the most toxic place in America,” with one former governor calling it “an underground Chernobyl waiting to happen.” Worrisome might actually be an understatement. The Deparment of Energy declared a state of emergency at the site. The accident occurred near the 200 East Area, the home of several solid waste sites. The tunnel that collapsed ran to the Plutonium Uranium Extraction Facility (PUREX) facility and was filled with highly radioactive train cars that once carried spent fuel rods containing deeply dangerous plutonium and uranium from a reactor on the Columbia River to the processing facility. Those reactors once produced plutonium for America’s nuclear arsenal, though production ended in 1980. The cleanup process that followed has gone on for nearly 30 years. Back to the poor workers, though. They’ve been instructed to stay indoors, and one manager reportedly sent out a message telling workers to “secure ventilation in your building” and “refrain from eating or drinking.” When you can’t even have a glass of water, you know the nuclear emergency is bad. Meanwhile, the United States Department of Energy activated its emergency teams to the Hanford Site. A press release sent out around 1pm EST said that “facility personnel have been evacuated,” while workers at nearby sites have been instructed to stay indoors. A spokesperson also told the press that “there was no evidence to suggest that radioactive materials had been released and that all of the workers in the area were accounted for.” So at least there’s that glimmer of hope. It’s currently unclear what the cleanup operation might look like. If we’ve learned anything from the Fukushima nuclear disaster, it’s that highly radioactive zones are almost impossible to secure, since the radiation tends to fry whatever goes inside. Not even a special radiation-resistant robot survived a trip inside of Fukushima’s damaged reactor earlier this year.

Emergency Crews Begin Work On Collapsed Nuclear Facility Tunnel - Latest Update - Emergency workers have begun work to stabilize and fill a 20-foot-by-20-foot opening over a tunnel that partially collapsed near the PUREX facility at the Hanford Site. Non-essential employees remain offsite. In the 1950s and 1960s two tunnels were constructed next to a former chemical processing plant, the Plutonium Uranium Extraction Plant, or PUREX, located in an industrial area near the center of the Hanford Site called the 200 East Area. The tunnels were constructed of wood and concrete and covered with approximately 8 feet of soil. The tunnels were constructed to hold rail cars that were loaded with contaminated equipment and moved into the tunnels during the Cold War. During a routine surveillance of the area this morning, a 20-foot-wide hole in the roof of one of the tunnels was observed, leading to the precautionary sheltering of employees and notifications to area counties and states. After no contamination was detected, the shelter in place order was lifted and employees were sent home from work early as a precaution. Workers continue to monitor the area for contamination as a crew prepares to fill the hole with clean soil. The approximately 360-foot-long tunnel where the partial collapse occurred contains 8 rail cars loaded with contaminated equipment. That tunnel feeds into a longer tunnel that extends hundreds more feet and contains 28 rail cars loaded with contaminated equipment. The hole opened up in the shorter tunnel near where it joins the longer tunnel. The tunnels were sealed in the mid-1990s and are checked periodically.

Workers Fear Radiation Exposure After Tunnel Collapse at Nuclear Waste Facility --  Democracy Now! - We are broadcasting from Washington state, where the Department of Energy declared a state of emergency at the Hanford nuclear site after a tunnel storing contaminated radioactive materials collapsed.  The collapse, which was discovered Tuesday, forced hundreds of workers to take cover to avoid potential exposure. Hanford is the nation's most polluted nuclear weapons production site. The site has been leaking radioactive waste on and off for years.  The Energy Department claims no radioactive contamination has been reported so far from Tuesday's tunnel collapse. But Edwin Lyman from the Union of Concerned Scientists said, "Collapse of the Earth covering the tunnels could lead to a considerable radiological release."  Now the Washington state Department of Ecology's Nuclear Waste Program has announced on Twitter that it has taken legal action against Hanford. We speak with Tom Carpenter, executive director of Hanford Challenge , which advocates for workers at the Hanford nuclear site.  Watch the interview below:

Tunnel Collapse at Hanford Nuclear Dump—Harbinger of the Collapse of the Entire Industry? - The collapse of a tunnel at the massive nuclear waste dump at Hanford, Washington, 200 miles east of Seattle, has sent shock waves through a nuclear power industry already in the process of a global collapse.  Hundreds of workers were told to "take cover," and to refrain from eating or drinking anything while in the area. Department of Energy Secretary Rick Perry said, "everyone has been accounted for and there is no initial indication of any worker exposure or an airborne radiological release." But Edwin Lyman of the Union of Concerned Scientists emphasized that "collapse of the earth covering the tunnels could lead to a considerable radiological release….this a potentially serious event.” Robert Alvarez, a former DOE official, told the Post in an email that “the tunnels now store contaminated train cars and a considerable amount of highly radioactive, ignitable wastes including possible organic vapors.” Inspection of the tunnels has not been possible, he said, because radiation levels are too high. We may never know the full extent of the damage from this latest incident at Hanford, which has been plagued by serious problems for years. Many critical nuclear industry oversight positions remain unfilled by the Trump Administration.  The tunnel collapse happens at a time when the nuclear power industry appears to be in an accelerating death spiral. Two reactors under construction at Vogtle, Georgia, may be on the brink of cancellation. Some $13 billion in cost overruns sparked a Westinghouse bankruptcy, and primary owner Southern Company is looking for billions more to finish a project already years behind schedule and billions over budget. Huge rate increases within Georgia have seriously poisoned the climate for more state money.

Is Yucca Mountain Back From the Dead? - Yucca Mountain, the project to permanently store high-level nuclear waste underground in southern Nevada, has been considered dead since then-President Obama defunded it in 2012. But now, President Trump has moved to revive it. His 2018 budget blueprint includes $120 million to restart licensing and to provide interim waste storage elsewhere. The Yucca Mountain plan has faced stiff opposition from Nevada residents, environmentalists and elected officials since 1987, when Congress identified the dry, remote ridge as the only location that would be studied for a national repository for high-level nuclear waste and spent nuclear fuel. The money allocated in Trump's budget plan amounts to only a token gesture. The Department of Energy estimated in 2008 that the project as a whole would require up to $96 billion to complete; it's already cost taxpayers $15 billion. On April 26, a House Energy and Commerce subcommittee held a hearing on a draft bill to restart the licensing process. Subcommittee Chairman Rep. John Shimkus, (R-Illinois), who introduced the legislation, expressed confidence that the Department of Energy fully supports the bill. Though no one from the department attended the hearing, Energy Secretary Rick Perry sent a letter to the chairman of the House Committee on Energy and Commerce: "I believe establishing a geologic repository is the best long-term solution for isolating spent fuel and high-level waste," Perry wrote, noting the importance of restarting licensing for Yucca "became even clearer" when he toured the site recently.The waste now awaiting permanent storage at 121 sites has mounted to 79,000 tons -- 9,000 tons above the planned limit for Yucca Mountain. Currently, the country's sole permanent storage facility is New Mexico's Waste Isolation Pilot Plant, which takes only defense-generated nuclear waste. It recently reopened after a fire and an unrelated radiological release led it to shut down in 2014. 

North Korea and the Damage From An Electromagnetic Pulse - A recent item in a non-mainstream media source sounded the alarm bells about a potential threat from  North Korea that could be used to disrupt the United States infrastructure.   As the world is aware, North Korea is making significant strides in its effort to create a nuclear weapon.  Other than the obvious and iconic mushroom cloud and its accompanying radioactive fallout, one of the most damaging aspects of a nuclear detonation is an electromagnetic pulse or EMP.  A high-altitude nuclear detonation produces an immediate flux of gamma rays from the nuclear reactions that take place within the weapon which then produce high energy free electrons which are trapped in the Earth's magnetic field, creating an oscillating electrical current.  This current then gives rise to a radiated electromagnetic field called an electromagnetic pulse or EMP.  The EMP can cover continental-sized areas and can affect all electrical systems on land, sea and in the air.  In July 1962, the United States conducted the "Starfish Prime" nuclear test at an altitude of 400 kilometres over the Johnson Atoll in the Northern Pacific Ocean.  This bomb had a yield of approximately 1.245 megatons or roughly 100 times the size of the bomb that destroyed Hiroshima in 1945.  The Starfish Prime test temporarily altered the shape and intensity of the lower Van Allen Belt located in the inner region of the Earth's magnetosphere, resulting in an artificial aurora borealis (i.e. colloquially known as the Northern Lights) that could be seen from Hawaii to New Zealand.  Here is a photo showing the artificial aurora seen from the Starfish detonation:

Google Asked To Label Anti-Fracking Sites As 'Fake News' -  An oil and gas drilling advocacy group published an open letter to Google asking the search engine giant to consider “purging or demoting” websites spreading misinformation about hydraulic fracturing. Google rewrote its search engine algorithm to bury “fake news” websites in the wake of the 2016 presidential election. The industry-funded Texans for Natural Gas wants Google to include anti-fracking websites. “We believe many of the most prominent anti-fracking websites have content that is misleading, false, or offensive – if not all three,” the group wrote in an open letter to Google published Monday. “As a result, we urge you to consider purging or demoting these websites from your algorithm, which in turn will encourage a more honest public discussion about hydraulic fracturing, and oil and natural gas development in general,” the group wrote.

Will Anti-Fracking Websites Be Labeled 'Fake News?' - Conservative outlets are highlighting a pro- fracking group's attempt to convince Google, which recently promised to alter its search algorithm to demote fake news, to also tweak it to purge or demote websites critical of fracking.  On May 8, Texans for Natural Gas, an industry group funded by Texas energy companies, published an open letter addressed to Google titled "ANTI-FRACKING ACTIVISM IS FAKE NEWS." The letter, which was highlighted in the industry - funded outlets The Daily Caller and The Daily Signal , referred to Google's recent move to alter its search algorithm to "demote misleading, false, and offensive articles online" before claiming, "We believe many of the most prominent anti-fracking websites have content that is misleading, false, or offensive—if not all three. As a result, we urge you to consider purging or demoting these websites from your algorithm, which in turn will encourage a more honest public discussion about hydraulic fracturing, and oil and natural gas development in general."  The pro-fracking group claimed that environmental groups such as the Sierra Club , Earthworks and others were "peddling fake news" about the link between fracking and drinking water contamination. The letter cited a U.S. Environmental Protection Agency ( EPA ) study to support its claims, saying that the EPA study "found no evidence of widespread water contamination." The group subsequently urged Google to examine other sites that contradict the findings of the EPA report, stating, "There are certainly other environmental groups that have made similarly false claims about fracking and groundwater risks, despite the conclusions of the EPA and other scientific experts."  Yet for all the grandstanding the letter makes about rooting out "misleading" information online, it is full of misleading statements. Though the group claimed that the EPA study "found no evidence of widespread water contamination" from fracking, it neglected to mention that the EPA subsequently removed that sentence from the report on the advice of its Science Advisory Board because the findings of the report did not support that conclusion. Additionally, according to , a study conducted by Stanford researchers in 2016 "found that common practices in the industry may have widespread impacts on drinking water."

Proposed wells for fracking waste stir up Brookfield residents - Sharonherald  – Teresa Mills advised Brookfield residents who oppose fracking in their town to buy rubber chickens.  This wasn't a culinary suggestion. Rather, she said residents might need them at the next township meeting.  "You need to ask them questions and voice your concerns on fracking,'' Mills said. "If some of them don't show up, put the rubber chicken on their chair and raise it up every time you ask a question.'' It was one of the lighter moments when she spoke to 30 listeners Friday evening at Wyngate Manor, a manufactured home community in Brookfield. The Columbus environmental advocate gave a brief overview on fracking, then listened to audience members' worries and answered questions. Mills works with the Center for Health, Environment & Justice, a nonprofit advocacy organization. She also is focused on what she sees as fracking industry abuses by working with the Buckeye Environmental Network, a non-profit environmental advocacy group. A number of Brookfield residents oppose two disposal wells proposed for the township by Highland Field Services. Waste liquid from from hydraulic fracturing in the drilling process for oil and gas would be pumped into the wells. The residents' biggest fear is the wells might contaminate drinking water. There are other concerns about these well, Mills said. "These wells have a large volume of extremely salty brine and chemicals,'' she said. "Companies often inject this waste water down a shaft into a deep layer of porous rock for permanent disposal – which can trigger an earthquake.'' For the past several years small earthquakes in Trumbull and Mahoning counties in Ohio have been blamed on these injection wells. "The industry is denying that there is a connection with drilling and the earthquakes,'' Mills said. Dr. Ray Beiersdorfer, a Youngstown State Universitty geology professor, was among those in the audience. There has been an effort to keep these earthquakes under wraps from state and industry officials, he said. "Madison County (Ohio) had 400 earthquakes that was kept secret for a year,'' Beiersdorfer said. "Your concerns about earthquakes are accurate.'' In the political arena, the fracking industry is outspending those supporting the environment by 50 to 1, he added.  To have an impact in the political arena, Mills said residents must be unrelenting and loud in their demands.

Ohio EPA orders Rover pipeline builder to pay $431,000 for violations -The Columbus Dispatch --- The Ohio Environmental Protection Agency has ordered Energy Transfer, the company building the Rover natural gas distribution pipeline, to pay $431,000 for water and air pollution violations at various locations across the state.In its order issued Friday, OEPA also instructed Energy Transfer to submit plans to address potential future releases and restore impacted wetlands along the $4.2 billion underground pipeline route, which stretches from Washington County in southeastern Ohio to Defiance County in the northwest.Work on the pipeline began in mid-February, and state officials say a total of 18 incidents involving mud spills from drilling, stormwater pollution and open burning at Rover pipeline construction sites have been reported between late March and Monday to the agency.That includes a 200-gallon release of mud Monday in Harrison County. Other Rover pipeline incidents include a spill that impacted one village’s public water system and another that smothered a protected wetland with several million gallons of bentonite mud, a natural clay which is used as a drilling lubricant.“All told, our frustration is really high. We don’t think they’re taking Ohio seriously,” said OEPA Director Craig Butler. “Normally when we have ... a series of events like this, companies respond with a whole lot of contrition and whole lot of commitment. We haven’t seen that. It’s pretty shocking.” Alexis Daniel, an Energy Transfer spokeswoman, said Monday in an email statement that the “small number of inadvertent releases of ‘drilling mud’ during horizontal drilling in Ohio ... is not an unusual occurrence when executing directional drilling operations and is all permitted activity by (the Federal Energy Regulatory Commission).“We do not believe that there will be any impact to the environment,” Daniel said, adding that the company — the same one behind the controversial Dakota Access pipeline — is managing the Rover pipeline situation in accordance with its federal- and state-approved contingency plan. After a pair of wetlands spills in April, Energy Transfer still planned to finish the Rover project and begin operating the pipeline this year.

Energy Transfer Partners Fined $431,000 for Rover Pipeline Spills -- Construction of Energy Transfer Partners ' new Rover Pipeline only began mid-February but the project has already resulted in 18 incidents involving mud spills from drilling, stormwater pollution and open burning that violated the Clean Air Act. The Dallas-based company—which is also the operator of the controversial Dakota Access Pipeline —has been fined $431,000 by the Ohio Environmental Protection Agency (EPA) for water and air pollution violations across various sites in Ohio. As The Columbus Dispatch reported, the incidents occurred from late March up to Monday's 200-gallon release of mud in Harrison County. The largest discharge leaked millions of gallons of bentonite mud, a drilling lubricant, into a protected wetland in April. Notably, Craig Butler, the Ohio EPA director, told The Washington Post that the largest spill could reach 5 million gallons, much higher than the original 2 million gallon estimate. An Energy Transfer Partners spokesman responded, "We have no idea where they came up with those figures."  Butler told The Post that two of the spills affected drinking water supplies and that two municipalities needed to adjust their filtration systems to protect drinking water.  As far as Energy Transfer's response, Butler said the company has been "dismissive," "exceptionally disappointing" and unlike any other response he has seen. According to Butler, the company claimed that the state EPA lacks the authority to interfere with the Rover project.  Butler said he arranged a meeting with Energy Transfer Partners executives to say "how upset Ohio was" and to arrange new response plans. However, the company said it would continue to operate and has not yet paid any of its fines.  An Energy Transfer spokeswoman told The Columbus Dispatch that the "small number of inadvertent releases of 'drilling mud' during horizontal drilling in Ohio ... is not an unusual occurrence when executing directional drilling operations and is all permitted activity by (the Federal Energy Regulatory Commission).

Pipeline spill by Dakota Access company could have a ‘deadly effect’ -- The director of the Ohio Environmental Protection Agency on Monday blasted the pipeline company Energy Transfer Partners for a “pattern” of 18 spills of drilling materials and said that the size of the biggest spill could reach 5 million gallons, more than double original estimates. Craig Butler, the Ohio EPA director, said that his agency has imposed about $400,000 in fines on Energy Transfer Partners, the same company that was recently embroiled in controversy over its Dakota Access crude oil pipeline. Butler said the company had brushed off his complaints, claiming the state EPA lacked the authority to interfere with its plans for the construction of a natural gas pipeline called Rover. Butler, a 27-year veteran of the Ohio EPA, said that the company’s response was “dismissive,” “exceptionally disappointing” and unlike any other response he has seen from a company. While drilling mud used to cool and lubricate drilling equipment is not toxic, the biggest spill has poured fluid the consistency of a milkshake a couple of feet deep in a previously pristine wetland and would “kill just about everything in that wetland,” Butler said. The company is trying to remove the material by vacuum and even by hand, Butler said. Energy Transfer Partners, whose Dakota Access pipeline ignited weeks of protests by Native Americans and environmentalists, is now building a $4.2 billion natural gas pipeline that would link the shale gas-rich regions of Appalachia to Michigan and Ontario, Canada. The company received a permit from the Federal Energy Regulatory Commission (FERC) on Feb. 2 and has told investors that the first stage of the pipeline will be complete by July.

 Ohio officials: it will take decades for wetlands to recover after major pipeline fluid spill -  The Ohio Environmental Protection Agency has told Energy Transfer Partners — the same company building the Dakota Access Pipeline — that it owes the state $430,000 for “inadvertent” damage to pristine state wetlands. Last month, construction on the 800-mile Rover pipeline discharged more than two million gallons of a clay-like substance used for drilling into wetlands in a rural area about an hour south of Cleveland.“It’s a tragedy in that we would anticipate this wetland won’t recover to its original condition for decades,” Ohio EPA spokesman James Lee told ThinkProgress. “And had [ETP] more carefully followed best practices and been prepared to respond to the bentonite release, this likely would not have occurred on the scale that we are dealing with now.”Last week, the state sent a proposed order, requiring a contingency plan to prevent future spills and outlining penalties. ETP denied any wrongdoing in a statement emailed to ThinkProgress. “We have placed a great deal of focus and importance on our construction and mitigation efforts,” a spokesperson said. “We are not out of compliance with any of our permits. It is unfortunate that the Ohio EPA has misrepresented the situation and misstated facts in its recent comments.”ETP said the discharge “is a mixture of naturally occurring bentonite clay and water and is safe for the environment… Bentonite is commonly used in a variety of household products that we use every day such as beer and wine, sugar, honey, creams and lotions, baby powders, laundry detergents and hand soaps.”The company also said that clean up was nearly complete. “We do not believe that there will be any long-term impact to the environment,” the spokesperson said. The company also contends, according to a letter from the Ohio EPA to federal regulators, that the state lacks the “authority to enforce violations of its federally delegated state water pollution control statutes.” It does not deny that the spill occurred. Ohio EPA director Craig Butler has sent a letter to FERC asking for the agency’s support in holding ETP accountable. Butler also pointed out that, in addition to spilling bentonite, the company has engaged in “impermissible open burning,” and air pollution violation. He told the Washington Post that ETP’s response to the violations was “dismissive” and “exceptionally disappointing.”

Feds shut down new drilling along Rover pipeline project – Columbus Dispatch - Federal officials have ordered a halt to new drilling activity along the troubled Rover pipeline project.  I n a letter sent Wednesday, the Federal Energy Regulatory Commission prohibited Texas-based Rover Pipeline from any new drilling activities until the company complies with new measures and receives authorization. The federal order came as the Ohio Environmental Protection Agency and Rover Pipeline officials continue to square off over a series of environmental violations that have piled up since construction on the natural gas distribution project began in February. “The federal action taken today is a step in the right direction,” Ohio EPA spokesman James Lee said.In all, 18 incidents have been reported in 11 Ohio counties over the past eight weeks, including mud spills from drilling, stormwater pollution and open burning. The Ohio EPA says at least eight incidents violated state law, and many of the rest are under review.The $4.2 billion underground pipeline route stretches from Washington County in southeastern Ohio to Defiance County in the northwest.Rover Pipeline uses horizontal drilling to install pipelines below waterways, wetlands, culturally sensitive areas, congested neighborhoods and roads to minimize surface disturbance, a spokeswoman said Tuesday in an emailed statement. The federal commission will allow some non-drilling activity to advance. To avoid boreholes from collapsing and prolonging environmental impacts, drilling projects already underway also can continue.

US FERC orders ETP to halt Rover gas pipeline drilling in some areas after spills - Days after the Ohio Environmental Protection Agency fined Energy Transfer Partners over alleged water and air pollution violations along the route of its Rover natural gas pipeline, the US Federal Energy Regulatory Commission ordered the company not to conduct any more horizontal directional drilling activities in some areas where it has not commenced work. The roughly 500-mile, 3.25 Bcf/d greenfield Rover Pipeline is designed to move Marcellus and Utica shale gas to markets in the Midwest, Gulf Coast and Canada. Backed almost entirely by Marcellus- and Utica-focused gas producers, the project is expected to impact numerous upstream and downstream markets.  FERC's actions follow two separate and sizable leaks of drilling fluid into Ohio wetlands in April.The spills, discovered April 13 and 14, both resulted from horizontal directional drilling, or HDD operations, typically performed when traversing beneath a river or other large body of water.The stoppage enforced by FERC affects HDD in eight out of 30 drilling areas associated with the project, according to a table included in the FERC letter.It would affect roughly half of the 23 miles of HDD work needed, according to data from Rover's February implementation plan.Also as a result, no activity associated with HDD crossing may occur on Mainline B of the project, which comprises one of the two parallel, 42-inch diameter pipelines that traverse north-northwest across Ohio.FERC also required Rover to immediately obtain independent third-party contractor proposals to study drilling activity at the Tuscarawas River further.The release of drilling fluid during HDD of the Tuscarawas River resulted in about 2 million gallons of bentonite-based drilling fluid spilling into a state-designated category 3 wetland, covering an area of about 6.5 acres and coating wetland soils and vegetation with bentonite clay and bore-hole cuttings, according to a Wednesday letter from Terry Turpin, director of FERC's Office of Energy Projects, to the developer. Turpin said that, based on drilling logs, returns of drilling mud were absent or intermittent during work in the areas at issue for nearly three weeks.  FERC staff has "serious concerns" about the magnitude of the incident, its environmental impacts, and the "lack of clarity regarding the underlying reasons for its occurrence, and the possibility of future problems," he said.

Ohio EPA is at Odds with Company Building the Rover Pipeline Across the State | WKSU -- Today, the Federal Energy Regulatory Commission ordered Energy Tranfer Partners to temporarily stop any new pipeline construction that involves drilling underneath rivers. The Ohio EPA believes this is a step in the right direction but does not resolve the overall dispute with the pipeline company. And the company is refusing to pay a $430,000 fine for multiple spills of millions of gallons of drilling fluid.. What was once a protected wetland has been turned into one giant mud pit.  “See all you have is mud, no drilling bits,”as Ohio EPA Director Craig Butler explains.  He says this is just one in a series of mistakes made by the Rover Pipeline project. “We have just seen a pattern of non-compliance and where we think they’re rushing and they’re not paying attention to even the best management practices.” has racked up a big list of violations for Energy Transfer Partners, or ET  That pattern includes EPA citations for more than a dozen violations so far, on a pipeline that just began construction three months ago.  The violations include:

  • Polluting reservoirs, streams and creeks;
  • More drilling mud spills in other wetlands found in Belmont County and Tuscarawas County;
  • Open-burning brush near a home in Jefferson County without permission.

Butler says  "They’re not taking Ohio seriously, the requirements that we have for environmental protection and protection of public health.”  Here’s where things take an odd turn.  Butler says usually, with other companies, the EPA will send a notice of a violation, issue a fine and that company complies:  End of story.  But that’s not the case with ETP. According to Butler, the pipeline company has been defiant while disregarding Ohio’s authority as a regulatory agency.  And the $430,000 fine? Butler says, so far, Energy Transfer Partners won't pay it.

Ohio pipeline spill raises broader questions about oversight - Midwest Energy News - Releases of more than two million gallons of drilling mud triggered federal and state agency actions against the developer of Ohio’s Rover Pipeline this month, and advocates suggest those incidents may be part of a bigger problem in the rush to develop Ohio’s shale oil and gas. “I suspect this is just the tip of the iceberg,” said Ted Auch at FracTracker Alliance, with many other problems, he and others suspect, going undetected. “How many little spills are there?” In April, construction activities for the Rover Pipeline led to “inadvertent” releases of a total of more than two million gallons of drilling fluid at and near Ohio rivers and wetlands. Now a May 5 enforcement letter from the Ohio Environmental Protection Agency seeks $431,000 and other actions from Texas-based Energy Transfer Partners for alleged violations of Ohio laws. “We are significant proponents of shale oil and gas development in Ohio… but the governor would say you have to do it right,” said Ohio Environmental Protection Agency Director Craig Butler. Enforcing the state’s environmental laws in this case is “important to Ohio. It’s important for water quality, drinking water quality, and just the quality of life for Ohio.” On May 10, the Federal Energy Regulatory Commission told Energy Transfer Partners to add more environmental review and delay construction at several spots where work has not yet begun. Horizontal directional drilling uses water, clay and other materials to help push metal pipe through the earth.  Usually drilling mud comes back up and the driller logs its return. For nearly three weeks, however, Rover Pipeline logs showed some returns were absent or intermittent, according to FERC’s May 10 letter. In April drilling mud leaked into wetlands in six counties, Ohio EPA’s proposed order said. Last Friday Ohio EPA issued a proposed administrative order, seeking $431,000 for penalties, plus additional actions, including a restoration plan. Although inadvertent releases and other violations happen with other projects from time to time, “we don’t see patterns like this,” Butler said. “This is a significant pattern of violations of various water quality issues.” On Wednesday, FERC followed up with its own action. Until certain requirements are met, the company should delay construction at eight spots where horizontal directional drilling work has not yet begun, FERC’s letter said. Those locations are near the Ohio River, Portage River, Captina Creek and Middle Island Creek.

 Ohio now ranks ninth among oil and gas producing states -- Norwalk Reflector - As a result of the recent boom in horizontal hydraulic fracturing or "fracking," Ohio now ranks ninth among oil and gas producing states.Ohio still hasn't caught up with its peers when it comes to taxing the drilling industry — costing the state hundreds of millions of dollars in the midst of a revenue crunch, according to a new Budget Bite from Policy Matters Ohio. Ohio taxes oil extracted here by the barrel and gas per thousand cubic feet (MCF). That's a dime per barrel of oil and 2.5 cents per MCF of natural gas — doubled with regulatory costs assessments, but still very low. Between 2001 and 2010, the state's severance tax rate amounted to about 0.2 percent on the value of oil and 0.37 percent on natural gas. By comparison, the base rate of the severance tax on natural gas in Texas is 7.5 percent (4.6 percent for condensate). It's 6 percent in Wyoming, 7 percent in Oklahoma and 5 percent in Arkansas and West Virginia. In his 2018-2019 budget, Governor Kasich proposes increasing the tax to 6.5 percent for the value of oil, unprocessed natural gas and condensate; and 4.5 percent on processed natural gas and natural gas liquids. He estimates the state would collect $310 million in 2019 at this rate.In past budgets, Republican legislators killed proposals to increase the severance tax. But as lawmakers cite dwindling revenue and look to cut $400 million a year from the budget, Ohio can't afford to leave potential revenue on the table, said senior project director Wendy Patton. "It's time for Ohio to implement a real severance tax on fracking, like other states do,"

Wayne National Forest Fracking Lawsuit a Prime Example of Activists’ “Litigious Battles to Drive Regulation” – Jackie Stewart - EID recently highlighted that national fringe environmental groups have promised “litigious battles, to drive regulation” as part of their goal to ban fracking. That effort is playing out in Ohio, where the Center for Biological Diversity, Ohio Environmental Council, Heartwood and the Sierra Club have an axe to grind with the Bureau of Land Management (BLM) and the U.S. Forest Service (USFS) after their numerous protests against leasing in the Wayne National Forest failed to derail the administrative process within those agencies. With deep pockets and national support, these environmental groups have now decided to sue the BLM and USFS in federal court in hopes of a de facto moratorium on fracking in the Wayne National Forest from the bench.  First, it’s important to note that the author of this lawsuit— Center for Biological Diversity (CBD) — is an extremist “multimillion dollar litigation factory” that brags about ignoring science and the law in pursuit of its agenda. CBD doesn’t particularly care about the outcome of any particular case it files and is the ultimate practitioner of a “throw it against the wall to see if it sticks” legal philosophy. The numerous press releases CBD authors clearly indicate the organization’s core strategy is to pour sugar into the gas tank of the regulatory process in order to disrupt the process as much as possible. At CBD, wasting the time and energy of industry, regulatory agencies and the court system – not to mention taxpayer dollars – is a way of life.  CBD’s Ohio lawsuit is a perfect example.  A close look at CBD’s Ohio lawsuit against the BLM reveals that it is simply a hodgepodge of complaints the groups have litigated in the past, such as the claim USFS should have conducted more environmental reviews when it established its Forest Plan and supplemental review. The suit also takes aim at the BLM’s most recent extensive Wayne National Forest environmental review process, alleging the agency did not go far enough nor include enough public comment opportunities. Lastly, the lawsuit targets a litany of accusations made over alleged violations of the Endangered Species Act. In short, this new suit essentially calls into question a comprehensive environmental impact review process that’s taken place since 2006 and entirely discounts all of the due diligence both agencies have made to fully vet leasing in the Wayne from an environmental perspective. The BLM Environmental Assessment is 209 pages, after all, and the response to the December protest adds another 38 pages of rebuttal.

Fracking Pennsylvania to Make Plastics in Scotland? -  A new report from Food & Water Watch documents how a Scottish energy billionaire's dangerous plan to ship gas liquids across the Atlantic is linked to a controversial pipeline currently under construction across Pennsylvania.  The report, The Trans-Atlantic Plastics Pipeline, tracks how the fracking boom in the U.S. has spawned a resurgence in petrochemical and plastics manufacturing. A British company called Ineos has contracted with U.S.-based drilling companies to supply it with ethane, a gas liquid used to make plastics. And in order to deliver these liquids, Sunoco is building the 350-mile Mariner East 2 pipeline across the state. The pipeline ends at the Marcus Hook facility south of Philadelphia, where massive "dragon ships" owned by Ineos carry gas liquids to Norway and Scotland.  "Fracking is creating a public health and climate disaster while propping the highly polluting plastics industry," said Wenonah Hauter , executive director of Food & Water Watch.  "People on both sides of the Atlantic are suffering the costs, with extremely detrimental effects to our global environment—everything from air pollution and climate altering emissions to the proliferation of plastic waste can be tied to the companies benefiting from this poisonous process."  Shipping gas liquids to Europe will drive more fracking in Pennsylvania, with all the accompanying water and air pollution that has been well-documented over the last several years of drilling in the state. That drilling is the rationale behind the Mariner East 2. Though the project has been approved by state regulators, communities along the 350-mile route are fighting against the pipeline's construction through a mix of municipally-oriented strategies and nonviolent direct action tactics.  "Sunoco Logistics, aka Energy Transfer Partners, continues to insist that it is providing a 'public benefit,' while in fact it is simply lining its pockets at the expense of the environment,"

New Allegheny County map illustrates hazards of old abandoned wells - Pittsburgh Post-Gazette --Zoom in on Leetsdale on the state Department of Environmental Protection’s new map of legacy oil and gas sites in Allegheny County and you will see a cluster of yellow diamonds, representing long-forgotten oil wells, under what is now an industrial park on the eastern bank of the Ohio River. These wells are not in any official state database and their locations have not been verified in the field. They were plotted from paper mine maps drawn in the 1930s and they offer a best guess for the thicket of hazards left over from earlier eras of drilling that have been paved over, in some cases literally, on the outskirts of the modern city. “If I lived in the suburbs, I would be very interested to know what might be in my backyard,” said Stewart Beattie, a DEP information specialist, who created the map. DEP this week released a host of information about Pennsylvania’sabandoned oil and gas wells, including the results of a year-long study that helped clarify how hard the wells are to find based on old records in a changing landscape; how often they might be leaking; and how much it might cost to plug them to modern standards.Estimates put the number of unaccounted for wells in the state somewhere between 100,000 to 560,000. DEP predicts it would cost as much as $8 billion to plug 200,000 of them.Since the 1980s, DEP has plugged 3,066 legacy wells that don’t have current owners. But what the agency calls “gross underfunding” of its well plugging program has caused a steady decline in the number of wells decommissioned during the past decade — from a peak of about 350 wells in 2007 to 2016, when no routine plugging contracts were issued.The wells are remnants of a century of oil and gas drilling before wells needed to be registered or permitted. They were often left unplugged or stoppered with items like pieces of wood. Solutions to the state’s legacy well problem “will not be possible without finding new sources of revenue for the plugging program,” which now relies almost exclusively on surcharges attached to drilling permits, the study says.

Natural gas has displaced coal in the Northeast’s generation mix over the past 10 years -- The generation fuel mix of electricity in the Northeast Census division of the United States has shifted dramatically over the past 10 years. In the nine Northeast states, natural gas nearly doubled its share of the region’s total generation to 41% in 2016, up from 23% in 2006. Coal-fired generation fell from 31% to 11% of generation over the same period. Nuclear-powered generation as a share of total generation remained relatively constant near 34%. Despite more than doubling over the same period, the share of nonhydro renewables remains relatively small. Overall, total generation in the region declined by 3% between 2006 and 2016.  Increased access to low-cost natural gas from the Marcellus Shale and other regional shale plays has driven the switch away from coal in the Northeast United States. Environmental policies at the federal and regional level, such as production tax credits, the Regional Greenhouse Gas Initiative, and renewable portfolio standards, have also contributed to the decline in coal generation. Pennsylvania continues to be a leading coal generator nationally, despite falling by 31%, or 68 million kilowatthours (kWh), between 2006 and 2016. Coal-fired generation in both New York and Connecticut fell by 90% between 2006 and 2016, or by 19 million kWh and 4.1 million kWh, respectively.   Nuclear generators accounted for 33.9% of Northeast generation in 2006 and 34.98% in 2016. Although no new nuclear plants were constructed in the Northeast during this period, one plant, Vermont Yankee, ceased operations in December 2014. Vermont Yankee alone accounted for 72% of total generation in Vermont in 2006. In addition, several nuclear plants in the Northeast region received approvals for uprates that increased their capacities—some increasing by as much as 15%. Other differences in nuclear output in 2006 and 2016 are likely attributable to the timing of maintenance and refueling cycles.

Another update on the Marcellus / Utica gas pipeline takeaway projects. -  For years now, limited natural gas pipeline takeaway capacity has constrained gas production growth in the Marcellus/Utica natural gas shale plays in the Northeast. To fix that, a slew of pipeline projects were planned to relieve the constraints as regional supply began outstripping demand starting in 2014. Now, the region is on the verge of being unconstrained for the first time since the Shale Revolution hit Appalachia. Many of those projects have come online since then, and another 19 expansions totaling 15.5 Bcf/d are planned for completion by late 2019. If all goes as expected, this next round of projects should turn the Northeast market on its head again, as the capacity additions should start to outpace production growth. The problem, though, is that several projects have faced significant challenges in recent months, resulting in either cancellation or major delays. At the same time, Marcellus/Utica production growth has slowed dramatically in the past 18 months or so. In today’s blog, “In a Northeast Minute…Everything Can Change — An Update of Marcellus/Utica Takeaway Projects,” Sheetal Nasta begins a series looking at the status of regional takeaway capacity expansions. When we published our review of Northeast pipeline takeaway projects in late 2014 in the RBN Drill-Down report “50 Ways to Leave the Marcellus,” natural gas production in Appalachia had just broached 18 Bcf/d and showed no sign of slowing down. The oil price collapse was already under way, but production economics in the Marcellus/Utica remained favorable thanks to uplift in prices from the sale of natural gas liquids and condensates in the gas stream. At the time, regional gas production was beginning to exceed demand in most months of the year, and so the only real limit to production gains seemed to be the capacity of the pipeline network — originally designed to flow gas to the Northeast — to move gas to demand markets outside the region. Midstream companies were scrambling to rework their pipeline systems to handle the increasing volumes of gas needing to flow out of the Northeast. More than 50 pipeline projects were under development in and around the Marcellus/Utica, 41 of them specifically to increase takeaway capacity by 28 Bcf/d.

Trump Finally Nominates Two of Three Open FERC Seats - President Trump has finally announced his intent to nominate candidates for two of the three open seats on the Federal Energy Regulatory Commission (FERC) and send their names to the U.S. Senate for approval. Assuming they are confirmed, the two new commissioners will help shape America's energy future. We encourage them to continue FERC's bipartisan tradition of clean energy progress for the electricity grid amid today's rapidly evolving energy landscape. FERC—the independent federal agency that oversees the high power electric grid, natural gas pipelines and hydroelectric dam licensing—has been without a quorum since Feb. 3, when then-Chairman Norman Bay resigned, leaving the remaining Democratic commissioners (Acting Chairman Cheryl LaFleur and Colette Honorable) in two of the five seats. The two new nominees are Neil Chatterjee (Senate Majority Leader Mitch McConnell's energy advisor) and Robert Powelson (commissioner on the Pennsylvania Public Utility Commission and current president of the National Association of Regulatory Utility Commissioners). There also are rumors that Kevin McIntyre , an energy attorney at the large international law firm Jones Day, also will be nominated in the near future. (More about all three of them here ). As long as there are only four members of FERC, the possibility exists for a 2-2 deadlock. Adding more uncertainty is that Commissioner Honorable's term expires June 30. She's announced her decision not to seek another term, although she could agree to stay on until her replacement is named. Meanwhile, the White House has not announced who it wants to chair the commission.  Our simple message to the nominees: FERC needs to keep up with the fast-changing electric grid and avoid creating new barriers through inaction or new limitations. FERC has a strong bipartisan tradition of removing electricity market and planning barriers to new energy resources. With wind and solar hitting new output peaks daily, and energy storage coming on strong, FERC-regulated energy markets and planning must continue to evolve to reflect the new reality of a more efficient, cleaner, and affordable grid.

Doc Shows How Greens Trick The Media Into Attacking Fracking | The Daily Caller: A newly uncovered environmentalist memo from 2012 shows how green groups conspired to link hydraulic fracturing to health issues, despite a lack of scientific evidence.   The 2012 memo discussed how environmentalists lack evidence that fracking causes health issues. It suggests using the media to misrepresent the scientific community’s research to shut down fracking by linking it to health concerns, according to an investigation published Tuesday by the pro-industry group Energy In Depth (EID), which uncovered the memo.  The memo was prepared for the 11th Hour Project, which donates money to anti-fracking groups such as Earthworks, Food & Water Watch, Friends of the Earth, New Yorkers Against Fracking, and the Post Carbon Institute. “For years, we have seen an onslaught of inflammatory headlines and wild accusations about fracking and its supposed impacts on public health,” Steve Everley, a senior adviser for Energy In Depth, told The Daily Caller News Foundation. “This memo helps explain why: it was part of a strategy developed for a wealthy donor network that funds anti-fracking groups across the country. They wanted to prime the pump for lawsuits against the oil and gas industry, and the ultimate goal was to secure bans or other regulatory restrictions.” The memo instructs environmentalists to focus on attacking any scientific papers that disagree with their conclusions while getting any anti-fracking research “popularized in the media.” It also suggests focusing on emotional and relatable issues, such as mandating fracking be located far away from schools.  Environmental groups took the advice to heart in tip sheets for anti-fracking activists, advising them to appeal to people’s emotions, not their rationality, as well as using babies as props.

Huge Victory: Natural Gas Storage Plan Halted at Seneca Lake --  Sandra Steingraber - The news broke Wednesday in the most banal of venues: the biweekly environmental compliance report submitted by Arlington Storage Company to the Federal Energy Regulatory Commission (FERC). Deep in the third paragraph of section B, this wholly owned subsidiary of the Houston-based gas storage and transportation giant, Crestwood Midstream, announced that it was walking away from its FERC-approved plan to increase its storage of methane (natural gas) in unlined, abandoned salt caverns along the shoreline of Seneca Lake .  In its own words, "Arlington has discontinued efforts to complete the Gallery 2 Expansion Project."  It was a blandly expressed ending to a dramatic conflict that has roiled New York's Finger Lakes region for more than six years. Together with a separate—and still unresolved—plan for lakeside storage of propane (LPG) in adjacent salt caverns, Crestwood's Arlington operation has been the focus of massive, unrelenting citizen opposition that has taken many forms.  The Gas Free Seneca Business Coalition has, at last count, 398 members. Together with the more than 100 members of the Finger Lakes Wine Business Coalition , this group has been a powerful voice in promoting wine and agri-tourism—a $4.8 billion industry in New York State—as the centerpiece of the Finger Lakes economy, deploying renewable energy systems for wineries and providing an alternative vision to Crestwood's plan to turn the region into "the gas storage and transportation hub" for entire Northeast. In letters, petitions, press conferences, interviews and editorials, these business leaders have made clear that industrialized gas storage on Seneca Lake—with all the attendant pipelines , compressor stations, flare stacks and air pollution—is incompatible with the pristine environment on which wine and tourism depend.  Meanwhile, 32 municipalities—representing 1.2 million residents—have passed resolutions against gas storage on Seneca Lake. These efforts have played an important role in generating political pressure, capturing media attention , and raising awareness among community members about the public health threats created by storing highly pressurized, explosive gases in abandoned salt caverns situated below a lakeshore in an area crossed by geological fault lines.

Natural Gas Exports Can Solve U.S. Energy Glut -- The slogan “Made in the U.S.A.” resonates with Americans, except when there’s too much of a given product being made, which forces down prices along with the industry. One example is natural gas, where U.S. inventories have been largely above average for the last two years. The salvation lies in Liquefied Natural Gas, the clear, odorless liquid formed when natural gas is cooled to about minus 260 Fahrenheit. And that’s just what President Donald Trump is pushing for. His administration is moving to make the U.S. the world’s leading exporter of natural gas, and LNG would be is a central component of both energy and trade policy. This makes a lot of sense.  In recent years, there was strong domestic opposition to energy exports, particularly for reasons of national security. But after years of depressed prices resulting from improved technologies that reduced extraction costs, that opposition has eased. Proponents argue that natural gas exports can provide enhanced security to allies such as Japan; reduce European energy dependence on Russia, which has used gas exports as a political weapon; and address global climate change by replacing coal.  Trump’s policies to support oil and gas drilling by removing regulatory barriers to production, will support prices in the medium-term. Nonetheless, both domestic end-user demand and power generation demand are highly weather-sensitive, meaning a particularly cool summer or warm winter could result in severe regional surpluses, if not a national glut. LNG has been and will continue to be a growing source of offtake from future production. The U.S. has slowly come to realize that developing a nationwide infrastructure to substitute gasoline with LNG was a pipe dream. Today’s investments are steering toward electric and self-driving vehicles as well as renewable energies. That means the best bet is on the export market, where demand for LNG is growing rapidly.

US EIA says gas prices could see modest boost from exports, demand -- US Energy Information Administration projections for natural gas prices are headed up year on year, the agency said Tuesday in its monthly outlook. The 12-month moving average domestic gas consumption, coupled with exports at the end of last year, began to outpace the average supply of US gas from production and imports, a trend EIA expects to continue through 2017. That trend, EIA said, will put "modest upward pressure on prices." The agency, in its May Short-Term Energy Outlook, raised its forecast for second-quarter Henry Hub natural gas spot prices 12 cents to $3.16/MMBtu. The Q3 forecast also edged up to $3.21/MMBtu, 15 cents above EIA's April estimate. The agency put prices for full-year 2017 at an average $3.17/MMBtu, up 7 cents from the prior-month's estimate. Prices averaged $2.51/MMBtu in 2016.   Gas prices are expected to average $3.43/MMBtu in 2018, EIA said, lowering by 2 cents its estimate from April 2. Higher gas prices are generally positive for the coal industry. "US coal production is expected to rise 5% this year and about 1% in 2018 on higher coal-fired electricity generation, which would be the first back-to-back annual increase in coal output since 2010-11," EIA Deputy Administrator Howard Gruenspecht said Tuesday in a statement. EIA added in its report that "after declining by 1.7% in 2016, energy-related carbon dioxide emissions are projected to decrease by 0.7% in 2017 and then increase by 2.3% in 2018."

Bet You'd Be Shocked by How Much of Our Natural Gas Comes From Fracking  - While crude oil dominates the energy news, natural gas is one of the most important -- yet often overlooked -- sources of energy in the United States. According to the U.S. Energy Information Administration, more than one-third of America's electricity comes from natural gas; half of American homes use it for cooking, heating water and drying clothes; tens of billions of dollars' worth of goods are made from it, and hundreds of thousands of vehicles use it as a fuel. A whopping two-thirds of the natural gas produced in the U.S. is produced with hydraulic fracturing. And while there is some controversy around the risks of fracking, it has driven a huge increase in natural gas production and lowered the cost of the goods and energy produced from it. This table shows how hydraulic fracturing has increased significantly over the past nearly 20 years: But it's not just fracking alone that's increased; it was the pairing of horizontal drilling with hydraulic fracturing that's driven the increase in the use of fracking. Around a decade ago, there were serious concerns that America's supply of accessible natural gas was running out. Traditional vertical drilling methods had nearly exhausted the majority of North America's conventional reserves. In 2002, U.S. natural gas production peaked and would fall for the next four years. This situation caused natural gas prices to more than triple from 2000 to 2006: The pairing of fracking with horizontal drilling changed things. Since 2006, natural gas production in the U.S. has increased 40%, and natural gas prices have fallen by more than half:

A Sobering Look At The Future Of Oil ---- The current discussion about the future of oil is how soon will it be before petroleum becomes a sunset industry. If it isn’t already. Flat or falling demand. Carbon taxes. Electric cars. Renewable energy. Oil has no future. It is only a matter of time, although how much time remains is subject to considerable discussion and debate. Various prognosticators put forth differing view about when world oil demand will peak. Some say as early as 2030, others much later. Nobody says never. As for actually running out of oil, that issue has run its course. At least for now. How long the world stays in the oil business is of critical importance. This is illustrated by a Financial Post article April 28 titled, “Next battleground; Enbridge’s aging Great Lakes pipeline stirs new protest in Michigan”. Until recently, the battle against pipelines has been opposing new construction. Now it is existing pipelines. This opens yet another can of worms the industry and regulators have never really grappled with. Enbridge Line 5 crosses from Wisconsin to Michigan under the Mackinac Straits between Lake Michigan and Lake Huron, a distance of about 4.5 miles. Built in 1953 to the most demanding standards of the day, the Enbridge website says Line 5 transports about 540,000 b/d of Canadian light and synthetic crude and natural gas liquids to markets in Michigan and beyond. What has emerged is concern among campaigning Michigan politicians about the potential for a major spill into the Great Lakes, an event being politically branded as inevitable. Replacing this submerged section of the line is reported to cost $2.4 billion. Where it would go and who would pay is not mentioned. Enbridge routinely inspects the line and claims it is in good shape. Unfortunately, the failure of Enbridge Line 6B in 2010 which leaked 20,000 barrels of oil into Michigan’s Kalamazoo River in 2010 is still fresh in peoples’ memories. The ongoing maintenance of producing, processing and transportation assets is the responsibility of the owner, the same as changing the oil, tires and brakes on a car. It is assumed operators will maintain their sets in good working order, and the vast majority do. Maintenance capital budgets are part of every company. But what happens when cash gets tight? More importantly, what happens if and when the industry starts going out of business as so many hope?

Former Obama EPA Official Now Lobbying for Atlantic Coast Pipeline --  A new disclosure by Dominion shows that a long-time employee for the Environmental Protection Agency (EPA) is now lobbying for the controversial Atlantic Coast Pipeline (ACP).  Laura Vaught is Dominion’s Federal Affairs Policy Advisor, a position she began in March 2017. According to a Dominion lobbying report filed on April 20, 2017, she lobbied the Senate, House, and key regulatory agencies on issues that included “Permit for Atlantic Coast Pipeline” and “project development and advocacy” for the ACP.  Importantly, Vaught lobbied the National Park Service, U.S. Fish & Wildlife Service, and the U.S. Forest Service — all federal agencies that must approve the ACP for it to proceed.  However, immediately prior to joining Dominion, Vaught served for nearly six years in the EPA during the Obama administration in a number of positions that involved close contact with elected officials and regulatory agencies. These positions included Senior Advisor, Deputy Associate Administrator for Congressional Affairs, and Associate Administrator for the Office of Congressional and Intergovernmental Relations. Her last EPA position was as Associate Administrator in the Office of Policy — a position she left in January 2017, just weeks before she joined Dominion as a lobbyist. Vaught also served as Chief of Staff to Representative Rick Boucher, the longtime Democratic Congressman from Virginia’s 9th District. Vaught worked for Boucher from 1996 to 2011. Virginia is a crucial battleground state for the ACP. The revelation that Vaught, a former Obama EPA employee and congressional chief of staff, is lobbying for Dominion’s Atlantic Coast Pipeline is a stark example of the revolving door between environmental regulators and the fossil fuel companies that they oversee. Vaught is now working to smooth the path to regulatory approval for a pipeline that has generated enormous controversy and opposition, and is also in the middle of moving through a crucial stage of regulatory approval, with an eye on beginning construction in the fall of 2017.

Trump to consider new testing for offshore Atlantic oil and gas | TheHill: The Trump administration is considering letting six companies test for oil and natural gas off the Atlantic coast. The Wednesday decision by the Interior Department is an early step toward potential drilling in the Atlantic Ocean, reversing an Obama administration policy to reject such applications. “Seismic surveying helps a variety of federal and state partners better understand our nation’s offshore areas, including locating offshore hazards, siting of wind turbines, as well as offshore energy development,” Interior Secretary Ryan Zinke said in a statement.“Allowing this scientific pursuit enables us to safely identify and evaluate resources that belong to the American people.” The Wednesday announcement does not necessarily mean that any permits will be issued, since they still need to go through an approval process. The six companies had previously sought seismic testing approvals, but the Obama administration rejected them in January, leading the companies to appeal to an Interior board. Interior is now asking that board of administrative judges to allow the Bureau of Ocean Energy Management another chance to consider the requests. Zinke is presenting the policy change as fulfilling President Trump’s executive order signed last month to expand offshore oil and natural gas drilling. Seismic testing would allow the oil industry to research for the first time in three decades what resources could be under the ocean floor. 

Seismic Testing to Begin in Atlantic Ocean in Push for Offshore Drilling - The Interior Department announced it is moving forward with seismic surveys in the Atlantic Ocean, following President Donald Trump 's executive order last month to aggressively expand offshore drilling in protected areas off the Arctic and Atlantic oceans.  Six permit applications by energy companies—ones that were rejected by the Obama administration—are being reviewed by the department. The oil and gas industry has long pushed for seismic surveys used to search for oil and gas deposits deep below the ocean's surface.  However, environmental groups warn that the surveys are an extremely loud and dangerous process. "Seismic airguns create one of the loudest manmade sounds in the ocean, firing intense blasts of compressed air every 10 seconds, 24 hours a day, for weeks to months on end," Dustin Cranor, Oceana 's senior director of U.S. communications, told EcoWatch. "The noise from these blasts is so loud that it can be heard up to 2,500 miles from the source, which is approximately the distance from Washington, DC to Las Vegas."  “These blasts are of special concern to marine life, including fish, turtles and whales, which depend on sound for communication and survival," Cranor said. He noted that the government's own estimates show that seismic airgun blasting in the Atlantic could injure as many as 138,000 marine mammals like dolphins and whales, while disturbing the vital activities of millions more. Furthermore, Greenpeace said "pursuing this development stands at cross-purposes with the nation's necessary and rapidly accelerating move away from fossil fuels, and with previous commitments to address global climate change ."   Sea Shepherd Conservation Society's Capt. Paul Watson explained, "One of the major threats to the survival of cetaceans, is noise pollution. More seismic testing and military LFS testing will result in more strandings . This decision equates to a death sentence for thousands of whales and dolphins."

First Urals crude imported to US East Coast since 2013: data - Russian Urals crude was recently imported into the US East Coast for the first time since 2013, according to US Customs data. More shipments of the medium-to-light sour grade may be making the rare trip across the Atlantic as lower differentials, coupled with affordable freight rates, opened the opportunity, according to market sources.Two Urals cargoes aboard the same vessel were unloaded along the US East Coast within the past two weeks. The first, a 580,000-barrel shipment, arrived on the Elias Tsakos in Wilmington, Delaware, on April 30. Another 140,000 barrel shipment, also on the Elias Tsakos, arrived in Philadelphia on May 6. The cargoes were shipped by Statoil from storage in the Bahamas.

US distillate exports from gulf coast to Latin America on the rise -- U.S. exports of diesel and other distillates averaged 1.2 million barrels/day (MMb/d) in 2016, more than eight times their 2005 level and up slightly from 2015, another in a series of record-busting years for distillate exports. So far, 2017 looks like another winner. This year, though, a lot more distillate is being shipped south from Gulf Coast marine terminals to nearby Central America and South America, and less is being floated across the Atlantic to Western Europe. Today we consider recent trends in U.S. distillate exports and the significance of the export market to U.S. refiners. Way back in the 1970s—literally a lifetime ago for many RBN blog readers—U.S. exports of diesel and other distillates averaged less than 3 Mb/d. That’s no typo; daily distillate exports on a typical day back in the Disco Era were less than 3,000 barrels. Today, in the Shale Era, that many barrels of distillate are being exported from U.S. marine terminals every three and a half minutes or so. (We did the math—2016 distillate exports averaged 1.2 MMb/d; divide that by 24 (hours in a day), then by 60 (minutes in an hour) and you get 826 barrels/minute.) It goes without saying, then, that distillate exports play a key role in the profitability of U.S. refineries, especially (as we’ll get to) those along the Gulf Coast, the send-off point for the vast majority of U.S. refined products shipped overseas. The same is true for gasoline exports.

 All Washed Up? Shale Oil and Gas Drowns Out US Gulf of Mexico Shallows - Short-term contracts, dismantled infrastructure and lagging dayrates have long challenged shallow water drilling on the U.S. side of the Gulf of Mexico – but it’s the natural gas-belching shale plays that may finally turn the tide away from the shelf. In January 2007, there were 82 jackup rigs drilling in the shallow water of the U.S. Gulf (GOM). By January this year, that figure had dwindled down to 12. At the end of March, 11 jackups remained on the shelf, according to Rigzone Data Services. McDermott International Inc. began its exit from the U.S. shallows six years ago, said Scott Munro, McDermott’s vice president for the Americas, Europe and Africa. “There’s not much of the (U.S. GOM) shallow water that hasn’t been explored or attempted. Most of the low-hanging fruit has been taken; most of the big oil opportunities have been taken,” he said. “What was left really was gas opportunities … But then what happens? Mr. Shale shows up and the onshore shale plays just spit out gas as a by-product of oil production and so no one is spending a lot of money to develop offshore gas. It’s only if you can get out a nice oil find that people are really spending.”  A jackup requires up to 150 personnel on board (POB), according to Rigzone Data Services and Platts RigData. At a drop from 82 jackups to 11, that’s up to 10,659 jobs that won’t be coming back.  “I’m no economist, I’m no soothsayer, but I would say the chances of shallow water coming back in the USA coming back in any meaningful way is slim,” Munro said.

New pipeline infrastructure should accommodate expected rise in Permian oil production – EIA - As crude oil production in the Permian Basin of western Texas and eastern New Mexico has increased, pipeline infrastructure has also increased to deliver this crude oil to demand centers on the U.S. Gulf Coast. One indicator of a potential shortfall in available takeaway capacity in the Permian is a negative spread between the price of West Texas Intermediate (WTI) crude oil at Midland, Texas, and the price of WTI at Cushing, Oklahoma. Going forward, the Midland versus Cushing discount, which recently widened to more than $1 per barrel (b), is unlikely to be either as large or as persistent as it was following the rapid increase in Permian production from 2010 to 2014. At points in both late 2012 and mid-2014, WTI-Midland was priced at least $15/b lower than WTI-Cushing. Pipeline capacity expansions and other market changes are now underway to deliver more Permian crude oil to demand centers. Compared with other oil producing regions, the Permian has a large number of productive geological formations stacked in the same area. The Permian’s in-region refining capacity, close proximity to large refining centers on the Gulf Coast, and existing pipeline infrastructure also make the Permian attractive to oil producers. Crude oil production in the Permian grew from 886,430 barrels per day (b/d) in January 2010 to nearly 1.5 million b/d in January 2014, and this production level was more than could be accommodated by in-region refining capacity and pipeline capacity. This situation resulted in large price discounts at the crude oil gathering and transportation hub in Midland, Texas, compared with Cushing, Oklahoma, indicating that pipeline capacity was becoming constrained and crude oil was likely moving out of the region by more expensive methods, such as rail or truck. In 2014, WTI-Midland averaged a $6.94/b discount to WTI-Cushing, compared with a $1.68/b average discount during 2013. However, as new and expanded pipeline capacity was added, WTI-Midland’s discount to WTI-Cushing narrowed, falling to an average of $0.18/b in 2015 and $0.07/b in 2016. With the rise in oil prices from their low point in early 2016, EIA’s April Short-Term Energy Outlook (STEO) expects crude oil production growth in the Permian to accelerate. EIA’s April Drilling Productivity Report (DPR) indicates a total of 310 oil-directed rigs active in the Permian, 158 more than at the same time last year. The DPR also estimates crude oil production in the Permian at 2.3 million b/d as of April 2017, or almost 300,000 b/d higher than the same month in 2016.

Midstream Companies Struggle to Keep Pace with Permian Growth - Permian crude oil production and pipeline takeaway capacity out of the region are in a horse race —it’s a close one too, and the stakes are high. Twice in the past few years, Permian production growth has outpaced the midstream sector’s ability to transport crude to market, resulting in negative price differentials that cost many producers big-time. Now, thanks to increased drilling activity and producers’ heightened ability to wring more out of the play’s multistack formations, Permian production is expected to rise by at least another 1.5 million barrels/day (MMb/d) by 2022 —a 60%-plus gain over five years —raising the threat of another round of major price hits, maybe as soon as later this year. Today we continue a blog series on the challenges posed by rapid production gains in the hottest U.S. shale play. In Part 1 of this series, which is based on our new Drill Down Report, “With a Permian Well, They Cried More, More, More,” we discussed the fact that the Permian for the past two years has been the engine propelling U.S. crude oil production upward. The Permian’s Midland, Delaware and Central basins now produce 2.2 MMb/d, more than double the region’s 1.0 MMb/d output in 2010 and up 200 Mb/d in the past six months alone. Because the Permian has been a major production area for decades —producing as much as 2.0 MMb/d back in the mid-1970s before the play entered a 30-year-plus, pre-Shale-Era decline —there was substantial pipeline infrastructure in place when the ongoing resurgence in Permian production started seven years ago.

Oklahoma Governor Mary Fallin Signs Law Imposing Hefty Fines and Lengthy Jail Terms for Anti-Pipeline Protests -- Last Wednesday, Oklahoma governor Mary Fallin approved HB 1123, a bill aimed at stifling protests against oil and gas pipelines. The measure took effect immediately. The new Oklahoma statute declares an “emergency” exists and creates a new category of misdemeanor, as well as two additional felony counts. The statute imposes draconian penalties on protestors convicted of trespassing at a critical infrastructure facility— including chemical plants, liquid natural gas terminals, pipelines, ports and other transportation facilities, power plants, railways, and refineries (section 1 D 1 a-p). As summarized in Oklahoma Trespassing Laws Beefed Up Against Protesters by, the specified penalties are serious:The misdemeanor level allows for a fine of $1,000 and up to six months in county jail for willfully trespassing onto property containing critical infrastructure (Jerri-Lynn here: See section 1 A of HB 1123).The first felony level allows for a fine of no less than $10,000 and a prison sentence for up to 10 years for individuals that willfully trespass with the intention to damage, destroy, vandalize, deface, tamper with equipment, impede or inhibit operations of the facility. The final felony level is for a fine not less than $100,000 and a prison sentence for up to 10 years for successfully damaging, destroying, vandalizing, defacing or tampering with equipment in a critical infrastructure facility (Jerri-Lynn here: See sections 1 A and B of HB 1123). The statute targets not only protestors on-the-ground, but organizations– such as environmental groups– that “conspire” with them to trespass. The Intercept has teased out two of the more serious implications of targeting organizations as “conspirators” in Oklahoma Governor Signs Anti-Protest Law Imposing Huge Fines On “Conspirator” Organizations. First is the breadth of activities targeted: And second is the formidable level of penalties that may be imposed on these “conspiring” organizations,  with a maximum fine of 1 million dollars for the top felony category.

Fracking's Dark Secret - We've long known extracting oil and gas comes with negative consequences, and rapid expansion of hydraulic fracturing, or fracking, increases the problems and adds new ones—excessive water use and contamination, earthquakes , destruction of habitat and agricultural lands and methane emissions among them. As fossil fuel reserves become depleted, thanks to our voracious and wasteful habits, extraction becomes more extreme and difficult. Oil sands mining, deep sea drilling and fracking are employed because easily accessible supplies are becoming increasingly scarce. The costs and consequences are even higher than with conventional sources and methods. Of the many problems with the industry, methane emissions from fracked and conventional operations are among the most serious. Methane is at least 84 times more potent than carbon dioxide as a heat-trapping gas over the short term. Researchers estimate it's responsible for 25 percent of already observed climatic changes. One difference between methane and CO2: Methane remains in the atmosphere for a shorter time—around a decade, compared to many decades or centuries for CO2. Methane's relatively short lifespan means reducing the amount entering the atmosphere will have major and rapid results. Cutting methane emissions from the oil and gas sector is one of the cheapest, most effective ways to address climate change . The technology to do so already exists. It's absurd that the industry is leaking the very resource it wants to sell.  Methane comes from a number of sources, including animal agriculture and natural emissions. Global warming itself means methane once trapped in frozen ground or ice is escaping into the air.

Methane rule repeal expected to surface in Senate -  The Senate will try to beat the clock during the week of May 8 in a potential Congressional Review Act vote to repeal an Obama-era rule regulating methane emissions on public lands. Lawmakers are under pressure to hold a vote on methane ahead of a looming deadline for rolling back so-called “midnight regulations” issued in the waning months of President Barack Obama’s term. The CRA resolution of disapproval cannot be subject to a filibuster and requires only a simple majority. The Senate can only use the CRA to disapprove of Obama-era rules during the first 60 legislative days of this session, a deadline the Senate is scheduled to hit later in the week. Congress has already used the CRA to nullify a number of Obama-era regulations, including a stream buffer zone regulation that limited the placement of mining waste in streams. The Interior Department rule forces energy companies to curb emissions of methane escaping from wells and pipelines on public land. Most Republicans, joined by the Competitive Enterprise Institute, Americans for Tax Reform and other opponents, argue it will decrease energy production on federal lands and lead to fewer revenues from royalties and higher energy costs, as well as lost jobs. Environmental groups and other supporters of the rule contend the CRA resolution would impair—if not eliminate—the Bureau of Land Management’s ability to promote the recapture of wasted gas. The House easily passed the repeal in February. But the Senate vote is close because Republicans only control the Senate 52-48 and at least two GOP lawmakers—Sens. Lindsey Graham (R-S.C.) and Susan Collins (R-Maine)—are opposed to the measure. The vote has been delayed by unrelated objections from Sen. Charles Grassley (R-Iowa) and other senators seeking to trade a vote on a bill to eliminate a restriction on selling higher blends of gasoline and ethanol in the summer in exchange for a vote on the methane resolution. But Senate Majority Whip John Cornyn (R-Texas) said the Environment and Public Works Committee is considering a hearing and markup on the ethanol issue, a move Cornyn predicted would let the CRA vote proceed. 

GOP under pressure as Senate weighs vote on drilling rule - (AP) — Republicans from energy-producing states are under pressure as the Senate weighs whether to overturn an Obama-era regulation to restrict harmful methane emissions escaping from oil and gas wells on public land. A coalition of groups with ties to the fossil-fuel industry and the conservative Koch Brothers have waged a public campaign to overturn the Interior Department rule but have so far fallen short. Senate Republican leaders say they are close to getting the 51 votes needed to overturn the rule under the Congressional Review Act, but as a Thursday deadline approaches, no vote has been scheduled and key GOP senators remain publicly undecided. Two Republican senators — South Carolina's Lindsey Graham and Susan Collins of Maine — have said they will oppose the repeal effort, while Republican Sens. Cory Gardner of Colorado and Dean Heller of Nevada have not declared how they will vote. Sen. Rob Portman, R-Ohio, said late Monday he will support the repeal effort after weeks of public silence, saying he got assurances from Interior Secretary Ryan Zinke that he will take steps to reduce methane waste. Despite Portman's announcement, some environmental groups are optimistic they can score an unlikely victory by preserving the Obama-era rule under a Republican-controlled Congress and White House. "This was a longshot," said Mark Brownstein, vice president of the Environmental Defense Fund. "Is there any bigger or badder opponent than the oil and gas industry?" The methane issue "has captured the attention of local communities, and the reason is they are seeing the impact on their houses, their water and in some cases they are literally smelling it," Brownstein said. "When you have local groups getting engaged and speaking out ... it's incredibly hard for any elected representative to ignore that."

Dem senator: Possible methane vote would be ‘a huge step backward’ -- A top Senate Democrat on Monday said members will be forced to choose between “pollution or people” if Republicans bring to the floor a bill undoing an Obama administration methane rule. “It would be a huge step backward if the Senate repealed the [Bureau of Land Management’s] methane rule,” said Maria Cantwell(D-Wash.), the top Democrat on the Energy and Natural Resources Committee. “We can preserve and protect our valuable natural resources and we can protect the health of our citizens, or we can go back to more pollution and more waste.” ADVERTISEMENTCantwell said she thinks it's “likely” Republicans will vote this week on a Congressional Review Act (CRA) resolution undoing the BLM rule, which limits venting and flaring of methane at natural gas sites on federal land. Under the terms of the CRA, the Senate needs to pass the resolution by Thursday if it wants to quickly strip the regulation off the books. Sen. John Cornyn(R-Texas) told reporters last week that the bill will come to the floor before then, though leadership has yet to schedule a vote on the resolution. Cantwell, on a call with reporters Monday, previewed Democrats’ arguments in favor of keeping the methane rule in place. Supporters say cutting methane is good for both environmental and economic reasons: Methane is a potent greenhouse gas and contributes to climate change, but it’s also the main component of natural gas, and producers are able to sell off methane they capture that might otherwise have been released into the atmosphere. 

Bid to revoke Obama methane rule fails in surprise U.S. Senate vote | Reuters: The U.S. Senate on Wednesday rejected a resolution to revoke an Obama-era rule to limit methane emissions from oil and gas production on federal lands, dealing a blow to President Donald Trump's efforts to free the drilling industry from what he sees as excessive environmental regulation. The Congressional Review Act resolution received just 49 votes after Republican leaders scrambled for weeks to secure the 51 needed to pass it. The resolution would have revoked the rule and prevented similar regulations from being introduced. Getting the Trump administration to repeal the BLM rule had been a top priority of the oil and gas industry. Companies said it was unnecessary, would could cost them tens of thousands of dollars per well and hinder production. But not all Republicans supported the measure, in part because it would have made regulating methane waste more difficult in the future. Republican Senator John McCain of Arizona made a surprise vote against the resolution, joining fellow Republicans Lindsey Graham of South Carolina and Susan Collins of Maine in opposition to torpedo it. "While I am concerned that the BLM rule may be onerous, passage of the resolution would have prevented the federal government, under any administration, from issuing a rule that is ‘similar’," McCain said in a statement. He said the Interior Department should issue a new rule on to replace the existing one on methane leaks, which he called a public health and air quality issue.

Senate unexpectedly rejects bid to repeal a key Obama-era environmental regulation - The Senate on Wednesday narrowly blocked a resolution to repeal an Obama-era rule restricting methane emissions from drilling operations on public lands — with three Republicans joining every Democrat to preserve the rule. The 51-to-49 vote on a procedural motion marked the first time since Trump’s election that Republicans have failed in their attempt to use the Congressional Review Act to overturn Obama-era rules. Thirteen other resolutions, based on the 1996 law that allows Congress to overturn rules within 60 legislative workdays of their adoption, have succeeded. Thursday is the deadline for using the Congressional Review Act this way. The methane emissions rule, issued by the Interior Department’s Bureau of Land Management in November, addresses a potent greenhouse gas that is accelerating climate change. The rule would force oil and gas companies to capture methane that had been previously burned off or “flared” at drilling sites. According to federal estimates, the rule would prevent roughly 180,000 tons a year of methane from escaping into the atmosphere and would boost federal revenue between $3 million and $13 million a year because firms only pay royalties on the oil and gas they capture and contain. Sen. John McCain (R-Ariz.) unexpectedly voted no against a motion to proceed with consideration of the resolution, along with GOP Sens. Susan Collins (Maine) and Lindsey O. Graham (S.C.). Two Democrats who had considered backing the rule’s elimination — Heidi Heitkamp of North Dakota and Joe Manchin III of West Virginia — voted against the motion, and sent a letter asking Interior Secretary Ryan Zinke to make it less burdensome. In a floor speech after the vote, Sen. Tom Udall (D-N.M.), said “the very first victory” lawmakers have had in beating back a Congressional Review Act bill this year came from a combination of Democratic unity and a few Republicans’ willingness to buck their leadership. “Thank you so much for coming forward and seeing the common-sense nature of this issue,” Udall said, referring to Collins, Graham and McCain. 

Huge Win in Senate: Oil and Gas Industry's Attempt to Gut Methane Rules Fails - In a win Wednesday for oil and gas-patch communities and taxpayers, a procedural vote failed in the Senate, preventing a Congressional Review Act resolution from nullifying the Bureau of Land Management's (BLM) Methane Waste Rule. The vote to proceed to debate on the resolution failed, 49–51. This rule is a common sense standard to limit wasteful methane pollution from oil and gas operations on public lands . The Congressional Review Act is a controversial and anti-democratic tactic that anti-environmental extremists in Congress attempted to use to push this pro-polluter agenda item forward. "Just when we thought all hope was lost, common sense prevailed today in the United States Congress," Jessica Ennis, Earthjustice senior legislative representative, said. "By preserving this win-win rule that protects public health and saves taxpayers money at the same time, Congress is managing to slowly rebuild its credibility as an institution that can serve as a check against powerful corporate interests." Each year, oil and gas companies leak or deliberately vent millions of tons of methane , a potent climate pollutant, into the atmosphere during oil and gas operations. Methane pollution from these operations not only speeds-up global warming, but is often accompanied by toxic air pollutants like benzene, formaldehyde and ethylbenzene, threatening the health of residents who live nearby. To address this problem, the Bureau of Land Management (BLM) recently finalized a waste prevention rule, which reduces methane pollution and enjoys wide public support; in a poll out earlier this year, 81 percent of Western voters surveyed said they supported leaving the BLM methane rule in place.  Fifty-one senators voted in accordance with their constituents wishes.

Halliburton In Colorado: Board Member’s Donation Shows Power Of Oil And Gas Industry - A top fossil fuel industry official poured $40,000 into the Colorado Republican Party’s super PAC on the same day the state’s legislature began considering a bill to limit the oil and gas industry’s fracking and drilling near schools, according to state documents reviewed by International Business Times. Soon after the contribution from Halliburton board member J. Landis Martin, Republican lawmakers lined up against the legislation. They eventually killed it — days before a deadly blast at a home near an oil well in Northeastern Colorado.Halliburton has a large presence in Colorado. The company says it employs 1,900 people in operations across the state; it bankrolled a 2012 effort to defeat municipal fracking regulations in the state; and it has a top executive on the executive board of the Colorado Oil and Gas Association —  an industry lobbying group that fought the setback legislation, according to state records. (Halliburton is a member of the COGA and has touted its links to the group in the past.) Martin not only serves on Halliburton’s board, he is also chairman of a private equity firm that invests in a Colorado-based company that provides fracking materials to fossil fuel operations in the state and elsewhere. Martin’s March 14th donation was one of the single largest individual contributions in the Colorado Republican Party’s modern history, and the second largest ever given to the party’s super PAC, according to data from the National Institute on Money In State Politics.

What the commissioners can (and can’t) do about fracking -- Last Sunday’s Daily Camera contained an op-ed piece signed by all three Boulder County Commissioners explaining to their constituents, yet again, why they can’t impose a moratorium or an outright ban on oil and gas production in Boulder County — as the local anti-fracking cult continues to demand.The brief answer, in case you’ve been in a persistent vegetative state for the past year, is the rule of law.OK, one more time:Last year, the Colorado Supreme Court declared protracted and serial moratoriums on oil and gas drilling, like Boulder County’s, were both unconstitutional and a violation of state law.The commissioners’ justification for their endless moratoriums — their re-writings of their oil and gas regulations — was so transparently bogus that Colorado Attorney General Cynthia Coffman sued the commissioners to force them to start accepting applications for drilling permits. Had they continued to stall, they very likely would be looking at a court order and maybe contempt of court proceedings after that, not to mention damage suits from oil companies and property owners.This prodded the commissioners to finally adopt new regulations on March 23. They are so deliberately Kafkaesque and over-reaching that they will likely get sued by the oil and gas industry for exceeding their authority. None of which has kept the county’s green-washed rads from calling the commissioners sell-outs to Big Oil and demanding they ban drilling anyway instead of adopting regulations that attempt to strangle it in red tape.

Study: Fracking, north-south drilling open up Wyoming oil -  AP) — Certain approaches to hydraulic fracturing — the more of it, the better — and directional drilling appear the secret to successfully tapping a previously unprofitable oil deposit, according to a Wyoming State Geological Survey report released Monday. For decades, geologists thought the Codell Sandstone of southeast Wyoming was too dense to make drilling worthwhile. Then came the two techniques that have opened access to such deposits nationwide: Fracking, or pumping pressurized water mixed with fine sand and chemicals into wells to break open deposits, and directional drilling. The Codell Sandstone has received far less attention than the overlying Niobrara Shale in Colorado, Wyoming and Nebraska but the same techniques have revolutionized drilling in both. Six companies have produced oil from 119 wells targeting the Codell Sandstone east of Cheyenne over the past five years. The Wyoming State Geological Survey looked at what the most productive Codell wells have in common. Some of the wells, besides tapping the almost 9,000-foot-deep layer of oil-bearing sandstone, were drilled up to two miles to the side of the well pad. Wells drilled into the Codell toward the north or south tended to produce more than those drilled toward the east or west, geologists Rachel Toner and Erin Campbell wrote. Such wells might intersect with more oil-bearing fractures in the formation, they speculated. The top-producing Codell wells also have undergone the most fracking. Each had at least 40 frack stages, or individual fracking zones, along their course. They also used at least 200,000 barrels of water-chemical mix and between 10 million and 12.5 million pounds of proppant, or the fine sand used to prevent the cracks that are opened by fracking from closing back up again. 

U.S. lawmakers seek looser energy development rules for tribal lands | Reuters: A bill to ease restrictions on energy development on U.S. tribal lands has a good chance of passing the Republican-controlled Congress this year, after several failed attempts since 2013, the chair of the Senate Indian affairs committee said. Many Republican lawmakers, along with President Donald Trump, have expressed support for more oil drilling, coal mining and other energy projects on Native American reservations, which are overseen by the federal government. Several additional layers of regulatory bureaucracy have slowed those efforts. "I think we will be able to get the bill through the House this go around," Republican Senator John Hoeven of North Dakota, who authored the bill with seven other Republican Senators, said in a recent interview with Reuters. He said he believed the bill also had the support of "a broad spectrum of tribes across the country" and would "empower" Native Americans. The bill, dubbed the Tribal Energy Development and Self Determination Act, would authorize tribes to conduct their own energy resource appraisals. It would streamline the permitting process for drilling and mining and provide incentives for tribes to enter into joint-venture agreements with private companies. Former President Barack Obama had opposed a previous House version of the bill in 2015 because it would have exempted tribes from some federal environmental regulations. Other versions were blocked after being rolled into broader bills that were defeated. Tribal lands cover just 2 percent of the nation's surface but by some estimates contain as much as a fifth of all remaining U.S. oil and gas reserves.But clearing regulatory hurdles for a single project on tribal lands can take as many as 50 steps, compared to a half dozen on private property, according to Reuters interviews conducted in January with tribal leaders, lawyers, oil company executives and federal regulators.

Dakota Access Pipeline protest movement now focuses on the money -  It’s been a tough few months for opponents of the Dakota Access Pipeline (DAPL). First Donald Trump officially approved the $3.8 billion project. Then indigenous people were forced to clear out of the Oceti Sakowin and Sacred Stone protest camps. And with construction done, oil has now begun flowing from North Dakota to Illinois. But the opposition has not faded away. In fact, it's entering a new phase by moving from the plains of North Dakota into city councils and corporate boardrooms. And its indigenous leaders are scoring big victories. They’ve convinced cities to divest billions of dollars in their portfolios from Wells Fargo, which is financing about 5 percent of Dakota Access. Several major European banks have also dropped investments in the project. The protest camps at the Standing Rock Indian Reservation “planted seeds in thousands upon thousands of people’s moral sensibilities,” said Jackie Fielder, a 22-year-old indigenous activist. She’s now fighting to get San Francisco to divest: “I don’t think [the DAPL opposition] is nearly over. It’s multiplying.”The DAPL divestment movement may foreshadow similar protests to come against the Keystone XL Pipeline project, which President Trump also green-lit, and other infrastructure that would increase planet-warming greenhouse gas emissions.Fielder was born and raised in Long Beach, California. But she has deep ancestral ties to the land and water Standing Rock protesters are fighting to protect. She’s an enrolled member of North Dakota’s Three Affiliated Tribes – and is also descended from the Cheyenne River Sioux Tribe, a key leader in the Dakota Access opposition.

Dakota Access Pipeline Divestiture and Climate Change Politics  --The Financial Times reports today on last-ditch efforts to thwart the Dakota Access Pipeline (DAPL) in Dakota pipe lenders under pressure to withdraw: A number of banks funding the controversial $3.7bn Dakota Access Pipeline have pulled out of the project, following environmental and human rights concerns from the public and big investors that it would contaminate drinking water and damage sacred burial sites of the Standing Rock Sioux tribe. Efforts to force divestiture focus on two prongs: those banks funding the project, and on states and cities– such as Seattle, Washington; Eugene, Oregon; and Providence, Rhode Island– that invest in lenders, such a Wells Fargo Bank– that have financed the project, as discussed in this recent opinion piece in The Guardian, We can resist the Dakota pipeline through a powerful tool: divestment.  The impact of these moves is unlikely to thwart DAPL — especially as Trump has provided a full-speed ahead for construction of both the DAPL and Keystone XL pipelines, as I discussed more thoroughly in this post, Trump Approves Keystone XL Pipeline, Making Good on Campaign Promise. I shouldn’t neglect to note that the way for Trump ’s DAPL policy was cleared by his predecessor, who as usual, while virtue-signalling his support for the #noDAPL cause, failed to stop construction of the pipeline during his presidency, as I discussed in this previous post, Obamamometer Whispers DAPL Sweet Nothings to Lure Progressives. Now, with huge amounts of money at stake, contracts in place, and most of the pipeline built, it would take a massive intervention by a severely avenging Jehovah to prevent DAPL’s completion. But I am intrigued by the success that #noDAPL advocates have had in pressing various European lenders to pull the plug in DAPL. Allow me to quote at length from the FT’s account:

Dakota Access pipeline has first leak before pipeline is fully operational - The Dakota Access pipeline has suffered its first leak, outraging indigenous groups who have long warned that the project poses a threat to the environment.The $3.8bn oil pipeline, which sparked international protests last year and is not yet fully operational, spilled 84 gallons of crude oil at a South Dakota pump station, according to government regulators.  Although state officials said the 6 April leak was contained and quickly cleaned, critics of the project said the spill, which occurred as the pipeline is in the final stages of preparing to transport oil, raises fresh concerns about the potential hazards to waterways and Native American sites. “They keep telling everybody that it is state of the art, that leaks won’t happen, that nothing can go wrong,” said Jan Hasselman, a lawyer for the Standing Rock Sioux tribe, which has been fighting the project for years. “It’s always been false. They haven’t even turned the thing on and it’s shown to be false.” The pipeline, scheduled to transport oil from North Dakota to Illinois, inspired massive demonstrations in 2016 and was dealt a major blow when the Obama administration denied a key permit for the project toward the end of his presidency. But shortly after Donald Trump’s inauguration, the new administration ordered the revival of the pipeline and worked to expedite the final stage of construction.  The Standing Rock tribe, which has fought the pipeline corporation Energy Transfer Partners and the US government in court, has argued that the project requires a full environmental study to assess the risks of the pipeline. But under Trump, who has close financial ties to the oil company, the project recently completed construction by the Standing Rock tribe’s reservation in North Dakota and has been loading oil in preparation for a full launch.

The Dakota Access Pipeline Leaked 84 Gallons in April and It's Not Even Fully Operational: The Dakota Access pipeline, which was at the center of protests by the Standing Rock and Cheyenne River Sioux tribes as well as environmentalists, leaked 84 gallons of oil in April, according to a report from the Associated Press.The pipeline, which is not yet fully operational, was filled with oil in preparation to begin service at the end of March of this year after duplicitous, ill-tempered toddler President Donald Trump signed an executive order for its advancement, just two days after the collective national nightmare that was the inauguration. News of the leak was published in a searchable database on South Dakota’s Department of Environment and Natural Resources website. But there was no public announcement about it because the state doesn’t issue news releases about leaks unless they prove to be a threat against public health, drinking water reserves or fisheries, according to Brian Walsh, an environmental scientist with the agency. The leak took place on April 6 and was quickly contained.  Jan Hasselman, an attorney representing the Standing Rock Sioux Tribe, who, according to the Guardian, has been fighting against this pipeline for years, expressed disappointment and again, stressed the need for a closer environmental assessment. “It doesn’t give us any pleasure to say, ‘I told you so.’ But we have said from the beginning that it’s not a matter of if, but when,” Hasselman told the Guardian. “Pipelines leak and they spill. It’s just what happens.”

Trump Resurrects Controversial Fracking Project - Proving once again that elections have consequences, the Trump Administration has resurrected a controversial fracking proposal in California’s Los Padres National Forest that had been on hold for nearly three years. The news came just days before Donald Trump reversed another Obama-era policy, signing an executive order to open up California’s coastal waters for oil drilling. When Texas-based oil company, Seneca Resources Corporation, applied in 2014 to frack eight new oil and gas wells and build 5,000 feet of new pipeline in and around the Sespe Wilderness, environmental organizations sprang to action. One group, Save the Sespe, gathered over 3,000 signatures from concerned citizens who opposed the project, expressing concern about air and water contamination, threats to wildlife, greenhouse gas emissions, increased seismic activity, and water depletion. In January 2015, a report from California’s Department of Oil, Gas & Geothermal Resources confirmed those fears, concluding that fracking in the Sespe posed “significant and unavoidable” environmental impacts to air quality, biological resources, climate change, recreation, and worker safety. After DOGGR released that report, the U.S. Forest Service placed the fracking proposal “on hold,” a status that remained unchanged until last month. Trump’s Forest Service has now put the project back on track and is conducting an environmental assessment - the lowest level of federal review – for the drilling proposal. Local groups will organize opposition to the project once the public comment period opens.  

  Legal Settlement Halts Effort to Open 1 Million Acres in California to Oil Drilling, Fracking -- Conservationists have forced the Trump administration to halt plans to open more than 1 million acres of public land and mineral estate in California to oil drilling and fracking. The victory preserves a four-year-old moratorium on leasing federally owned land in the state for oil and gas development. The legal settlement, approved Wednesday, resolves a lawsuit brought by the Center for Biological Diversity and Los Padres ForestWatch, represented by Earthjustice. The agreement requires the Bureau of Land Management to rework a resource-management plan that would have auctioned off drilling rights on vast stretches of public land in California’s Central Valley, the southern Sierra Nevada, and Santa Barbara, San Luis Obispo and Ventura counties. “This is a big victory for California and a major blow to Trump’s plan to turn our public lands over to oil companies,” said Brendan Cummings, the Center’s conservation director. “Despite the petroleum industry’s stranglehold on the White House, these beautiful wild places are still off limits to drilling and fracking. That protects our water, wildlife and climate from fracking pollution.” The BLM has not held a single lease sale in California since 2013, when a federal judge first ruled that the agency had violated the National Environmental Policy Act by issuing oil leases in Monterey County without considering the environmental dangers of fracking. The new settlement will continue that de facto leasing moratorium. “This agreement ensures that public lands along California’s central coast — and the communities that depend on them — are protected from the harmful effects of oil drilling and fracking,” said ForestWatch Executive Director Jeff Kuyper. “Our region’s wildlife, clean water and scenic landscapes are too valuable to sacrifice to development.” 

690,000 Contiguous Acres in Alaska May Soon Be Open to Fracking -- Steve Horn  -- Hydraulic fracturing's horizontal drilling technique has enabled industry to tap otherwise difficult-to-access oil and gas in shale basins throughout the U.S. and increasingly throughout the world. And now fracking , as it's known, could soon arrive at a new frontier: Alaska.  As Bloomberg reported in March, Paul Basinski , a pioneer of fracking in Texas' prolific Eagle Ford Shale , has led the push to explore fracking's potential there, in what's been dubbed " Project Icewine ." His company, Burgundy Xploration, is working on fracking in Alaska's North Slope territory alongside the Australia-based company 88 Energy (formerly Tangiers Petroleum ). "The land sits over three underground bands of shale, from 3,000 to 20,000 feet below ground, that are the source rocks for the huge conventional oilfields to the north," wrote Bloomberg. "The companies' first well, Icewine 1, confirmed the presence of petroleum in the shale and found a geology that should be conducive to fracking." According to an Australian Securities Exchange filing , in April of this year, 88 Energy and Burgundy Xploration began pre-drilling procedures for Icewine 2, a second fracking test well. In the filing, which also noted receipt of a Permit to Drill from the Alaska Oil and Gas Conservation Commission, 88 Energy said it expects to begin "stimulation and production testing" in June or July.  When all is said and done, the two companies may soon have a plot of land 690,000 contiguous acres in size, according to the Securities Exchange filing. A May 3 Securities Exchange filing noted that 88 Energy is still on schedule for Icewine 2.

Secretly Approved in Alaska, Will LNG Trains Soon Appear in Rest of US?  - Steve Horn - In 2015, a federal rail agency authorized the Alaska Railroad Corporation to ship its first batch of liquefied natural gas (LNG) by rail in Alaska, but granted this permission behind closed doors, according to documents obtained by the Center for Biological Diversity (CBD) and provided to DeSmog.The documents, a series of letters and legal memoranda obtained through the Freedom of Information Act (FOIA), show that the Federal Railroad Administration (FRA) may have violated the National Environmental Policy Act (NEPA) by permitting the shipping of LNG, a highly combustible and flammable material, via rail without any public notification or comment period. The agency granted the Alaska Railroad Corporation a legal exemption under 49 C.F.R. § 174.63(a).That federal statute mandates that a “carrier may not transport a bulk packaging … containing a hazardous material in container-on-flatcar (COFC) or trailer-on-flatcar (TOFC) service … unless approved for transportation by” the FRA.The Association of American Railroads (AAR), a rail industry lobbying group, has since petitioned the FRA for the ability to ship LNG tankers by rail (as opposed to containers or trailers on flatcars), filing the request on January 17, according to documents on file at“AAR petitions for rulemaking to authorize the transportation of methane, refrigerated liquid (“LNG”), by rail in … tank cars,” reads the AAR petition. “LNG should be authorized for rail transportation because it is a safe method of transporting this commodity, LNG shippers have indicated a desire to use rail to transport it, and because railroads potentially will need to transport LNG for their own use as a locomotive fuel.”In its petition, AAR — whose members include nearly all of the major rail companies — says that natural gas companies want to explore transporting LNG by rail in various regions around North America. “Notwithstanding the requirement for a special approval, customers have expressed interest in shipping LNG by rail from Pennsylvania to New England, and between the U.S. and Mexico,” wrote AAR. “Authorizing transportation of LNGby rail likely would stimulate more interest.”

Canada's Suncor prepares oil sands growth as global majors exit | Reuters: Even as the world's largest energy companies exit Canada's high-cost oil sands the country's top producer Suncor Energy is lining up its next phase of growth in the world's third largest crude reserves. The preliminary plans for new projects in remote northern Alberta follow a stream of multi-billion dollar deals in which international oil majors sold off oil sands assets to Canadian producers, who are betting technology and economies of scale will make the region competitive with other plays globally. Suncor said on Monday it will file a regulatory application for its 160,000 barrel-per-day Lewis project later this year, and in March received approval for the 80,000 bpd Meadow Creek East plant. It also plans to file an application for the 40,000 bpd Meadow Creek West project later this year. The company has not yet taken a final investment decision on any of the projects but if sanctioned they would boost the company's current output of 680,000-720,000 bpd by more than a third. In total, Canada produces around 4 million bpd. Calgary-based Suncor cemented its position as the largest oil sands operator last year when it bought Canadian Oil Sands Ltd and Murphy Oil's stake in the giant Syncrude mining and upgrading project in two deals worth over C$5 billion ($3.66 billion). Its strategy for future growth relies on building identical smaller thermal plants to help cut costs. This is how future development across the industry is expected to look, as the exit of the majors has drawn a line for now under the megaprojects that drove the industry's rapid expansion over the past 15 years. Suncor will add new plants able to produce between 30,000-40,000 barrels per day every 12-18 months, chief executive Steve Williams said on a quarterly earnings call last month.

Canada govt, industry to spend $51 mln on oil sands clean tech projects | Reuters: The Canadian and Alberta governments and three energy companies said on Thursday they will spend C$70 million ($51.14 million) to develop three new clean technology projects, aimed at cutting costs and carbon emissions in the country's oil sands. Northern Alberta's vast oil sands hold the world's third-largest crude reserves but are costly to operate and require carbon-intensive production methods, factors that have prompted a number of international oil majors to pull back from the patch in recent months. The sector is now concentrated in the hands of a smaller pool of domestic players, who have repeatedly said technology will be the key to remaining competitive. Canada's Ministry of Natural Resources is contributing C$26.2 million in funding under its previously announced Energy Innovation Program, which has C$50 million over two years to support the development of clean oil and gas technologies. Provincial government-funded agency Alberta Innovates will invest C$5.2 million, while the three companies involved - Cenovus Energy Inc, MEG Energy Corp and privately held Field Upgrading - will provide the additional C$43.3 million. "Innovation like this is critical because while the transition to a low carbon future is well underway the world will continue to rely on fossil fuels for years to come. Our responsibility is to make them cleaner," said Canada's Minister for Natural Resources Jim Carr. The funding will help take all three technology projects towards the commercial demonstrations stage.

EIA's Short Term Energy Outlook For May, 2017, Has Been Released

  • Increased drilling rig activity is expected to boost to U.S. crude oil production this year and next, with forecast production in 2018 averaging 10 million barrels per day.
  • Higher oil production from the United States, along with rising oil output from Canada and Brazil, is expected to curb upward pressure on global oil prices through the end of 2018.
  • The recent decline in crude oil prices and rising gasoline inventories are cutting into pump prices, lowering the average price U.S. drivers are expected to pay for gasoline this summer.
  • U.S. gasoline inventories rose in April, a month when they normally fall.
  • Because of higher overall pump prices this year, the average U.S. household is expected to spend about $150 more for gasoline during 2017 than last year. However, gasoline expenditures are still expected to be lower than the average for the previous five years.
  • U.S. industrial production growth, rising rail traffic, and higher drilling rig activity are pushing up distillate fuel use.
  • U.S. marketed natural gas production is expected to increase almost 5% next year.U.S. electricity generation is expected to be flat this year and then increase in 2018, with natural gas-fired generating facilities accounting for the biggest share of electricity supplies during both years.:
  • U.S. coal production is expected to rise 5% this year and about 1% in 2018 on higher coal-fired electricity generation, which would be the first back-to-back annual increase in coal output since 2010-11.
  • The amount of U.S. wind power generation capacity is expected to top 100 gigawatts by the end of next year, when it would account for 9% of the electric power sector’s total generation capacity, and provide more than 6% of total electricity supplies.

NYMEX June gas rises after smaller-than-expected storage injection - The NYMEX June natural gas futures contract rose 8.4 cents Thursday to settle at $3.376/MMBtu after the US Energy Information Administration reported a smaller-than-expected build in gas storage inventories in the week that ended May 5. EIA estimated a net injection of 45 Bcf for last week, 9 Bcf below the 54 Bcf build expected by a consensus of analysts surveyed by S&P Global Platts. Inventories totaled 2.301 Tcf as of May 5, down 13.9% from where stocks were at the same time last year. The largest injection by region was seen in the East at 25 Bcf, which boosted regional stocks to 350 Bcf. However, that total is nearly 25% lower than the 466 Bcf reported for the same time in 2016, according to EIA data. A decrease in dry gas production is seen as a key reason why the storage total is lagging the year-ago level. According to data from Platts Analytics' Bentek Energy unit, US dry gas production is down 1.8 Bcf/d so far in 2017. Concurrently, there has been an increase in both exports to Mexico and in demand for LNG terminal feedgas of a combined 2.1 Bcf/d year to date, which has decreased the supply of gas to the domestic market. US demand on Thursday is expected to tick 900 MMcf higher compared with Wednesday, with residential and commercial consumption responsible for 800 MMcf of the increase, according to Platts Analytics data. Power burn is expected to be unchanged. In the most recent six- to 10-day outlook from the National Weather Service, temperatures are expected to be below average in the West, while the Southeast region is forecast to see above-average temperatures, which could boost power burn next week.

US and China agree closer cooperation on LNG trade -  The US and China have agreed to advance their economic cooperation in the energy sector, in a move aimed at improving access of US-based LNG exporters to the world's third largest consumer of the fuel. The agreement on LNG is one of 10 initial actions, released by the White House Wednesday under the framework of the US-China Comprehensive Economic Dialogue, aimed at promoting economic engagement and cooperation between the two world powers in a range of issues including energy, agriculture, investment and finance. "The United States welcomes China, as well as any of our trading partners, to receive imports of LNG from the United States," the release said. "Companies from China may proceed at any time to negotiate all types of contractual arrangement with US LNG exporters, including long-term contracts, subject to the commercial considerations of the parties."It continued to say the US treats China no less favorably than other non-free trade agreement trade partners with regard to LNG export authorizations, but details on how cooperation was to move forward were scarce. China is already an importer of US-sourced LNG, having received 212,000 mt in 2016 and 420,000 mt so far in 2017, according to Platts Analytics, through a combination of spot deals and long-term contracts with portfolio suppliers. It imported its first LNG from the US in late August 2016, when state-owned CNOOC received a cargo from the Sabine Pass export facility in the US Gulf of Mexico aboard the LNG carrier Maran Gas Apollonia, cFlow, S&P Global Platts trade flow software, showed. It was the first cargo from the Lower 48 States to reach Northeast Asia since Sabine Pass commenced operations in February 2016, and the first LNG tanker to transit the newly expanded Panama canal.  

Shale Drillers Are Outspending the World With $84 Billion Spree | Rigzone-- U.S. shale explorers are boosting drilling budgets 10 times faster than the rest of the world to harvest fields that register fat profits even with the recent drop in oil prices. Flush with cash from a short-lived OPEC-led crude rally, North American drillers plan to lift their 2017 outlays by 32 percent to $84 billion, compared with just 3 percent for international projects, according to analysts at Barclays Plc. Much of the increase in spending is flowing into the Permian Basin, a sprawling, mile-thick accumulation of crude beneath Texas and New Mexico, where producers have been reaping double-digit returns even with oil commanding less than half what it did in 2014. That’s bad news for OPEC and its partners in a global campaign to crimp supplies and elevate prices. Wood Mackenzie Ltd. estimates that new spending will add 800,000 barrels of North American crude this year, equivalent to 44 percent of the reductions announced by the Saudi- and Russia-led group. “The specter of American supply is real,” Roy Martin, a Wood Mackenzie research analyst in Houston, said in a telephone interview. “The level of capital budget increases really surprised us.” Drilling budgets around the world collapsed in 2016 as the worst crude market collapse in a generation erased cash flows, forcing explorers to cancel expansion projects, cut jobs and sell oil and natural gas fields to raise cash. The pain also swept across the Organization of Petroleum Exporting Countries, which in November relented by agreeing with several non-OPEC nations to curb output by 1.8 million barrels a day. Oil prices that initially popped above $55 in the weeks after the cut was announced have since dipped to around $46, reflecting pessimism that the OPEC-led deal can withstand the onslaught of U.S. shale. So far, independent American explorers such as EOG Resources Inc. and Pioneer Natural Resources Co. are holding fast to their ambitious growth plans. Some recently finished wells in the Permian region yielded 70 percent returns at first-quarter prices, EOG Chief Executive Officer Bill Thomas told investors and analysts during a conference call on Tuesday. EOG, the second-largest U.S. explorer that doesn’t own refineries, plans to boost spending by 44 percent this year to between $3.7 billion and $4.1 billion. Pioneer is eyeing a 33 percent increase to $2.8 billion. The sub-group that includes North American shale drillers like EOG and Pioneer is collectively targeting $53 billion in spending this year, up from $35 billion in 2016,

 US producers boost oil hedges to backstop accelerated capital investment - After reducing capital expenditures by 70% in 2014-16, U.S. exploration and production companies (E&Ps) have collectively taken their foot off the brake and stomped on the gas, boosting 2017 capital outlays by an impressive 42% to kick-start production growth. At first glance, the move may seem somewhat reckless. After all, E&Ps just weathered a crisis caused by plunging oil prices partially through impressive capital discipline, and the price for benchmark West Texas Intermediate (WTI) crude oil has once again drifted below $50/bbl over concern that U.S. output may be rising too fast. But as we’ve learned from a new report by our friends at Bloomberg Intelligence, most major U.S. oil producers paired their increased investment with significant oil-price protection, aggressively snapping up hedges in late 2016 as oil prices were buoyed by the announcement of planned OPEC output cuts. Today we review BI’s examination of the efforts by many E&Ps to lock in $50/bbl-plus prices for much of their 2017 production. The surge in hedging activity by U.S. E&Ps is another indicator of an ongoing transformation of the E&P sector that we analyzed in depth in Piranha!, a new market study of 43 representative U.S. E&Ps. Of that universe of companies, 21 focus on oil (60%+ liquids reserves), nine are gas-weighted producers (60%+ natural gas reserves) and 13 are diversified producers. All major U.S. shale/unconventional plays are represented in the combined portfolios of these firms. In Very Particular Places to Go, we discussed the purpose and organization of our analysis, which included an examination of the strategies that E&Ps are adopting to thrive in a $50/bbl world; a look at merger and acquisition (M&A) activity by basin; and a review of each company’s financial condition, capex plans, geographic focus, M&A strategies and a general assessment of the company’s position in today’s U.S. E&P industry.

 Statoil Q1 results handily beat estimates – Norway's Statoil posted significantly better-than-expected quarterly results on Thursday, helped by a rise in output and higher crude prices year-on-year. The results are in line with the industry's broader upward trend as oil majors BP, ExxonMobil, Chevron and Total also have reported better than expected earnings. "Our solid financial result and strong cash flow across all segments was driven by higher prices, good operational performance and an organic production growth of 5 percent," the company said in a statement. The oil and gas company reported adjusted operating profit of $3.3 billion in the quarter, against expectations of $2.67 billion. A year ago, adjusted operating profit stood at $857 million. Cash flows from operating activities more than doubled to $5.97 billion in the first quarter from $2.2 billion in the year-ago period with its international operations also delivering positive results. Statoil’s quarterly petroleum production stood at 2,146 million barrels of oil equivalents per day (boed), with production from the Norwegian continental shelf hitting the highest level in five years.

Exxon, Petrobras Said to Hold Talks on Wide-Ranging Partnership | Rigzone -- Exxon Mobil Corp. and Petrobras have held talks on a strategic partnership that could involve multiple assets in Brazil and overseas in different segments of the industry, similar to the $2.2 billion deal signed with Total SA in December, said people familiar with the conversations. Such a deal could give Exxon access to oil fields and infrastructure in Brazil while state-controlled Petroleo Brasileiro SA could gain from Exxon’s expertise in production, refining and distribution, the people said. Carla Lacerda, Exxon’s country chief, said earlier this month that the U.S.-based oil giant sees great opportunities in Brazil. International oil companies are taking a closer look after Brazil eased nationalist regulations and opened the market to more competition. Last week, Petrobras Chief Executive Officer Pedro Parente met in Houston with both Lacerda and BP Plc’s head of Latin America, Felipe Arbelaez, the people said, asking not to be named because the discussions were private. Arbelaez confirmed that he and Parente had talked in “a number of meetings.” He said that with the policy changes being undertaken by Brazil’s government, “all companies are reviewing their Brazil strategy.” Lauren Kerr, an Exxon spokeswoman, declined to comment. “As a matter of practice we don’t comment on rumors or speculation,” she said. Petrobras didn’t immediately respond to a request for comment. In December, France-based Total agreed to buy stakes in Brazilian oil fields and energy infrastructure in a $2.2 billion deal that is expanding its presence in Latin America’s largest economy.

When It Comes to Fracking, Argentina Dreams Big | Inter Press Service: (IPS) - Since a US Energy Information Administration (EIA) report announced in 2011 that Argentina had some of the world’s biggest shale oil and gas reserves, the dream of prosperity has been on the minds of many people in this South American nation where nearly a third of the population lives in poverty. The question that hangs in the air is whether it is really possible for Argentina to become South America’s Saudi Arabia, or if it is just a fantasy. Six years after the release of the report, although Argentina is still, like then, a net importer of oil and natural gas, the hope would appear to remain intact for centre-right President Mauricio Macri. When Macri visited the United States on Apr. 25-27 he stopped over in Houston, Texas, described as the “Oil Capital of the World”. There, he urged the executives of the world’s top energy companies to make the huge investments that Argentina needs to exploit its reserves. “Argentina is among the countries with the greatest potential in the world. We want the best companies to come and partner with us,” Macri told oil executives at lunch in Houston on Apr. 26, before flying to Washington, where he met with his US counterpart Donald Trump at the White House.“The delays in exploiting non-conventional fossil fuels in Argentina are inherent to the process, from a technical standpoint. The oil and gas industry operates in the long term,” said Martín Kaindl, head of the Argentine Oil and Gas Institute (IAPG), a think tank supported by oil companies in the country.“We have to do things well for this opportunity to become a source of wealth for Argentina,” he told IPS. So far, however, what seems to have grown more than the investments are the social movements opposed to hydraulic fracturing or fracking, in which rock is fractured by the high-pressure injection of ‘fracking fluid’ (primarily water, as well as sand and chemicals,) to release natural gas and oil from shale deposits.. This process has environmental and socioeconomic effects, according to experts quoted by environmentalists.

Oil company Santos admits business plan is based on 4C temperature rise -  The oil and gas company Santos has admitted its business plans are based on a climate change scenario of a 4C rise n global temperatures, at odds with internationally agreed efforts. Its chairman, Peter Coates, made the comments at an AGM in Adelaide on Thursday, telling shareholders it was “sensible” and “consistent with good value”.  Earlier this week, the Australian National University, which previously divested from Santos citing a commitment to its renewables research, appeared to have reinvested in the company.  There has been a shareholder push for a resolution that Santos disclose its climate risk assessments and scenario analyses. Asked whether the analyses were conducted on a 2C pathway, Coates replied that the company had adopted a 4C pathway.“It’s in comparison to the [International Energy Agency] business-as-usual forecast on carbon emissions,” Coates said.“There’s been no nationally determined commitment to the 2C scenario, and even the 4C scenario is not funded. So I think what we’re doing is very sensible, and consistent with good value.”Will Steffen, councillor with the Climate Council, and an emeritus professor at ANU, said Coates’s revelation was “absolutely appalling”.“[A 4C pathway] really is a worst-case scenario,” he told Guardian Australia. “This is not some minor climatic blip we need to deal with. It’s a completely different climate system.”Steffen said the difference between the ice age and the Holocene age, which Earth has been in for about 12,000 years, was 4C. “You’d be locking in tens of metres of sea-level rise, and you can forget about the world cities,” he said.In 2015 Shell was accused of pursuing a business strategy based on 4C warming, which experts have said would lead to catastrophic climate change, including a devastating impact on world food production and the finance market.  The Paris climate agreement, which came into effect late last year, sets a target of carbon emissions that would mean a global temperatures rise of no more than 2C above pre-industrial levels.

Can southeast infrastructure handle southeast demand growth? - Only a few years ago, pretty much all the natural gas flowing through pipelines in the southeastern U.S. was headed north to serve demand in the Northeast and the Midwest. But that’s all been changing — and fast. Gas production in the Marcellus/Utica has soared and now meets the needs of the Northeast and more. And, as LNG exports from the Gulf Coast ramp up and Southeast gas demand for power generation rises, more and more Marcellus/Utica gas is flowing south, raising the question of whether pipes in the Southeast can handle it all over the long term. Today, we discuss the findings of a study RBN prepared for the American Petroleum Institute (API) on the adequacy of regional gas pipeline infrastructure. Back in 2014, we posted (South)Eastbound and Down – The Southeast, Emerging Demand Epicenter of U.S. Gas Industry, in which we recounted the findings of a study of the southeastern U.S. and how it would be supplied, performed for America’s Natural Gas Alliance (ANGA). At the time, we suggested it might be the first installment in a series, but then never got around to doing another installment. Oops.  Now ANGA is a part of the American Petroleum Institute (API). So, believing that even three years isn’t too late to flesh out and update such an important subject, here we are with a new study looking at many of the same issues for API — updated for the rapid evolution of the facts during those three years, as flows have reversed from the traditional south-north, to north-south. Basically, how are we doing?

China, India plans for electric cars threaten to cut gasoline demand | Reuters: Demand for gasoline in Asia may peak much earlier than expected as millions of people in China and India buy electric vehicles over the next decade, threatening wrenching change for the oil industry, oil and auto company executives warned. They said refiners should prepare for a future in which gasoline, their biggest source of revenue, will be much less of a cash cow. Change is being prompted by policy moves in India and China, where governments are trying to rein in rampant pollution, cut oil imports, and compete for a slice of the fast-growing green car market. In its "road map", released in April, China said it wants alternative fuel vehicles to account for at least one-fifth of the 35 million annual vehicle sales projected by 2025. India is considering even more radical action, with an influential government think-tank drafting plans in support of electrifying all vehicles in the country by 2032, according to government and industry sources interviewed by Reuters late last week. "We will see a clear shift to electric cars. It's driven by legislation so electric cars are coming, it's not a niche anymore," Wilco Stark, vice president for strategy and product planning at German car maker Daimler (DAIGn.DE), told Reuters. Stark and other executives were interviewed during the Asia Oil & Gas Conference in Kuala Lumpur this week. Daimler sees electric vehicles contributing 15-20 percent of its overall sales by 2025 and at least an additional 10 percent of sales coming from hybrids, he said. Electric cars currently make up less than 2 percent of the global car fleet, and any faster-than-expected growth in that percentage will materially impact oil demand and the refining business

India's gasoline boom stalls: Kemp (Reuters) - India's gasoline consumption has flattened out in recent months after tremendous growth between 2014 and 2016. India's motorists consumed 581,000 barrels of gasoline per day between February and April, according to the Petroleum Planning and Analysis Cell at the Ministry of Petroleum and Natural Gas.Gasoline consumption rose by 4 percent compared with the same period a year earlier, a sharp slowdown from the 14 percent increase between 2015 and 2016 (  Gasoline consumption growth has been slowing since the middle of 2016 after surging for the previous two years ( Consumption growth for most other fuels used for cooking and transportation has also been slowing for the last nine months.Demand for liquefied petroleum gas and kerosene used for cooking, heating and lighting as well as diesel used for transport all show signs of levelling off or actually falling in the first four months of 2017.  The slowdown may have been compounded by the demonetisation of large-denomination bank notes announced at the start of November as part of the government's anti-corruption campaign. Demonetization resulted in a sharp slowdown in sales of the cheaper motorcycles favoured by first-time buyers in rural areas. Rapid expansion in motorcycle ownership has been one of the major factors driving increases in gasoline demand ("India's new motorcycle owners drive gasoline boom", Reuters, Sept. 2016).  Rising crude oil and refined fuel prices over the last year are also likely to have constrained the growth in consumption and other fuels.

Despite Sanctions, Russia's Oil Industry Powers On | Fox Business: The sanctions, put in place by the U.S. and European Union in 2014 after Russia's annexation of the Crimea region of Ukraine, were meant to limit Russia's pursuit of new technology for extracting more crude oil and natural gas.The measures specifically targeted deepwater drilling planned in the Black Sea, Arctic operations and the use of fracking technology in Siberia. The terms were a blow to Exxon because drilling in those areas was at the heart of a landmark deal the company struck a few years before to partner with state oil firm PAO Rosneft. The company sought a waiver from U.S. sanctions to drill in the Black Sea, but was rejected last month by the Trump administration. At the same time, some of the company's European rivals are moving ahead with projects in Russia, many under partnerships begun before the sanctions. BP PLC (BP) was allowed to keep its nearly 20% stake in Rosneft, which contributed $590 million to its net earnings in 2016. Italy's Eni SpA (E) is preparing to drill a Black Sea well later this year as part of a partnership with Rosneft, and also plans to explore the Arctic waters of Russia's Barents Sea. The company has proceeded because the EU allowed partnerships in place at the time of sanctions to continue, Eni has said. The U.S. didn't grant exemptions for existing partnerships, as Exxon's experience showed. An EU spokeswoman said that while some differences exist between how sanctions have been applied by different countries, these have been limited and don't undermine the overall impact of the restrictions.

Shell proposes adding Russian oil to Brent benchmark | Reuters: Royal Dutch Shell on Wednesday urged oil pricing agency S&P Global Platts to protect the dated Brent crude benchmark from declining North Sea supply by including other grades, such as Russian Urals, in its price-setting process. The suggestion marks a shift from two years ago when Shell said adding Urals would not be "worth the trouble". The benchmark, based on light North Sea crude grades, is used to price about two-thirds of the world's oil but a decline in North Sea output has led to concerns that physical volumes could become too thin and prone to large price swings. Platts announced it would add a fifth grade, Troll, to the benchmark slate from January 2018 but Shell says more must be added in the next two to three years and considers Russian medium sour Urals as a top candidate. The benchmark is now made up of Brent, Forties, Oseberg, and Ekofisk, known as BFOE. "A good benchmark need not only be representative of what the region produces ... If you had to pick one grade of crude, Urals is the one which northwest European refineries should be designed to run optimally," Mike Muller, vice president of crude trading and supply at Shell, told the Platts Crude Summit in London.

New major Senegal natural gas find raises prospect of second LNG hub: BP, Kosmos - BP and partners Kosmos Energy announced Monday a new major gas discovery off Senegal able to feed a potential further LNG hub in the gas-rich West African basin. The Yakaar-1 exploration well drilling in the Cayar Offshore Profond block discovered 15 Tcf of gross gas resources, in line with pre-drill expectations, Kosmos said in a statement. The find's condensate-to-gas ratio is also on par with previous discoveries in the area, Tortue and Teranga, at 15-30 barrels per million cubic feet, it said. "This discovery marks an important further step in building BP's new business in Mauritania and Senegal," BP's upstream head Bernard Looney said in a separate statement. "The Yakaar discovery, coupled with the Teranga discovery, creates the foundation for a further LNG hub in the basin." Formerly known as Teranga West, Yakaar-1 lies in the Cayar Offshore Profond block roughly 95 km northwest of Dakar. Kosmos and BP each currently hold an effective 30% participating interest in the Cayar Offshore Profond license.

Difference between output and exports bedevils OPEC oil goals: Russell | Reuters: ne of the factors behind the recent slump in crude oil prices may be the realization among market participants that there is a difference between production cuts and export flows. While OPEC and its allies appear to have been relatively successful in implementing their planned output cuts of 1.8 million barrels per day (bpd), this has yet to show up in a meaningful way in the amount of crude oil being transported by ships. The seeming easy availability of crude despite the output cuts helped drive crude prices lower, with Brent dropping as low as $46.64 a barrel on May 5, just above the close of $46.38 on Nov. 29, the day before OPEC and its allies announced the deal to trim production and down about 20 percent since its recent peak in early January. The 11 members of the Organization of the Petroleum Exporting Countries that agreed last November to restrict output by 1.2 million bpd for the first six months of 2017 achieved 90 percent compliance in April, according to a Reuters survey. Output by the 11 countries was 29.92 million bpd in April, up fractionally from 29.9 million in March and only about 116,000 bpd above the agreed target. The non-OPEC countries that agreed to curb their output by a combined 600,000 bpd also largely claim to be compliant, with major producer Russia saying it has exceeded the 300,000 bpd it agreed to cut as part of the deal aimed at boosting oil prices. While ship data doesn't capture oil moved by pipeline, it still represents more than half of the global market and is therefore a useful indicator. The broadest measure of the data captures all movement by tankers, including domestic voyages and ship-to-ship transfers, and provides a universal picture of the amount of crude moving around the world. In April this totalled 45.23 million bpd, down from March's 46.4 million bpd and February's 46.2 million bpd, but up from January's 44.3 million bpd, according to Thomson Reuters' Eikon vessel-tracking and port data.

Saudi Arabia says will 'do whatever it takes' to balance oil market | Reuters: Saudi Energy Minister Khalid al-Falih said on Monday that oil producers would "do whatever it takes" to rebalance the market and that he expected a global deal on cutting crude output to be extended through all of 2017. The Organization of the Petroleum Exporting Countries, of which Saudi Arabia is the de-facto leader, and other producers including Russia pledged to cut output by 1.8 million barrels per day (bpd) in the first half of the year to boost the market. But global inventories remain high, pulling crude oil prices back below $50 per barrel and putting pressure on OPEC to extend the cuts to the rest of the year. "Based on consultations that I've had with participating members, I am confident the agreement will be extended into the second half of the year and possibly beyond," Falih said at an industry event in Kuala Lumpur. "The producer coalition is determined to do whatever it takes to achieve our target of bringing stock levels back to the five-year average," he said. Falih said recent price falls had been caused by seasonal low demand and refinery maintenance, as well as by non-OPEC production growth, especially in the United States. U.S. oil production has gained more than 10 percent since mid-2016 to 9.3 million bpd, close to the levels of top producers Russia and Saudi Arabia. Despite this, Falih said markets had improved from last year's lows, when crude prices fell below $30 per barrel.

OPEC Runs Out of Options as Bid to Boost Oil Price Fizzles -- OPEC’s plan to boost oil prices by cutting production has fizzled, yet it has little choice but to stick with it. Crude has surrendered all of its gains since the Organization of Petroleum Exporting Countries first agreed production cuts in November. While the group has implemented the curbs, a rebound in U.S. shale output and stubbornly-high stockpiles show the world’s three-year crude glut isn’t shifting. Even signals from Saudi Arabia and Russia that they’ll prolong the supply reductions haven’t staunched the rout. Yet OPEC has limited room for maneuver when it meets on May 25 in Vienna to discuss the deal, and is almost certain to persevere because the alternatives look even worse. If it were to deepen the cutbacks, even more shale supplies might come along to fill the gap, according to UBS Group AG. Abandoning the policy and restoring output would inflict the economic pain of crude below $40, Citigroup Inc. predicts. “The risk of a higher cut is that it could trigger too strong an increase in prices and support U.S. shale,”  You can’t say you want lower inventories, and after a few months give up.” Oil slumped to a five-month low of $43.76 a barrel in New York on Friday and traded at $46.18 at 10:27 a.m. local time. The selloff came even after a statement from Russian Energy Minister Alexander Novak that his country was “inclined toward” an extension of production cuts into the second half. He was echoing his Saudi counterpart Khalid al-Falih, who said on April 26 that there’s a preliminary consensus to prolong the agreement with backing from other OPEC nations such as Kuwait and Iraq. With OPEC already showing near-perfect compliance in delivering its pledged 1.2 million barrel-a-day production cut and an extension looking likely, the group has little ammunition left in its battle to raise prices. “The OPEC deal was doomed to failure from the very beginning,” “If they deepen the cut, the effect will be short-lived. OPEC will find itself in the same position again in six months time, but non-OPEC would get more market share by then.” ‘

Why OPEC Lost The War Against Shale, In Four Charts --Undeterred by earlier failure to jawbone the price of oil higher, moments ago a new barrage of headlines hit courtesy of Reuters reiterating more of the same, and adding a new spin, namely that this time around the oil considered oil production cut extension will be nine not six months, thus lasting at least through March 2018. As Reuters adds, OPEC and non-member oil producers are considering extending a global supply cut for nine months or more to avoid a price-sapping output increase in the first quarter of next year, when demand is expected to be weak. OPEC countries including core Gulf members are discussing internally whether an extension of nine months or longer is needed to give the market more time to rebalance, the sources said. One industry source familiar with the talks said there had been discussions about extending curbs until the end of the first quarter of 2018, when crude demand should be seasonally weak. In other words, it's desperation time for OPEC which is now throwing out every possible trial balloon to see what sticks with headline scanning algos and pushes the price of oil higher, if only temporarily.  There is just one problem, or rather four, as shown in the following four charts. First, it is no longer a question merely of supply as demand has in recent weeks gone through a "soft patch", confirmed overnight when China recorded a decline in oil imports in April.  Second, the current rig count recovery in the US is now the strongest in 30 years. Overnight, Goldman revised its forecast for US production and now sees annual oil output in the US increasing 285k b/d y/y on average in 2017. As a result, oil output is expeted to rise 765k b/d between 4Q 2016 and 4Q 2017 across Permian, Eagle Ford, Bakken and Niobrara shale plays, and may approach an all time high production level of 10mmpb. As a result, US producers are increasingly taking market share from OPEC as shown in the next chart.  Finally, as Morgan Stanley shows, all this has impacted the oil strip, and as a result without prospects for a tight 2018, the forward curve has moved to full contango.

Hedge Funds Just Liquidated The Most Oil Longs Ever --When one of the world's largest oil hedge funds announced it had liquidated its entire long position, we suggested he would not be alone... and according to the latest CFTC data, he was not. The last two weeks have seen hedge funds liquidate over 120,000 WTI crude futures contracts (120 million barrels worth or approximately $6 billion notional). That drop is the largest ever recorded by CFTC and drops the managed money net speculative positioning to its least bullish since November's OPEC production cut deal was agreed.. So the question is - how many more times will the levered speculative 'smart money' pile in balls-deep long on the slightest uptick in price?

Hedge funds turn bearish on oil and refined fuels: Kemp (Reuters) - Hedge funds and other money managers were turning increasingly bearish towards oil even before prices plunged on Thursday.Hedge funds cut their net long position in the three main futures and options contracts linked to Brent and WTI by 97 million barrels in the week to May 2 ( long positions were trimmed by 31 million barrels while bearish short positions increased by 65 million barrels according to data published by regulators and exchanges.Hedge funds reduced their net long position by a combined 236 million barrels over the two weeks between April 18 and May 2 ( managers now have the smallest net long position in crude futures and options since OPEC announced its production-cutting deal on Nov. 30.Fund managers hold just three long positions for every one short position, down from a ratio of almost 6:1 on April 18 and a recent high of 10:1 on Feb. 21 ( ratio was also the lowest since the OPEC deal was announced and illustrates the loss of confidence in the deal’s effectiveness in draining global inventories.Bearishness is not confined to crude. Fund managers have also turned increasingly negative on the outlook for the price of refined fuels given the high level of stockpiles in the United States.Hedge funds cut their net long position in NYMEX gasoline by 24 million barrels in the week to May 2 and are now running a small net short position of 3 million barrels for the first time since August 2016 ( Hedge funds also cut their net long position in NYMEX heating oil by 26 million barrels and are now net short by almost 1 million barrels, the first short position since November 2016 (

Oil Prices Plunge To Where They Should Be - Art Berman:  WTI oil prices plunged to almost $45 per barrel yesterday (Figure 1). That was a downward adjustment to where prices should be based supply, demand and inventory fundamentals.  Analysts invent narratives to explain why things happen after we already know the answer. In this case, oil prices fell supposedly because of falling confidence that the OPEC production cuts are working, fears of increasing U.S. shale output, and weakening demand from China. None of those factors is new nor did they seem to affect the market a few weeks ago when prices were above $53 per barrel. The real reason that oil prices have fallen is that they were too high and needed to adjust downward. Comparative inventory analysis (Bodell,2009) suggests that the correct price for WTI right now is about $45 per barrel (Figure 2). Prices rose from that level in November 2016 to almost $55 (black arrows in Figure 2) following announcement of OPEC production cuts. Approximately $10 of “OPEC expectation premium” was included in those higher prices.In February and March, prices fell from more than $54 to $47 per barrel in the first deflation event shown in Figure 3. Prices then increased to more than $53 in the first half of April before falling to almost $45 per barrel this week during the April-May deflation. There is little doubt that the OPEC cuts are real and are working to reduce global inventories. Unrealistic expectations about how quickly markets might re-balance created an expectation premium that is now being deflated as prices adjust to where they should have been all along.

Why We Should Be Concerned About Low Oil Prices -- Gail Tverberg - Most people assume that oil prices, and for that matter other energy prices, will rise as we reach limits. This isn’t really the way the system works; oil prices can be expected to fall too low, as we reach limits. Thus, we should not be surprised if the OPEC/Russia agreement to limit oil extraction falls apart, and oil prices fall further. This is the way the “end” is reached, not through high prices. I recently tried to explain how the energy-economy system works, including the strange way prices fall, rather than rise, as we reach limits, at a recent workshop in Brussels called “New Narratives of Energy and Sustainability.” The talk was part of an “Inspirational Workshop Series” sponsored by the Joint Research Centre of the European Commission.  My talk was titled, Elephants in the Room Regarding Energy and the Economy.” (PDF) In this post, I show my slides and give a bit of commentary.

Is The Market Ignoring OPEC? -- Oil prices stabilized on Monday after a week of sharp declines on the news that OPEC might be open to extending its production cuts into 2018.. Fearing further losses, Saudi energy minister Khalid al-Falih stated very firmly that the six-month extension is all but a done deal and he even suggested that the group is looking at extending the cuts “beyond” the end of 2017. In fact, an OPEC source told Reuters that the group is considering an extension until the end of the first quarter of 2018, a move that would provide a much stronger jolt to the oil market if implemented.  OPEC seems to have backed itself into a corner regarding its production cuts. The initial agreement was supposed to end in June, but the inability to bring down inventories have forced them into (likely) agreeing to a six-month extension. Now, analysts are billing the extension through the end of 2017 as insufficient, so OPEC might push the cuts to the end of the first quarter of 2018. All the while oil prices have not appreciably moved in months and U.S. shale is taking market share. The ultimate fear for OPEC is that non-OPEC countries continue to be successful at bringing new supply online even with oil prices at $50 per barrel. In the meantime, the rhetorical power of OPEC is diminishing, judging by the relatively muted price response after hinting at a 9-month extension.  The latest trading data shows that hedge funds and other money managers have sold off their bullish bets, taking their net-long positions to the narrowest point since the OPEC deal was announced last year. That has led to a stampede of negative sentiment, which threatens to drag oil lower. But the counterargument is that the newfound bearishness opens up buying possibilities that could spark a price rebound.

Market Mocks OPEC Crude Jawboning; Morgan Stanley Warns Of Risks To 2018 Oil Price -- In the clearest indication yet that OPEC jawboning no longer has an effect on markets, and especially headline scanning algos, following numerous headlines from Saudi energy minister Khlaid Al-Falih overnight warning that the oil rebalancing is imminent, and in case it isn't, it will come in 2018 when OPEC and Non-OPEC producers may extend their production cuts, this morning oil is firmly hugging the flatline after a failed attempt to push higher earlier in the session.  As Bloomberg reports, Saudi Arabia and Russia signaled they may extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus as oil prices continue to drop.  In separate statements just hours apart on Monday, the world’s largest crude producers said publicly for the first time they would consider prolonging their output reductions for longer than the six-month extension widely expected to be agreed at the OPEC meeting on May 25. "We are discussing a number of scenarios and believe extension for a longer period will help speed up market rebalancing” the Russian Energy Minister Alexander Novak said in a statement. Speaking in Kuala Lumpur earlier Monday, Saudi energy minister Khalid Al-Falih said he was “rather confident the agreement will be extended into the second half of the year and possibly beyond” after talks with other nations participating in the accord. “The producer coalition is determined to do whatever it takes to achieve our target of bringing stock levels back to the five-year average,” Al-Falih said. While U.S. shale output growth and the shutdown of refineries for maintenance have slowed the impact of cuts by OPEC and its partners, the Saudi minister said he’s confident the global oil market will soon rebalance and return to a “healthy state.” The response was less than enthusiastic however, with Brent and WTI giving up earlier, while a drop in Chinese crude imports suggested that the demand side of the equation is becoming a growing concern.  A major hurdle for the oil bulls, as discussed here often, is that s OPEC and its allies curbed supply, U.S. production has risen to the highest level since August 2015 as drillers pump more from shale fields. “Given the extent of the over-hang I think they always knew the market was not going to rebalance in six months which is why our base case was always for a deal lasting at least one year, and if not longer,”

Morgan Stanley To Revise 2018 Forecast After Oil Price Rout -- Morgan Stanley may have to revise its 2018 oil market outlook after last week benchmarks recorded the lowest price levels since last November, before OPEC and non-OPEC producers agreed to reduce their combined output. Equity researcher Martijn Rats said in a note that contrary to the investment bank’s base scenario for 2018, in which it forecast a stable price environment, U.S. drillers have been adding rigs at a rate that suggests in a year, output would be much higher than it is now. Last Friday, Baker Hughes reported the number of active rigs had climbed for the 16th week in a row. At 877, active rigs are now 462 more than a year ago. The output increase will be gradual and will not be immediately evident, but it will become evident next year, as it may be as large as a million additional barrels per day, Rats warned. Even at current production levels, OPEC is losing market share to U.S. producers, according to Rats, as its output is declining while U.S. output is growing. According to Rats, “We doubt OPEC will allow this to go on for long.” In fact, the analyst believes that OPEC will not extend its production cut agreement beyond this year, despite comments to the contrary from Saudi Arabia’s and Russia’s energy ministers. In separate statements yesterday, Khalid al-Falih and Alexander Novak said their governments were willing to extend the cuts for more than six months after the initial June 30 deadline to stabilize prices.

OPEC signals cuts extension, oil traders ponder response: Kemp (Reuters) - Saudi Arabia’s energy minister has indicated OPEC will extend its current production cuts for at least another six months to the end of 2017 and maybe further.“Based on consultations that I’ve had with participating members, I am confident the agreement will be extended into the second half of the year and possibly beyond,” Khalid al-Falih said on Monday. “I believe the worst is now behind us with multiple leading indicators showing that supply-demand balances are in deficit and the market is moving towards rebalancing,” Falih told an audience in Kuala Lumpur. “We should expect healthier markets going forward,” he said (“Saudi energy minister says may extend oil output cuts beyond 2017,” Reuters, May 8).  From the beginning, oil producers envisaged the agreement on production cuts might need to be extended to rebalance the oil market fully. OPEC’s original agreement on revised production levels was reached on Nov. 30 last year and always subject to review in the normal way at the organisation’s next scheduled ministerial conference on May 25.OPEC’s subsequent agreement with non-OPEC producers made this explicit by stating output would be cut from Jan. 1 for six months with the option to extend the curbs for a further six months.Earlier this year, Saudi officials cast doubt on whether an extension would be necessary given high levels of compliance with the agreement.Falih told reporters in January an extension would probably not be needed ("Saudi energy minister: unlikely to extend producers' agreement," Reuters, Jan. 16). "My expectations (are) that the rebalancing that started slowly in 2016 will have its full impact by the first half," he said. But as global crude stocks remain high and prices come under renewed pressure, Riyadh seems to have concluded an extension is inevitable to drain excess inventories and restore confidence.

 Saudi oil minister Falih confident output cut deal will be extended by 6 months - Saudi energy minister Khalid al-Falih said Monday at an industry conference in Kuala Lumpur that he was confident that the crude oil output cut deal will be extended by six months or more as the market was moving towards rebalancing. "Based on the consultation I have had with participating members, I am rather confident that the agreement will be extended into the second half of the year and possibly beyond and that includes consultations I have had this morning with the Malaysian prime minister," Falih said during the opening address at the 19th ASIA Oil and Gas Conference in Kuala Lumpur. The producer coalition is determined to do "whatever it takes to achieve our targets and bringing stock levels back to the five-year average." Falih said he was pleased that OPEC and non-OPEC partners that agreed to the supply cuts are so far exhibiting discipline and adherence to the commitments that were made last December. Falih's comments come ahead of the meeting of OPEC and non-OPEC deal participants scheduled to be held in Vienna on May 25 to review the agreement and negotiate any extension. Falih also said that leading indicators showed crude supply-demand was in deficit as the market was moving towards rebalancing. "I do believe however that the worst is behind us with multiple leading indicators showing that supply-demand balance are clearly in deficit and the market is moving towards rebalancing. We should therefore expect healthier markets going forward," he said.

Let's make a deal: Can OPEC's oil output cuts continue as they are? – Platts podcast - When OPEC reached its historic supply cut deal last year, Brent oil was trading for about $49/b ... and it still is. So has the deal been a failure, and what should the market expect from OPEC now?Senior oil editor Brian Scheid is in London, talking with the Platts OPEC team ahead of the Vienna meeting this month. Eklavya Gupte, Paul Hickin and Herman Wangshare thoughts on whether OPEC will agree to extend the cuts, how production could shift within OPEC, and views from Saudi Arabia. Further, what impact will an extension — or lack of one — have on ongoing US shale oil growth?

Oil rebounds, as OPEC talks up cutting supply into 2018 (Reuters) - Oil prices rose on Monday in volatile trading, bolstered by statements from major oil-producing countries suggesting that OPEC and non-OPEC supply cuts could be extended into 2018. Benchmark Brent crude settled up 24 cents, or 0.5 percent, at $49.34 a barrel. U.S. light crude gained 21 cents to $46.43 a barrel. Oil prices have been under pressure of late, amid investor concerns the global supply glut is not receding as fast as expected. The Organization of the Petroleum Exporting Countries and non-OPEC producers, such as Russia, decided late last year on an output cut of 1.8 million barrels per day (bpd) to reduce global oil inventories. News that the curbs might last into 2018 fueled a modest rally in the market. The lengthy period of rebalancing has prompted a reassessment in the market of whether OPEC's cuts are working. Saudi Energy Minister Khalid al-Falih on Monday issued more forceful comments about OPEC's plans, saying the cartel would "do whatever it takes" to rebalance the market. He said a deal on cutting output could extend early into next year. Kuwait's oil minister Essam al-Marzouq echoed those concerns, saying Monday that there is "almost consensus about the importance of extending the agreement for at least six months." OPEC and other top producers will meet in Vienna on May 25 to discuss the possibility of cuts. Russia also said it was discussing prolonging cuts with other producers beyond 2017. However, many analysts only see an overbundance of talk from OPEC members, as opposed to action regarding stockpiles. "The market is getting tired of hearing from OPEC how good they are, how compliant (with supply curbs) they are," "Those claims do not withstand the reality check with the inventories staying stubbornly high and non-OPEC production rising strongly."

Russia's June exports of ESPO crude oil to dip 17% from May to 2.4 mil mt - Russia's exports of the medium sweet ESPO crude blend in June are set to fall 17.2% from May to 2.4 million mt, according to the latest monthly loading program seen by S&P Global Platts. The June loading program runs from May 30 to June 30 and will comprise a total of 24 cargoes of 100,000 mt each, according to the program. In comparison, ESPO exports in May totaled 2.9 million mt, which comprised 29 cargoes of 100,000 mt each. The loading rate for ESPO exports will average around 547,500 b/d in June, down from 622,647 b/d scheduled for May. The June program showed state-owned Rosneft holding 10 cargoes, Russia's Surgutneftegaz with seven, Swiss-based Tenergy holds six cargoes and Lukoil a single cargo for June. Traders have attributed the shorter program for ESPO Blend crude in June to a field maintenance, although further details were unclear. The lower volumes has helped provide a bit of support for ESPO Blend crude premiums for June-loading cargoes, traders said.

Iran's NIOC plans to boost crude oil output capacity about 80%, by 3 mil b/d: report- Iran plans to raise its crude production capacity by 3 million b/d, oil ministry news agency Shana quoted a senior official as saying Monday. Speaking on the sidelines of a petroleum exhibition in Iran, National Iranian Oil Co.'s deputy head for engineering and development, Gholam-Reza Manouchehri, said the aim of boosting the country's output capacity by such a substantial amount would be to promote and stabilize its footing in OPEC and the global market, Shana reported. The agency did not mention any target date envisioned for the increase. It also reported Manouchehri as saying that NIOC for considering signing $80 billion of deals with domestic and international contractors within the next two years. Following the lifting of international nuclear sanctions on Iran in January 2016, NIOC has so far signed 24 memoranda of understanding with domestic and international companies seeking to join oil and gas development projects in the country, including a recent MOU with Philippine National Oil Co. for studies of Iran's Pazanan and Darkhowin oil fields, he said. Iran produced 3.77 million b/d of crude in April, the latest S&P Global Platts survey of OPEC production shows. Manouchehri made his remarks as Iranian president Hassan Rouhani campaigns for re-election in voting scheduled for May 19. The NIOC official was promoted in April 2016 to his current position, as head of what was then a newly formed division of the national oil company, in a surprise move by Iran's oil minister Bijan Zanganeh.

OPEC Said to Have Discussed Deeper Cuts; No Consensus Reached - Ministers from some OPEC countries have discussed the possibility of deepening their output cuts, in addition to the potential extension of the agreement into 2018, said four delegates. The OPEC delegates, who asked not to be identified because the talks were private, didn’t say that the discussions resulted in any kind of agreement to make deeper cuts. Earlier Monday, Saudi Arabia and Russia signaled they could be willing to extend production cuts into 2018, doubling down on an effort to eliminate a supply surplus just as its impact on prices wanes. The Organization of Petroleum Exporting Countries and its allies are looking at ways to reaffirm their commitment to their historic accord to reduce production amid growing doubts about its effectiveness. Surging U.S. production has raised concern that the curbs are failing to reduce an oversupply. Oil has surrendered most of its gains since the cuts were agreed last year.  

OPEC, non-OPEC discuss extending supply cut by nine months or more: sources | Reuters: OPEC and non-member oil producers are considering extending a global supply cut for nine months or more to avoid a price-sapping output increase in the first quarter of next year, when demand is expected to be weak, OPEC and industry sources said. The Organization of the Petroleum Exporting Countries, Russia and other producers agreed last year to curb production by 1.8 million barrels per day for six months from Jan. 1. Oil prices have gained support but global inventories remain high, pulling crude LCOc1 back below $50 a barrel and putting pressure on OPEC to extend the cuts through the rest of 2017. Production from countries not participating in the deal, such as the United States, has also been rising, keeping crude below the $60 level that OPEC kingpin Saudi Arabia and others would like to see. OPEC countries including core Gulf members are discussing internally whether an extension of nine months or longer is needed to give the market more time to rebalance, the sources said. One industry source familiar with the talks said there had been discussions about extending curbs until the end of the first quarter of 2018, when crude demand should be seasonally weak. "To increase production in those months may have a negative impact (on prices). So we may ask for an extension until the end of Q1 of 2018," the source said. An OPEC source said other ideas and scenarios could be discussed, adding that core Gulf OPEC producers had talked about an extension beyond six months. Another OPEC source said it would be tough to get a consensus on prolonging curbs for more than six months but "anything can happen".

Oil prices end lower after two-session climb -  Oil prices closed lower on Tuesday as traders fretted over rising U.S. crude production as OPEC weighs extend its production-cut agreement late this month. In a monthly report Tuesday, the U.S. government raised its forecast on domestic crude output for this year and next, and cut its 2017 price outlook. On the New York Mercantile Exchange, June West Texas Intermediate crude fell by 55 cents, or 1.2%, to settle at $45.88 a barrel, after briefly trading as high as $46.78.July Brent crude lost 61 cents, or 1.2%, to $48.73 a barrel on the ICE Futures exchange in London.Last week, prices for WTI and Brent marked their lowest settlements since the Organization of the Petroleum Exporting Countries agreed on Nov. 30 to cut output for six months at the start of this year.The EIA Tuesday forecast U.S. crude production at an average 9.31 million barrels a day in 2017, up 1% from the previous forecast. The agency sees 2018 output at 9.96 million barrels a day, up 0.6% from the previous forecast.   “Increased drilling rig activity is expected to boost to U.S. crude oil production this year and next,” said Howard Gruenspecht, EIA acting administrator, in a statement.

WTI Bounces Back Above $46 After Biggest Crude Draw Since 2016 -- WTI and RBOB prices slipped lower today after EIA raised its 2017 US crude output forecast (and the dollar rallied) along with Libya production headlines. WTI bounced on a much bigger than expected draw from API (-5.789mm v -2mm exp), but RBOB slipped towards the lows of the day on another unexpectedly large gasoline build. API

  • Crude -5.789mm (-2mm exp) - biggest since 2016
  • Cushing -133k (+60k exp)
  • Gasoline +3.169mm (+350k exp)
  • Distillates -1.174mm (-800k exp)

Hope (for the bulls) is that crude oil stocks have peaked (with seasonal declines due) and API appears to confirm that with the 5th weekly draw (and largest since December - if this holds for tomorrow's DOE data). Gasoline saw another big build though...

Saudi signals first cut in crude supplies to Asian customers: sources | Reuters: Saudi Arabia, the world's biggest oil exporter, has notified at least two Asian refiners of its first cuts in crude allocations for regional buyers since an OPEC output reduction took effect in January, two refining sources told Reuters on Wednesday. State-owned Saudi Aramco has told Asian buyers it is curtailing supplies for June to meet its commitments for the output cut, one of the sources at a refiner in South Korea said. "Saudi is adjusting supplies because it has somewhat supplied full volumes or even more in the previous months," the source said, declining to give specific details on the cuts. The notification of the reductions in June allocations signals added urgency among members of the Organization of the Petroleum Exporting Countries as evidence mounts that the output cut has so far failed to rein in a global glut in crude. OPEC has previously kept supplies to clients in high-growth Asian markets steady, while cutting allocations to Europe and the United States. Reuters reported on Tuesday that state-owned Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June, as it keeps to the production agreement and trims exports to meet rising domestic demand for power during the summer. Seven million barrels is roughly two days of oil imports into Japan, the world's fourth-biggest importer. Aramco and other producers typically issue monthly notices to refineries and other buyers with contracted supplies outlining their intended allocations to each customer. Usually they keep volumes at previously agreed levels but sometimes will reduce or increase the supplies depending on market conditions.

Source: Saudi Aramco to Cut June Oil Supply to Asia by About 7 mln Barrels | Rigzone - - Saudi Aramco will reduce oil supplies to Asia by about 7 million barrels in June, a source said on Tuesday, as the oil giant cuts output as part of global supply pact and trims exports to meet rising domestic demand for power during hot summer months. An OPEC-led agreement to cut global oil supplies is currently due to end in June, although Saudi Arabia and other producers in the group of OPEC and non-OPEC states have indicated curbs could be extended to the end of 2017 or beyond. OPEC and other producers are expected to discuss an extension at a meeting on May 25. When OPEC announced the cuts, Saudi Arabia was quick to tell its customers in Europe and the United States that they would receive lower volumes but shielded most of Asia from the cuts. However, summer is a peak period for power demand in the desert kingdom, as citizens turn up air conditioners to keep homes and offices cool, pushing up domestic oil consumption. This year is likely to see an earlier spike in demand as the Muslim fasting month of Ramadan starts sooner, beginning in late May. The traditional big evening meals with family and friends to break the fast tend to create a surge in power demand. As a result, Asia will now also face heavier cuts from the world's top oil exporter in June. According to the June nomination plans, Aramco will cut supplies by 1 million barrels each to Southeast Asia, China and South Korea, a source, who has knowledge of the nominations but did not wish to be identified, told Reuters. A separate industry source said the action in June did not mean Saudi Arabia was preparing to deepen cuts to Asia in the rest of 2017. The kingdom will cut supplies by a little more than 3 million barrels for India and slightly less than 1 million barrels for Japan, the source with knowledge of the nominations said. In total, the cuts should be equivalent to about 233,000-234,000 barrels per day (bpd). Under the global supply pact, OPEC states, Russia and other major producers agreed to cut output by about 1.8 million bpd from Jan. 1 until June 30.

Oil prices rise in Asia in expectation of Aramco supply cut | Reuters: Oil futures rose in Asian trading on Wednesday after Reuters reported Saudi Arabia would cut supplies to the region as OPEC battles against rising U.S. output that is threatening to derail its attempts to end a sustained global glut in crude. State-owned Saudi Aramco will reduce oil supplies to Asian customers by about 7 million barrels in June, a source told Reuters, as part of OPEC's agreement to reduce production and as it trims exports to meet rising domestic demand for power during the summer. Seven million barrels is roughly two days of oil imports into Japan, the world's fourth biggest importer. Aramco had previously been maintaining supplies to its important Asian customers. Global benchmark Brent futures LCOc1 were up 25 cents, or 0.5 percent, at $48.98 a barrel at 0200 GMT. They fell 1.2 percent on Tuesday. U.S. West Texas Intermediate crude CLc1 was up 29 cents, or 0.6 percent, at $46.17 a barrel. It also fell 1.2 percent the previous session, and the closing price for both contracts on Tuesday was the second lowest since Nov. 29, the day before the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut production during the first half of 2017. While prices surged immediately after the agreement, in recent weeks they have come under sustained pressure as U.S. production has ramped up. Many are now pushing back the expected timing for when the oil market will come into balance after prices began slumping nearly three years ago. "Chief among (the) oil market's worries is that the renewed rise in U.S. oil production is reducing the speed at which the supply surplus is being eroded," Fawad Razaqzada, market analyst at, said in a note.

Oil Below $65 Per Barrel…For Years --Recognizing that something had to be done to halt the latest crash in oil prices, Saudi Arabia’s energy minister went public with his support not only for an extension of the OPEC cuts for another six months, but he also dangled the possibility of an extension into next year. “Based on consultations that I've had with participating members, I am confident the agreement will be extended into the second half of the year and possibly beyond,” Khalid al-Falih said during an industry event in Kuala Lumpur, according to Reuters. At the same time he waived away the signs that the market is still woefully oversupplied, acknowledging the larger-than-expected rebound in U.S. shale, but still noting that the fundamentals are improving. "I believe the worst is now behind us with multiple leading indicators showing that supply-demand balances are in deficit and the market is moving towards rebalancing," he said. Up until now the decision was whether or not to extend for six months. Now, with a six-month extension looking assured, there are questions about whether even that will be enough. The oil markets no longer appear to be impressed by a six-month extension, judging by the increasingly languid price responses that have come after OPEC comments in recent weeks. OPEC was very successful at talking up oil prices last year, but the rhetorical power of al-Falih is on the wane. With the six-month extension now baked in, OPEC is growing concerned that inventories might still be elevated by the end of the year. As a result, OPEC is starting to look at a nine-month extension, according to Reuters. “To increase production in those months may have a negative impact (on prices). So we may ask for an extension until the end of Q1 of 2018,” an OPEC source told Reuters.  However, the Saudi energy minister also cautioned that oil watchers are being myopic, becoming overly-focused on the near-term while neglecting the longer-term fundamentals. He argues that demand will continue to rise and the severe cutbacks in exploration over the last several years are sowing the seeds of a shortage by the end of the decade. The comments echo recent warnings from the IEA about the pending supply shortage because of a dearth of discoveries since 2015.

IEA Sees Oil Market Supply Deficit Deepen Significantly This Year -  Global oil demand will exceed supply in the second quarter, and even more so until the end of the year, if OPEC extends the production cuts, according to Neil Atkinson, head of oil analysis at the International Energy Agency (IEA).“It is starting to become clear that if the objective of the OPEC cuts was to flip the market from surplus into deficit that is now slowly beginning to happen,” Atkinson said at the Platts Crude Oil Summit in London on Wednesday, as quoted by MarketWatch.The market is largely expecting OPEC to extend its production cuts until the end of this year, and Saudi Oil Minister Khalid al-Falih has even hinted at extending the deal into early 2018, citing producers’ resolve to do ‘whatever it takes’ to rebalance the market. The IEA has been optimistic that the balance will be achieved. As early as its March Oil Market Report, the IEA said that the market needs time to see a significant drawdown, and expected an implied deficit of 500,000 bpd for the first half at current production levels and supply and demand fundamentals. In its April Oil Market Report, the international agency noted that “It can be argued confidently that the market is already very close to balance, and as more data becomes available this will become clearer.” At the time, the IEA downgraded global oil demand growth for 2017, dropping its estimate to 1.3 million bpd. With OPEC’s cuts extended through the end of this year, the supply deficit will deepen in the second half of 2017, according to Atkinson.

For Some, There's Never Been a Better Time to Buy Oil - Oil is trading near $50 again, OPEC seems to be losing its ability to influence prices and a wave of new supply is hitting the market from Texas to Libya. For some, there’s never been a better time to buy.Despite last week’s selloff, the global oil market is rebalancing rapidly, said Jeffrey Currie, head of commodities research at Goldman Sachs Group Inc. If the Organization of Petroleum Exporting Countries extends its cuts into the second half -- as the group has signaled -- demand will significantly exceed production, according to the IEA’s Head of Oil Industry and Markets Neil Atkinson. “Do I want to be long oil? The answer is absolutely yes because we are going into a deficit market,” Currie said at the S&P Global Platts Global Crude Summit in London on Wednesday. “With demand continuing to surprise to the upside,” the global supply deficit may be as wide as 2 million barrels a day by July, he said. Brent crude, the international benchmark, fell to a five month low of $46.64 a barrel last week amid doubts about the effectiveness of OPEC and Russia’s joint supply curbs. Subsequent signals from Saudi Arabia and Moscow that they could extend cuts into 2018 failed to trigger much of a price recovery. While the resurgence in U.S. shale oil continues to cause doubts about whether the three-year supply glut really is over, banks including Goldman and Citigroup Inc. say markets are nevertheless tightening and prices are poised to rise again. The bulls got some powerful backing on Wednesday from the most keenly watched data on the market -- the U.S. Department of Energy’s weekly report on crude stockpiles. The nation’s inventories fell by 5.2 million barrels last week, the biggest reduction this year. West Texas Intermediate crude rallied 3.2 percent after the data release on Wednesday and gained another 1.4 percent to $47.97 a barrel as of 12:10 p.m. in London.

Fuel economy improvements projected to reduce future gasoline use despite recent changes in vehicle sales mix – EIA - Gasoline demand is a function of the fuel economy of the vehicle fleet and the total number of miles driven. Over time, fuel economy of the vehicle stock (those in use) changes as a result of market developments and changes in fuel economy standards for new vehicles. Additional complexities arise from changing vehicle designs and how vehicles are classified. In 2016, total vehicle miles travelled (VMT) reached a record 3.217 trillion miles (3% growth over 2015), pushing U.S. product supplied for finished motor gasoline, a measure of consumption, to a new high of 9.33 million barrels per day (b/d). Fuel economy for the light-duty vehicle stock in 2016 is estimated at 22.2 miles per gallon (mpg), an increase of 1% over 2015.The fuel economy of the vehicle fleet reflects the number of vehicles in use by vintage, as well as the respective fuel economy and the number of miles driven for each vintage. While the average fuel economy of the stock changes only modestly based on sales of new light-duty vehicles in a single year, trends in new vehicle sales and the consequent fuel economy cumulatively have large implications for projected future gasoline consumption. The increase in the sales share of light trucks—a category that includes pickups, minivans, sport-utility vehicles (SUVs), and all other light-duty vehicles that are not classified as passenger cars—in total light-duty vehicle sales, is sometimes cited as a cause of recent growth in fuel consumption. More important for long-term gasoline consumption, however, are the scheduled increases for fuel economy standards covering model years through 2025 and the increasing market role of vehicles that blur the distinction between cars and light trucks.  In recent years, manufacturers have introduced new vehicle types that combine the capabilities of pickup trucks and truck-based SUVs—cargo space, towing capacity, all-wheel or four-wheel drive capability, seating height—with those of cars—comfort, handling, and higher fuel economy. As a result, there has been an increase in the number of models and total sales of vehicles described as crossovers or Crossover Utility Vehicles (CUVs). CUVs have similar appearance, seating height, and cargo space as SUVs, as well as optional all-wheel drive, but have comfort and handling more similar to passenger cars. The rise of CUVs in the marketplace is causing the relationship between vehicle capabilities and vehicle fuel economy to become more complex.

Is US Gasoline Demand Turning Bearish? - The EIA (U.S. Energy Information Administration) estimated that four-week average US gasoline demand fell by 22,000 bpd (barrels per day) to 9,215,000 bpd on April 21–28, 2017. US gasoline demand fell 0.2% week-over-week and 3% year-over-year. The fall in gasoline demand is bearish for gasoline and crude oil (FENY) (USL) (USO) prices.  US gasoline prices hit $1.14 per gallon on March 15, 2016—the lowest price in 12 years. As of May 9, 2017, prices have risen 31% from their lows in March 2016 due to the increase in gasoline demand. Rising gasoline demand partially supported crude oil prices as well. US crude oil prices have risen ~77% during the same period. Changes in gasoline demand drive gasoline inventories. For updates on gasoline inventories, read the previous part of the series.  The EIA released its monthly STEO (Short-Term Energy Outlook) report on May 9, 2017. It estimates that US gasoline consumption will average 9,330,000 bpd and 9,360,000 bpd in 2017 and 2018, respectively. US gasoline consumption figures for 2018 will be the highest ever. US gasoline consumption averaged 9,330,000 bpd and 9,180,000 bpd in 2016 and 2015, respectively. US gasoline consumption hit a record in 2016. High gasoline consumption in 2017 and 2018 could support gasoline and crude oil prices.

Oil prices get respite from selling after encouraging signs on US supply -  Oil futures got some respite from the sellers on Wednesday after an industry group said U.S. crude supplies fell by nearly 6 million barrels last week.The American Petroleum Institute, however, estimated gasoline stockpiles increased again — coming at a time that inventory levels are already unusually high for this time of the year. Official data from the Energy Information Administration will be released later Wednesday. Light, sweet crude futures for delivery in June rose 44 cents, or 1%, to $46.32 a barrel on the New York Mercantile Exchange. July Brent crude was higher by 41 cents, or 0.8% to $49.14 a barrel on London’s ICE Futures exchange. Both contracts settled down 1.2% on Tuesday.But analysts say the price rebound is likely to be short-lived as on Tuesday the EIA boosted its U.S. oil-production forecasts, including 2018’s average now seen being just shy of 10 million barrels a day. Output has only gotten back above 9 million the past several months, and this year’s average is now seen being 9.3 million. Meanwhile, the EIA now sees depressed oil prices at least through next year, citing new oil flowing out of Canada and Brazil set to inundate an already-oversupplied market. While the API and EIA have had the spotlight in recent hours, the market’s primary focus remains the Organization of the Petroleum Exporting Countries and what it might do to counter the anticipated gusher of new oil. The general expectation is the cartel and Russia will roll current production cuts into the second half of this year, or possibly into early 2018. However, production is recovering in Libya and Nigeria. Any sharp increase of output from those two OPEC members, which are exempt from the current output cuts, would add pressure on other OPEC producers to cut even more as the group tries to bring global crude inventories down to five-year averages. Meanwhile, compliance with the production quotas is another potential land mine that imperils the deal’s success. OPEC producers have betrayed their allotted quotas in the past by producing more than they reported; OPEC’s next monthly report will be published Thursday.

WTI/RBOB Jump After Biggest Crude Inventory Draw Since 2016 - WTI and RBOB have rallied since last night's surprisingly large Crude draw (and gasoline build)reported by API, and DOE ata confirmed with inventory draws across the entire complex (including gasoline). WTIO and RBOB prices popped as Crude inventories dropped most since 2016 despite crude production rising above 9.3mm - highest since Aug 2015. DOE

  • Crude -5.247mm (-2mm exp)
  • Cushing -438k (+60k exp)
  • Gasoline -150k (+350k exp)
  • Distillates -1.587mm (-800k exp)

Draws across the board with Crude inventories down most since Dec 2016

Oil prices surge as EIA stockpile report eases market fears: Oil prices surged as much as 4 percent after the latest report on U.S. crude stockpiles eased fears that have permeated the market in recent weeks, helping to drag prices to nearly six-month lows. U.S. West Texas Intermediate futures rocketed back above $47 a barrel and international benchmark Brent topped $50 after the Energy Information Administration reported a much larger drop in the nation's crude stockpiles and a strong rebound in gasoline demand.WTI posted its best performance since Dec. 1, one day after the Organization of the Petroleum Exporting Countries agreed to cut their production to reduce brimming global crude stockpiles. That marked a sharp reversal from the recent trend, which has seen oil prices crash through a number of technical levels to fall as low as $43.76. Oil prices had already been trading higher on a report that Saudi Arabia was cutting exports to the key Asian market and on earlier industry data pointing to a sharp decline in weekly U.S. inventories. "The EIA numbers came in bullish across the board," Roberto Friedlander, head of energy trading at Seaport Global Securities said in a research note. U.S. commercial crude inventories fell by 5.2 million barrels, versus estimates for a 1.8 million barrel decline. This occurred as refinery activity eased from recent elevated levels and oil imports dropped by 644,000 barrels a day. Gasoline demand rose by 252,000 barrels a day, bringing the four-week average closer to levels at this time last year after a string of data showing weekly consumption declines. While gasoline in storage did not decline as much as analysts anticipated, it did not rise as indicated in the earlier industry report. 

 Oil bulls draw hope from fall in U.S. crude stocks: Kemp (Reuters) - U.S. crude stocks have shown a sustained decline over the last five weeks, giving oil bulls new inspiration that the market is rebalancing.Commercial crude inventories have fallen by 13 million barrels since the end of March, according to data from the U.S. Energy Information Administration ( stocks generally follow an annual cycle driven by seasonal variations in fuel consumption and the maintenance schedule for U.S. refineries.Stocks typically rise during the first four months of the year, reaching an annual peak in early May, before falling steadily through the middle of September.During the decade between 2007 and 2016, crude stocks increased by an average of 45 million barrels between the start of the year and the annual peak on or about May 5 ( 2017, crude stocks started increasing much faster than usual, rising by 56 million barrels between the start of January and the end of March ( then, however, stocks have fallen every week, a much earlier start to the draw down season than normal.At the end of March, crude stocks were 35 million barrels higher than at the corresponding point in 2016 and 196 million barrels over the 10-year average.By May 5, stocks had fallen to just 13 million barrels over the prior year and 168 million barrels over the 10-year average ( stocks have drawn down, despite sales from the government’s strategic petroleum reserves during the period.The drawdown has been the result of slightly slower crude imports and a record rate of refinery crude processing ( peaked at 17.3 million barrels per day (bpd) in the middle of April when it was almost 1.4 million bpd higher than in 2016 and 2.4 million bpd higher than the 10-year average.  But such rapid rates of processing are unlikely to be sustainable and refiners have already begun to scale back crude throughput.

Vitol Executive Says Oil Market Not Seeing Expected Destocking (Reuters) - The oil market has not seen the destocking that it expected for the first half of 2017, Vitol executive committee member Chris Bake said on Thursday. Bake told the S&P Global Platts Crude Oil Summit that while oil inventories were shifting, with cargoes moving from the Atlantic Basin into Asia, the overall drawdown that many hoped for amid OPEC-led production cuts had not yet materialised. "This 550 million barrel-plus inventory build of crude and products that started in 2014 is still very much there," Bake said. "How much is tertiary or strategic, how much is going to come out, that is an ongoing debate among all of us." Vitol, the world's largest oil trading house, moved a record 7 million barrels per day of crude and oil products last year. He added that the market had continued to confound expectations since the Organization of the Petroleum Exporting Countries and other producers agreed last year to cut output, as OPEC was no longer a lone heavyweight. "The market is in flux because we’ve all traditionally said there is this huge price regulator sitting there, that has been OPEC, and I think that model is severely challenged today,” he said. "Three months later (after the OPEC-led deal), we see the U.S. rig count double and it says ‘this isn’t the only driver in the market any more. We have this other driver in the market that is incredibly powerful.’”

Interview: IEA sees oil prices firming if OPEC cuts rollover – podcast - Neil Atkinson, Head of the IEA Oil Industry & Markets Division, talks to S&P Global Platts senior oil news editor, Robert Perkins, on the outlook for global oil market balances, the recent oil price slip, the implications of potential rollover of output cuts by OPEC and other key oil producers, the demand picture, the movement of global oil stocks, and the prospects for a supply 'crunch' in coming years due to a collapse in industry upstream spending..

OilPrice Intelligence Report: Oil Stabilizes As OPEC Ponders Deeper Cuts: Oil prices showed some life this week after an encouraging drawdown in inventories in the U.S., sparking large gains on Wednesday. Crude stocks dropped by a sizable 5.3 million barrels last week, and importantly, there was not a corresponding uptick in gasoline inventories, confirming a significant reduction in storage. WTI and Brent jumped up from their six-month lows.  We are roughly two weeks away from OPEC’s official meeting in Vienna, which is expected to result in a six-month extension of the production cuts. But now top OPEC officials are wondering if it will be enough. OPEC’s monthly report revised expected U.S. shale growth sharply upwards, predicting output to increase 64 percent more than originally expected. That equates to projected growth from U.S. shale of 950,000 bpd this year. OPEC fears that an extension will boost prices just enough to allow shale companies to lock in hedges once again, ensuring another wave of supply.   U.S. shale is coming back so quickly that market analysts see additional production posing a threat to oil prices next year as well. "Risks are emerging to 2018 balances," said Martijn Rats, oil analyst at Morgan Stanley, in a Bloomberg interview. "The U.S. is set up for strong supply growth next year, that could exceed one million barrels per day.” The Rapidan Group, an energy consultancy, also sees problems looming next year. "The supply and demand balance for 2018 looks very bad,” said Fared Mohamedi, chief economist at consultant The Rapidan Group. Several top shale players, including Pioneer Natural Resources have breakeven costs that are down around $20 per barrel, so “even in a $40 world, in a $50 world, we are making good returns,” Pioneer’s senior vice president, Frank Hopkins, told Bloomberg.  Goldman Sachs reiterated its belief this week that the oil market is already in a supply deficit. Goldman’s head of commodities, Jeff Currie, said at a London Conference that oil investors should be betting on higher prices. “Do I want to be long oil? The answer is absolutely yes because we are going into a deficit market,” Currie said at the S&P Global Platts Global Crude Summit in London on Wednesday. “With demand continuing to surprise to the upside,” the oil market could find itself short on oil by some 2 million barrels a day by July.

Oil Prices Slip As The U.S. Rig Count Continues To Climb - The number of active oil and gas rigs in the United States rose by 8 on Friday, according to oilfield services provider Baker Hughes. The total oil and gas rig count in the U.S. now stands at 885 rigs, or 479 above the count a year ago. Oil rigs increased by 9, while gas rigs fell by 1. At 12:16pm EST, WTI was trading down 0.23 percent for the day at $47.72, while Brent Crude traded down just 0.04 percent at $50.75—picking up about a $1.50 per barrel from last Friday after the Energy Information Administration (EIA) reported earlier in the week a decrease in both crude oil and gasoline inventories, and after reports that OPEC had reached a consensus on a possible extension of its production cut deal, which may be extended into 2018. This optimism was offset to some degree by reports that Libya—which is exempt from the OPEC deal—had increased its oil production to 780,000 barrels per day, and reports that Nigeria expects to reopen its Trans Forcados Pipeline this week. This week marks the seventeenth straight build for oil rigs (+190 or +36.4 percent since January 13). Gas rigs have climbed 11 of the last seventeen weeks, for a total gain of 36 (+26.5 percent). By basin, the Permian was the big winner this week, with 8 rigs added to its total. Cana Woodford added 2 rigs, and Granite Wash, Utica, and Williston basins each added one rig. Arkoma Woodford and the Mississippian basin each lost a rig. Shortly after data release, both benchmarks started to slip further, with WTI trading at $47.59 or -0.5 percent and Brent trading at $50.61, down 0.32 percent.

BHI: Again mirroring Permian activity, US rig count rises in 17th straight week - Oil & Gas Journal - The US drilling rig count during the week ended May 12 recorded its 17th consecutive increase, bolstered again by rigs targeting oil, drilling horizontally, and stationed on the Permian basin.The overall US tally of rigs gained 8 units to 885, up 481 since its nadir in recent Baker Hughes Inc. data touched during May 20-27, 2016, and its highest level since Aug. 21, 2015. The Permian also was up 8 units this week.Also up on a 17th consecutive occasion, oil-directed rigs jumped 9 units to 712, up 396 since last May 27 and their highest point since Apr. 17, 2015. Gas-directed rigs edged down a unit to 172, still up 91 since Aug. 26. One rig considered unclassified remains operating.Land-based rigs rose 7 units to 860, with horizontal rigs rising 8 units to 742, up 428 since last May 20-27. Directional drilling rigs edged down a unit to 66. The tally of rigs drilling in inland waters dropped 1 to 4, while offshore rigs gained 2 units to 21.The US Energy Information Administration reported that US crude output for the week ended May 5 increased 21,000 b/d to surpass 9.3 million b/d, reflecting increases in the Lower 48 by 16,000 b/d and Alaska by 5,000 b/d.In its May Short-Term Energy Outlook (STEO) released this week, EIA forecasts US crude oil production in 2017 to average 9.3 million b/d—up from the 9.2 million b/d forecast in last month’s STEO—and almost 10 million b/d in 2018.US crude output already in April reached its highest level since March 2016, averaging 9.1 million b/d, agency data indicate. With the oil-directed rig count hitting a 2-year high last week, EIA said it believes “US oil production will likely rise further in the coming months.”According to separate data from Rystad Energy, US Lower 48 oil production could increase 390,000 b/d from May to December assuming a West Texas In termediate price of $50/bbl. The consulting service projects that completion activity is set for a steep expansion throughout the remainder of the year despite growing concerns about service cost inflation in the most active basins. Since the second half of 2016, the rig-count rebound has been outpacing growth in completion activity, resulting in a buildup of drilled but uncompleted (DUC) wells (OGJ Online, May 11, 2017). Should the prices collapse to $40/bbl or even $30/bbl level, Rystad believes a major portion of those DUCs could still be completed commercially, meaning a dramatic downward shift in market conditions would not lead to a rapid collapse of US oil production.

Oil notches first weekly gain in a month as hopes grow for extended output cuts - Oil prices ended nearly flat on Friday, but notched the first weekly gain in a month on expectations the Organization of the Petroleum Exporting Countries will extend an agreement to curb production when the cartel meets later in the month. OPEC officials in recent days have suggested the possibility of an extension that would run past the end of the year, as well as deeper production cuts. The Wall Street Journal also reported Friday that some OPEC members hinted at the possibility of bringing new participants, including Turkmenistan and Egypt, into the agreement, helping to temper losses for oil prices. West Texas Intermediate June crude settled at $47.84 a barrel, up a penny for the session on the New York Mercantile Exchange. It ended roughly 3.5% higher for the week after posting three consecutive weekly declines. July Brent crude on London’s ICE Futures exchange added 7 cents, or 0.1%, to $50.84 a barrel, for a weekly gain of about 3.6%. The “baseline expectation continues to call for an extension” production cut agreement between members of OPEC and some non-OPEC producers, including Russia, “but the details of any arrangement can have significant price impact,”On Friday, Baker Hughes reported that the number of active U.S. rigs drilling for oil climbed by 9 to 712 rigs this week. The oil-rig count has climbed every week so far this year, except for one—and this marked the 17th straight weekly rise.

 In Its Fight Against U.S. Shale Oil, OPEC Risks Lower for Longer -  When Khalid Al-Falih arrived at Davos in late January, the Saudi oil minister was exultant. The output cuts he’d painstakingly arranged with fellow OPEC states and Russia were working so well, he said, they could probably be phased out by June. Almost five months later, U.S. production is rising faster than anyone predicted and his plan has been shredded. In a series of phone calls and WhatsApp messages late last week, Al-Falih told his fellow ministers more was needed, according to people briefed on the talks, asking not to be named because the conversations are private. In their battle to revive the global oil market, OPEC and its allies are digging in for a long war of attrition against shale. "OPEC is now recognizing they need longer -- and potentially deeper -- production cuts than they have anticipated," said Jamie Webster, a senior director for oil at the Boston Consulting Group Inc. in New York. From the beginning, Saudi Arabia saw a quick one-off intervention: reduce production for a few months and speed up the recovery. The strategy had an option for a six-month extension, but Riyadh initially thought it wouldn’t be needed. U.S. shale, the plan assumed, wouldn’t recover fast enough. And yet, shale has defied the naysayers. By the time OPEC meets in Vienna on May 25, U.S. output will be approaching the 9.5 million barrels a day mark -- higher than in November 2014 when OPEC started a two-year price war. The rebound has been powered by turbocharged output in the Permian basin straddling Texas and New Mexico. Forced to adjust to lower prices, shale firms reshaped themselves into leaner operations that can thrive with oil just above $50 a barrel. Since OPEC agreed to cut output six months ago, U.S. shale production has risen by about 600,000 barrels a day, wiping out half of the cartel’s cut of 1.2 million barrels a day and turning the rapid victory Saudi Arabia foresaw is turning into a stalemate. Al-Falih said this week Saudi Arabia is now pushing to extend the cuts "into the second half of the year and possibly beyond."

Analysis: OPEC contends with data cacophony as it reviews oil output cut -- When OPEC meets on May 25 to review its production cut deal, it will have to sift through an array of market indicators and analyst projections that paint an often confusing picture of oil supply and demand. For instance, OPEC estimated in its monthly oil market report Thursday that OECD commercial oil inventories were still some 276 million barrels above the five-year average, the benchmark it is aiming for with its output cuts. While those high stocks have led to doubt among traders that the cuts have been effective, OPEC said in its report that this was the second month in a row that stocks have drawn, indicating that the market's oversupply was trending downward. On the other hand, the resilience of US shale prompted OPEC to revise up its projection of US supply for 2017 by 280,000 b/d from last month's report, which it now sees at 820,000 b/d above last year's. The US Energy Information Administration on Tuesday also revised upward its forecast for 2017 US production by 90,000 b/d from the previous month to show year-on-year growth of 440,000 b/d. As for demand, OPEC is projecting growth of 1.27 million b/d globally this year, while the EIA has pegged growth at 1.56 million b/d.

Analysis: Iran sees share of Asian crude oil market slip -- Iran's crude and condensate exports fell in April with regional flows to Asia also slipping, as the country faces stiffer competition for supply into the region from its OPEC oil rivals. Total estimated export volume on Aframaxes, Suezmaxes and VLCCs from Iranian ports in April fell to 2.16 million b/d from 2.35 million b/d in March, data from cFlow, S&P Global Platts trade flow software, showed. Iran now faces a tricky period as there are signs that Iran is losing its market share in Asia to countries like Saudi Arabia and Iraq. Sources also said that Iran's exports in April fell mainly due to two factors, as the country's refineries are now running at full capacity, along with India and China reducing their purchases. Analysts have said that Iran needs a long term strategy to continue to increase its market share in Asia as it faces tougher competition from producers of medium sour crudes. "Iran is losing its market share in Asia to Saudi Arabia but on the other hand its share in European markets is increasing," said Sara Vakhshouri, a Middle East expert who runs consultancy SVB Energy International. "Unlike Saudi Arabia which tries to secure a long-term market share in Asia, Iran doesn't have a long-term market strategy and its focus is day-to-day sale of its oil. At the most it tries to secure annual term-contracts with its customers," she added. Exports to Asia fell sharply to 1.361 million b/d in April from 1.754 million b/d in March, as shipments to its biggest customers, China and India, dropped by 28% month on month. Exports to India fell by almost 300,000 b/d month on month, as a political row between the two countries raises the risk of Iran losing the key crude buyer.

 Iran To Raise Oil Output At Oil Field It Shares With Saudi Arabia -- The Iranian Offshore Oil Company will increase production at the Foroozan oil field, which Iran shares with Saudi Arabia, by 12,000 barrels daily, the company’s executive director told Iranian media, adding that it will install two platforms at the field soon.Iran has 11 percent of the field—which Saudi Arabia calls Marjan—whose reserves are estimated at 2.3 billion barrels. Besides it, Iran and Saudi Arabia also share another two fields in the Persian Gulf, Lulu and Dorra, respectively Esfandiyar and Arash on the Iranian side.The ramp-up is part of Iran’s efforts to boost its crude oil and natural gas production as soon as possible, challenging the market shares of other OPEC producers in the region, most notably Saudi Arabia. Still, the country is cutting exports after it cleared out what was in storage before economic sanctions were removed and the market share challenge may subside. Iran’s crude oil exports in May are expected to come in at 1.66 million bpd, and nearly 100,000 bpd will be put back into storage on tankers. For April, Iran is seen exporting 1.8 million bpd of crude oil and around 370,000 bpd of condensate. This compares to exports of crude and condensate combined of almost 2.9 million bpd in February, which marked a six-year high, Reuters data show.   At the same time, Tehran has indicated that it is on board with an extension of the production cut agreement OPEC struck at the end of last year, which exempted Iran from the cuts provided it didn’t produce more than 3.8 million barrels of oil daily.

Saudis Plan $40 Billion US Investment To "Cement Ties With Trump" -- Having gone all-in on a Hillary Clinton victory ahead of the elections, Saudi Arabia has quickly pivoted in its "appreciation" of the Trump administration, and having realized that the fastest way to Trump's heart is through the US Treasury's bank account, it is preparing to invest an "unprecedented" amount of money in the US. According to Bloomberg, the Kingdom’s sovereign wealth fund will announce plans to "deploy as much as $40 billion into U.S. infrastructure." The investment will likely be unveiled as early as next week when Trump is scheduled to visit the kingdom. While it is clear why Saudi Arabia is eager to appease Trump - after all the all important Aramco IPO is coming up, and the Saudis will be eager to open the world's biggest public offering in history to as many US accounts as possible while doing everything in their power to stay on America's good side  - Bloomberg's explanation that Riyadh felt "shunned by President Barack Obama, who crafted the 2015 nuclear deal with their Shiite rival Iran" leaves a bit to be desired: after all Saudi Arabia has consistently been the best customer of the US military-industrial complex for the past decade, and to claim that it had troubled relations with the previous administration is naive at best. What is certain, however, is that Saudi Arabia would have been delighted had Hillary Clinton become president, considering the millions in "donations" the Clinton Foundation received from Saudi Arabia and its peer Gulf states over the years.  Meanwhile, the kingdom claimed a “historic turning point” in bilateral relations after President Trump met Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman in the White House earlier this year. On May 19, Trump will make his first foreign trip since taking office, visiting Saudi Arabia and Jerusalem before heading to Europe. Or perhaps it's not Trump, but rather his son-in-law, that Saudi Arabia is most delighted with. A White House official told Bloomberg that the plans were in the works and that Trump’s son-in-law and senior adviser, Jared Kushner, had played a critical role in the discussions. The Saudi funding may end up an anchor investment in Trump's massive $1 trillion infrastructure stimulus plan.

The Silent Slaughter of the US Air War - April 2017 was another month of mass slaughter and unimaginable terror for the people of Mosul in Iraq and the areas around Raqqa and Tabqa in Syria, as the heaviest, most sustained U.S.-led bombing campaign since the American War in Vietnam entered its 33rd month. The Airwars monitoring group has compiled reports of 1,280 to 1,744 civilians killed by at least 2,237 bombs and missiles that rained down from U.S. and allied warplanes in April (1,609 on Iraq and 628 on Syria). The heaviest casualties were in and around Old Mosul and West Mosul, where 784 to 1,074 civilians were reported killed, but the area around Tabqa in Syria also suffered heavy civilian casualties. In other war zones, as I have explained in previous articles (here and here), the kind of “passive” reports of civilian deaths compiled by Airwars have only ever captured between 5 percent and 20 percent of the actual civilian war deaths revealed by comprehensive mortality studies. Iraqbodycount, which used a similar methodology to Airwars, had only counted 8 percent of the deaths discovered by a mortality study in occupied Iraq in 2006. Airwars appears to be collecting reports of civilian deaths more thoroughly than Iraqbodycount 11 years ago, but it classifies large numbers of them as “contested” or “weakly reported,” and is deliberately conservative in its counting. For instance, in some cases, it has counted local media reports of “many deaths” as a minimum of one death, with no maximum figure. This is not to fault Airwars’ methods, but to recognize its limitations in contributing to an actual estimate of civilian deaths. Allowing for various interpretations of Airwars’ data, and assuming that, like such efforts in the past, it is capturing between 5 percent and 20 percent of actual deaths, a serious estimate of the number of civilians killed by the U.S.-led bombing campaign since 2014 would by now have to be somewhere between 25,000 and 190,000. The Pentagon recently revised its own facetious estimate of the number of civilians it has killed in Iraq and Syria since 2014 to 352. That is less than a quarter of the 1,446 victims whom Airwars has positively identified by name.

US Foreign Policy is About to Kill 500,000 Children in Yemen — Media Silent -  As previously reported, civilians in Yemen are suffering from an intense and widespread humanitarian crisis. Staggering numbers include 7 million civilians in starvation, and 19 million out of the country’s 27 million population “in need of some form of aid,” according to the Guardian and the UN. “The poorest country in the Middle East, Yemen is now the largest food security emergency in the world,” stated a Unicef report that focused on the war’s effect on Yemeni children. At least 9.6 million children, which amounts to 80% of all Yemeni children, are in need of humanitarian assistance. “Nearly 2.2 million children are acutely malnourished and require urgent care. Close to half a million children suffer from severe acute malnutrition, a life-threatening condition that has seen a drastic increase of 200 percent since 2014,” the report also stated, adding that health care, education, and social systems have deteriorated during the war. Alongside this starvation crisis, is the high number of civilian casualties during the continuing conflict in Yemen. At least 4,773 civilians have been killed over the last two years and an additional 8,272 have been injured. US foreign policy is playing a direct role in the starvation and murder of thousands of innocent civilians. In an effort to ensure power to Yemeni President Abdu Rabbu Mansour Hadi, a Saudi-led coalition has been relentlessly attacking Yemen, targeting heavy military action toward Houthi rebels resistant of a Hadi government which has effectively accelerated the country’s humanitarian crisis. A critical element to this war, which has been ongoing for over two years, is assistance from the United States government. The United States has been a longstanding ally of Saudi Arabia and has been providing weapons deals for the Saudi government for a great number of years.

Southern Yemen leaders launch body seeking split from north | Reuters: Senior tribal, military and political leaders have formed a new council seeking the secession of southern Yemen, the former governor of the area's main city Aden said on Thursday, threatening to bring more turmoil to a two-year-old civil war. Aidaroos al-Zubaidi made his announcement in a televised address in front of the flag of the former nation of South Yemen, whose forces were defeated by the north in 1994 and brought into a reunified country. Zubaidi said a "national political leadership" under his presidency would administer and represent the south - a region which holds much of Yemen's modest oil deposits, the backbone of its economy. The announcement raises the prospect of more division in an already complex conflict in the impoverished Arabian Peninsular country, where Saudi Arabia is leading a coalition of Gulf Arab forces against Houthi fighters allied to Iran. Thousands of Saudi-led air strikes have backed both southern fighters and the forces of Yemen's internationally-recognized government against the Houthis. But the southerners and the government of President Abd-Rabbu Mansour Hadi have been caught up in their own power struggle - undermining Saudi efforts to coordinate the campaign. The Houthis say the Gulf powers are seeking to divide and occupy the country Neither the government, which is nominally based in Aden but works mostly from Riyadh, nor the Saudi-led coalition could be immediately reached for comment.

Syria’s Kurds march on to Raqqa and the sea -- Syria’s Kurds have revealed plans to redraw the northern part of the country by linking the Kurdish region of Rojava with the Mediterranean Sea, in a move that will infuriate neighbouring Turkey.In a further sign of growing Kurdish confidence in Syria’s north, officials say that they plan to ask the US for political support in creating a trade corridor to the Mediterranean as part of a deal for their role in liberating Raqqa and other cities from Islamic State (Isis).Senior figures have also indicated that the Syria Democratic Forces (SDF), a 50,000-strong collection of fighters dominated by the YPJ Kurdish militia and a crucial US partner in its offensive against Isis, is preparing to occupy Raqqa after eradicating Isis before pushing deeper into Arab territory, along the Euphrates valley, and seizing the city of Deir ez–Zor from the extremist group.In another startling development, an official even revealed it was possible that SDF forces might eventually push west to liberate the city of Idlib, 170km west of Raqqa, and currently controlled by a coalition of Islamists and jihadis including the former al-Qaida affiliate Nusra Front. Hediya Yousef, in charge of the federalism project for the self-declared autonomous “democratic federation of north Syria”, which has expanded from the Kurdish region of Rojava to include considerable Arab territory, told the Observer: “Arriving at the Mediterranean Sea is in our project for northern Syria, it’s a legal right for us to reach the Mediterranean.”When asked if that meant asking the US for its political backing to achieve a trading route to the sea once they had helped eradicate Isis from north Syria, Yousef said: “Of course.” Speaking in the Syrian city of Malikiyah near to where recent Turkish airstrikes struck Kurdish targets, killing 20 fighters of the People’s Protection Units (YPJ), Yousef added: “If we arrive at the Mediterranean it will solve many of the problems of the population in northern Syria, everyone will benefit.” Opening the region to international trading routes would significantly empower northern Syria, circumventing the existing blockade on Rojava caused by the closed border with Turkey and tensions with Iraq.

U.S. to arm Syrian Kurds fighting Islamic State, despite Turkey's ire | Reuters: Despite fierce opposition from NATO ally Turkey, U.S. President Donald Trump has approved supplying arms to Kurdish YPG fighters to support an operation to retake the Syrian city of Raqqa from Islamic State, U.S. officials said on Tuesday. Ankara views the Kurdish YPG militia, fighting within a larger U.S.-backed coalition, as the Syrian extension of the Kurdish PKK militant group, which has fought an insurgency in southeastern Turkey since 1984. There was no immediate reaction from Turkey, whose president, Tayyip Erdogan, is expected to meet Trump in Washington next week. The Pentagon immediately sought to stress that it saw arming the Kurdish forces "as necessary to ensure a clear victory" in Raqqa, Islamic State's de facto capital in Syria and a hub for planning the group's attacks against the West. "We are keenly aware of the security concerns of our coalition partner Turkey," Pentagon spokeswoman Dana White said in a statement as she traveled in Lithuania with defense secretary Jim Mattis. "We want to reassure the people and government of Turkey that the U.S. is committed to preventing additional security risks and protecting our NATO ally," White said. The United States has long directly supplied arms to the Arab components of the so-called Syrian Democratic Forces, which include YPG fighters. White said Washington would still prioritize supplying those Arab fighters within the SDF. One U.S. official, speaking on condition of anonymity, said the equipment for the Kurdish fighters could include small arms, ammunition, machine guns, armored vehicles and engineering equipment.

Russia Seeks Accord With U.S. on Iran Role in Syria Safe Zones - Russia is seeking to convince the U.S. to accept an Iranian role in a plan for foreign troops to police safe zones in Syria as a step toward ending the six-year war. The U.S. and Iran must show “compromise and flexibility” in helping to secure the so-called de-escalation zones proposed by Russia to shore up a Syrian cease-fire, President Vladimir Putin’s Middle East envoy, Mikhail Bogdanov, told reporters in Sochi on Thursday. Russia is trying to mediate between the U.S. and Iran, though it’s under “no illusions” about the difficulties, he said. “Does anyone think Iran is going to leave this region and Syria, as if you could wave a magic wand and Iran would disappear?” Bogdanov said. “That’s not going to happen.” Russian Foreign Minister Sergei Lavrov said after talks with U.S. President Donald Trump in Washington on Wednesday that he hoped the U.S. would “make an active contribution” to securing the safe zones. Lavrov suggested the U.S. may “initiate” the process in southern Syria near the borders with Israel and Jordan. Russia, Turkey and Iran signed a memorandum on creating four zones at talks involving the Syrian government and opposition groups in Kazakhstan’s capital, Astana, last week. Russia believes the U.S. should help to enforce the cease-fire in Syria, though it would have to gain approval from Syrian President Bashar al-Assad to deploy any troops to safe zones, Bogdanov said. Trump’s pragmatic approach as “a businessman who loves practical results” is encouraging Russia to “hope that life eventually puts everything in its place” to help end the conflict, he said.’

Qatar says Syria 'de-escalation' plan not an alternative to political transition | Reuters: Qatar's foreign minister on Tuesday welcomed a Russian-brokered agreement for "de-escalation" zones in Syria but said the plan was no substitute for a political transition that would see President Bashar al-Assad step down. Qatar has been a supporter of rebels who have been fighting to overthrow the Syrian president during six years of civil war. "It is good to have de-escalation zones but this must be a step to reach a solution to the Syrian crisis and not to use it as an excuse to delay this solution and to postpone the political transition," the Qatari foreign ministry quoted Sheikh Mohammed bin Abdulrahman al-Thani as telling the Doha-based al-Jazeera network. The remarks came after talks between the Qatari minister and U.S. Secretary of State Rex Tillerson in Washington. Russia brokered the deal for de-escalation zones with backing from Iran and opposition supporter Turkey during ceasefire talks in the Kazakh capital Astana last week. The deal took effect at midnight on Friday. Some fighting has continued in those areas, particularly north of Hama city, but the overall intensity has reduced, the Syrian Observatory for Human Rights monitoring group said.

No, the “New” CNN Video of the Chemical Incident Does NOT Prove that the Syrian Government Did It - The Sun claims that CNN has released new footage of last month’s Syrian chemical incident … and strongly implies that the Syrian government was responsible.Washington’s Blog asked MIT rocket scientist and chemical weapons expert Theodore Postol* what he thought of the footage.Postol replied:I agree that the footage is harrowing. However none of it is new and none of it proves that the Syrian government was the perpetrator of a nerve agent attack.As such, this article merely falls into the category of propaganda.The kindest alternative description of the article is that it might instead be yet another example of bad reporting that mixes ill-considered assumptions with facts that may or may not be relevant to its conclusions.This kind of reporting could actually be encouraging such attacks.If there was a false flag nerve agent attack, this tells the perpetrators that when they engage in the murder of children they can build a stronger false case against the Syrian government and thereby increase their chances of creating political pressure on the US Government to intervene militarily on their behalf. If people are sickened by the inhumanity of these events, they might want to consider alternative explanations of who might be responsible for the immoralities we are seeing.

Drone Images Expose Major US, Jordan Military Build-up On Syrian Border The US and Jordanian military forces may be prepping a massive invasion of Syria, if intelligence reports gathered from surveillance drones suggest.  Following reports today that President Trump confirmed US will provide arms directly to The Kurds to fight ISIS, reports, Damascus is reportedly on high alert after some 400 American and Jordanian military vehicles were located at a Jordanian military base near the Syrian desert border earlier today.More pictures of the drone surveillance here: The tanks are supposedly Jordanian M60 types. The photos validate previous reports by an Al-Masdar News military source suggesting a major Jordanian and US buildup at the Syrian border. The military base is located east of Az-Zarqa, 43 km away from the Syrian border.

Iraq fears for its future once Isis falls -- Abu Hassan, who asked that his real name not be used, still cannot understand how the friend he grew up with could support the jihadi group that killed thousands and branded his own minority sect infidels worthy of slaughter. “After something like this, how do people live together again?” he asks. As the battle against Isis in Mosul enters its final stages, it is a question many are grappling with in the diverse province of Nineveh, some 300km from Baghdad and with a population of more than 3m.  Over the centuries, Nineveh has hosted Christian sects, Jews who have long since fled, Arabs of the Sunni and Shia Muslim sects, Kurds as well as smaller minorities like the Turkmen, Yazidis and Abu Hassan’s Shabak people. There have been periods of conflict, but few as catastrophic as June 2014, when Isis militants seized Mosul and swept across northern Iraq and Syria. Advancing Iraqi forces, backed by a US-led international coalition, opened a fresh assault last week on the last districts of Mosul, Nineveh’s provincial capital, where several hundred Isis militants are bracing for a fight to the death. The presumed government victory over the coming weeks is seen as critical to delivering a final death knell to Isis’s territorial control in Iraq, where it has only a few remaining footholds. Washington and its allies are likely to support Iraqi security operations even after Isis is driven out. But that alone will not solve the puzzle of how Nineveh, and perhaps all of Iraq, heals the scars left by the Islamists. If the country cannot foster coexistence, Baghdad’s allies may find it mired in conflict yet again.“Of course this isn’t over . . . it will become sect versus sect, party against party, neighbour versus neighbour,” says one Nineveh council official, who asked not to be named. “The killing is easy, because we have not imposed governance here. There is no order.” Nineveh, Iraq’s second-largest province, is rich in oil and fertile land. But its complex ethnic make-up means conflicts, many of which predate Isis, are hard to resolve and relatively easy to reignite.

Iran Threatens To Destroy Saudi Arabia After Saudi Prince Warns Of "Moving Battle To Iran" -- An unexpected war of words erupted between two sworn Middle-Eastern rivals over the weekend, when Saudi Arabia and Iran threatened each other with military action, if not outright destruction.It started on Tuesday, when in "unusually blunt comments" delivered during a nationally-televised interview Saudi Deputy Crown Prince Mohammed bin Salman - the man who is now effectively in charge of Saudi oil policy - ruled out any dialogue with Iran and pledged to protect his conservative kingdom from what he called "Tehran's efforts to dominate the Muslim world.""We know that we are a main goal for the Iranian regime," he said. "We will not wait until the battle comes to Saudi Arabia but we will work to have the battle in Iran rather than in Saudi Arabia."Iran, never one to leave a lingering belligerent comment by its Saudi nemesis unanswered, responded when its defense minister said on Sunday that Iran would hit back at most of Saudi Arabia with the exception of Islam's holiest places if the kingdom does anything "ignorant"according to Reuters."If the Saudis do anything ignorant, we will leave no area untouched except Mecca and Medina," Defence Minister Hossein Dehghan was quoted by the semi-official Tasnim news agency as saying. Taking a jab at the Saudi war in Yemen, the iranian said that "they think they can do something because they have an air force," referring to Saudi attacks on Iran-aligned Houthi forces in control of the capital Sanaa.

Iran Warns It Will Attack 'Terrorist Safe Havens' Inside Pakistan - Iran has warned Pakistan that Tehran would hit militant bases inside the neighboring country if Islamabad does not confront Sunni insurgents who carry out cross-border attacks. Iranian state media quoted the army's chief of staff, Mohammad Hossein Bagheri, as saying on May 8 that Tehran expects "the Pakistani officials to control the borders, arrest the terrorists, and shut down their bases." "If the terrorist attacks continue, we will hit their safe havens and cells, wherever they are," he said. Ten Iranian border guards were killed in April in an attack claimed by the Sunni militant group Jaish al-Adl. Iran's Foreign Minister Mohammad Javad Zarif visited Islamabad early in May to discuss border security with Pakistani authorities. Pakistan assured Iran it would deploy additional troops along its border. The porous frontier between the two countries has long been used by drug smugglers and militants, both of whom occasionally clash with Iranian security forces. Jaish al-Adl that has carried out several assaults on Iranian security forces, claimed responsibility for attacks that killed eight border guards in April 2015 and 14 border guards in October 2013. The militant group says its attacks are aimed at what it calls discriminations against Sunni minorities in predominantly Shi'ite Iran.

Questions for US military after doubt cast on efficiency of Afghan bombing - After dropping its largest conventional bomb ever used in combat in Afghanistan on 13 April, the US military said the massive ordnance air blast, or Moab, was a “very clear message to Isis” that they would be “annihilated”.  Defence secretary Jim Mattis said the bomb was “necessary to break Isis”. The Afghan government claimed the bomb killed 94 Isis militants, while harming no civilians. But a new investigation by independent analysts casts doubt on the efficiency of the bomb, suggesting it inflicted far less damage than initially reported – and raising questions again over why the bomb was dropped. Using satellite imagery, ground footage and 3D visualisation, Alcis, an institute for geographical analysis, surveyed the targeted area in Nangarhar province.  It found 38 buildings and 69 trees destroyed within a 150-metre radius, challenging statements from locals who told reporters the bomb had damaged houses up to two miles away. The imagery also shows no 300-metre crater, as had been expected prior to the strike. Alcis believes damage done further away is a result of ground fighting. Alcis was also sceptical of the Afghan government’s assessment that the bomb killed 94 Isis militants. “I’m staggered by that,” said Richard Brittan, the institute’s managing director. “I simply don’t understand where they can get that number from.” The US has yet to put out a casualty estimate. The US military spokesman in Kabul, Capt William Salvin, would not comment on the Afghan numbers but said: “We have not been able to go in and do that assessment, and we’re probably not going to.” He said it was “too dangerous” and that the military had “better things to do with our time”.

Trump Considers Afghanistan Army Surge - After already escalating the fight in Afghanistan last month by dropping its GBU-43/B Massive Ordnance Air Blast Bomb (MOAB or "mother of all bombs"), the largest non-nuclear bomb in the U.S. arsenal, and engaging in a 3-hour gunfight this past weekend that resulted in the death of ISIS leader Sheikh Abdul Hasib, Trump is apparently considering whether to once again expand U.S. military presence in Afghanistan. According to the Washington Post, the new plan, which still needs the approval of the president, calls for expanding the U.S. military role as part of a broader effort to push an increasingly confident and resurgent Taliban back to the negotiating table, U.S. officials said. The plan comes at the end of a sweeping policy review built around the president’s desire to reverse worsening security in Afghanistan and “start winning” again, said one U.S. official, who like others spoke on the condition of anonymity to discuss internal deliberations. The new strategy, which has the backing of top Cabinet officials, would authorize the Pentagon, not the White House, to set troop numbers in Afghanistan and give the military far broader authority to use airstrikes to target Taliban militants. It would also lift Obama-era restrictions that limited the mobility of U.S. military advisers on the battlefield.Trump is expected to make a final call on the strategy before a May 25 NATO summit in Brussels that he plans to attend.

U.S. poised to expand military effort against Taliban in Afghanistan - President Trump’s most senior military and foreign policy advisers have proposed a major shift in strategy in Afghanistan that would effectively put the United States back on a war footing with the Taliban. The new plan, which still needs the approval of the president, calls for expanding the U.S. military role as part of a broader effort to push an increasingly confident and resurgent Taliban back to the negotiating table, U.S. officials said. The plan comes at the end of a sweeping policy review built around the president’s desire to reverse worsening security in Afghanistan and “start winning” again, said one U.S. official, who like others spoke on the condition of anonymity to discuss internal deliberations. The new strategy, which has the backing of top Cabinet officials, would authorize the Pentagon, not the White House, to set troop numbers in Afghanistan and give the military far broader authority to use airstrikes to target Taliban militants. It would also lift Obama-era restrictions that limited the mobility of U.S. military advisers on the battlefield. The net result of the changes would be to reverse moves by President Barack Obama to steadily limit the U.S. military role in Afghanistan, along with the risk to American troops and the cost of the war effort, more than 15 years after U.S. forces first arrived there. Trump is expected to make a final call on the strategy before a May 25 NATO summit in Brussels that he plans to attend. 

Bin Laden’s son wants to avenge his father, ex-FBI agent says - Personal letters seized in the raid that killed Osama bin Laden reveal the al Qaeda leader's son to be a young man who adores his father and wants to carry on his murderous ideology. That son today is poised to lead a stronger, larger al Qaeda and is bent on avenging his dad's death, says an ex-FBI agent familiar with those documents. Holly Williams interviews Ali Soufan, the former FBI agent who was the bureau's lead investigator of al Qaeda after the 9/11 attacks, on the next edition of 60 Minutes Sunday, May 14 at 7 p.m. ET/PT. Soufan describes a letter from the son, Hamza, that was collected in the raid and now declassified. "He tells him that…he remembers 'every look…every smile you gave me, every word you told me.'" Hamza would be about 28 now and wrote the letter when he was 22 and had not seen his father in several years. Hamza also wrote this: "I consider myself to be forged in steel. The path of jihad for the sake of God is what we live." Hamza's potential as a leader was recognized years ago when he was still a boy, says Soufan. The child was used in propaganda videos, sometimes holding a gun. "He was a poster kid for the al Qaeda…and for members of al Qaeda, who were indoctrinated with these propaganda videos, he means a lot to them," Soufan tells Williams. The U.S. has named Hamza a "specially designated global terrorist" -- the same classification his father once held. He even sounds like his father, says Soufan. "His recent message that came out, he delivered the speech as if it's his father…using sentences, terminology that was used by Osama bin Laden." 

China Warns Washington Its Latest Missile Can Sink A US Aircraft Carrier - China recently tested a new, advanced type of guided missile in the sea near the Korean peninsula, the Chinese defense ministry said Tuesday cited by the Times of India, just as South Korea concluded its presidential elections amid rising regional tensions. The test in the Bohai Sea was conducted to “raise the operational capability of the armed forces and effectively respond to threats to national security,” the ministry said in a brief statement. The statement did not say when the launch took place, only that it happened “recently”, nor did it give any details about the missile nor the type of platform from which it was launched. The test came as China, the United States and the Koreas are locked in a diplomatic spat over Pyongyang’s missile launches and potential new nuclear tests. To deter any future launches, the US military recently deployed an anti-missile defesce system in South Korea to deter the North, which China sees as a threat to the regional security balance and its own ballistic missile capabilities. As reported previously, Washington and Seoul agreed to the Terminal High Altitude Area Defense (THAAD) battery deployment in July in the wake of North Korean missile tests, the installation of which prompted vigorous complaints by local South Koreans. Last week, US Forces Korea said THAAD was now operational, with the ability to intercept North Korean missiles, prompting Beijing to demand the immediate suspension of the system’s deployment. A US defense official said, however, that the system had only “reached initial intercept capability”. This initial capability will be augmented later this year as additional hardware and components arrive to complete the system, officials said.

China Iron Ore Prices Crash Through Key Support To 6-Month Lows After a few short days of respite - suggested by some as indicative that the worst is over - China commodities are crashing again tonight with Dalian Iron ore snapping below 460 to its lowest since before Trump's election...This has erased the entire post-Trump reflation trade hope...The commodity has sunk on concern mine supplies will go on rising just as China’s mills enter a weaker period for demand and policy makers in Asia’s top economy rein in leverage. Stockpiles at mainland ports are near a record after robust shipments from Australia and Brazil, with miner BHP Billiton Ltd. citing the inventories as among risk factors that may tug prices lower. Citigroup Inc. has said there may have been forced sales by some traders in China.With all the industrials now red post-Trump... As Citi warned over the weekend, "We suspect that a good number of physical traders that are financially leveraged up to five times have been forced to destock due to rising short-term borrowing costs and the recent sharp price corrections."  Citigroup isn’t alone in saying that some traders may be compelled to sell holdings into a falling market as China tightens. Shanghai Cifco Futures Co. said this week signs are emerging that traders are dumping their holdings.

 China Reserves Jump Most In Three Years; Hedge Fund Asks "Is This The End Of The Yuan Bear Market?" - In all the drama surrounding the French elections, few noticed the PBOC's announcement that China’s FX reserves rose for the third straight month in April, increasing by $20.45 billion to $3.03 trillion, more than the $11 billion expected and the single biggest monthly increase in three years going back to April 2014, on the back of a weaker dollar and increasingly more draconian capital controls on outflows. Cited by the WSJ, some economists attributed April’s increase to a dollar that continued to decline in the past month especially after Trump said the U.S. currency “is getting too strong.” The value of other currencies in China’s reserve basket, including the euro, the British pound and Japan’s yen, similarly played a significant role in the rise, said Yan Ling, an economist with China Merchants Securities. Besides USD softness (USD has weakened against the CFETS basket by over 2% year-to-date through April) and perhaps stronger RMB sentiment, the capital flow management measures introduced over the last several months have also contributed to the slowdown in outflows, Goldman speculated in a Sunday note. That could reverse, as there may be incremental relaxation of the capital account as the flow situation has improved and an overly tight capital account could hinder legitimate international trade and the authorities' long-term RMB internationalization goals. “Downward pressure on the currency has significantly subsided thanks to capital controls introduced in late 2016 and early 2017,” Dariusz Kowalczyk, a Credit Agricole economist, toldBloomberg. “This means that going forward, depreciation will be very gradual.”  However, any systematic roll-back of capital controls is unlikely in the near term, given it is still uncertain as to whether and how fast outflows could pick up again in case the USD re-strengthens significantly, Goldman adds. Furthermore, some degree of capital account restrictions could beneficially help reduce volatility during the process of exchange rate liberalization. “The Chinese central bank no longer cares that much about the level of exchange rate. Rather, they now care more about the basic stability of the foreign-exchange reserve,” said Zhou Hao, an economist with Commerzbank AG .

China's Deleveraging Bill Tops $500 Billion -- How much pain can China’s leaders stomach? It’s becoming a key question for investors as the government’s clampdown on financial leverage ripples through markets.The tightening campaign has erased at least $453 billion from the value of Chinese stocks and bonds since mid-April, spurred $21 billion of canceled debt sales and compelled the People’s Bank of China to inject $48 billion into jittery money markets. Sales of asset-management products by lenders and trust companies have plunged by more than 30 percent, while domestic real estate transactions have slowed and metals prices have buckled. The upheaval hasn’t reached crisis levels yet. But as the nation’s equity crash in 2015 showed, market declines in China have a habit of snowballing. As authorities juggle the conflicting goals of curbing leverage and maintaining economic growth before a Communist Party leadership reshuffle later this year, some money managers are bracing for more turbulence. “It would take a lot for the country to move into easing mode,” said Howard Wang, the Hong Kong-based head of greater China at JPMorgan Asset Management, which oversees about $1.8 trillion worldwide. “They will adjust their policies if markets go down another 10 percent or the currency cracks under pressure. Only these very drastic swings will make them move the other way.” China’s banking, insurance and securities regulators have all played a part in the clampdown, focusing much of their attention on the nation’s shadow banking system. The investment products produced by that system have funneled huge sums of cash into local asset markets, but critics say they employ too much leverage, create dangerous asset-liability mismatches and reduce transparency. Shadow banking assets in China increased by 21 percent in 2016 to the equivalent of $9.3 trillion, or 87 percent of gross domestic product, Moody’s Investors Service said in a report on Monday.  The tightening campaign adds to a nine-month-long effort by China’s central bank to curtail excessive borrowing by gradually raising interest rates. The nation’s key seven-day repo rate has climbed to about 3 percent from 2.3 percent in August, and would likely be higher if not for cash injections by the PBOC via daily open-market operations over the past month. The rate topped 12 percent during a brief shakeout in the shadow banking system in 2013.

China Sickening into Classic Emerging Market Crisis - naked capitalism --Yves here. A big shortcoming of this analysis is that it assumes that loans are funded by deposits, which is not correct. However, China also has a substantial shadow banking system. Those of you who remember the crisis know that it was the result of the freezing of the repo market, which funded about half the balance sheets of investment banks, and other systemically important players, like AIG and JP Morgan, were exposed in a big way to the collapse in prices of assets that were security for repo.  But having said that, some of the discussion in this article, particularly regarding interbank lending, oddly suggests that banks themselves don’t trust the central bank backstop or have operational issues. Any input by informed readers would be very much appreciated.

 China's April trade growth slows as commodities, electronics demand cools | Reuters: China's import growth slowed faster than expected in April, as inbound shipments of commodities such as iron ore and copper weakened, while export growth more than halved, in line with a general cooling in demand for electronic gadgets. China's April imports rose 11.9 percent, cooling from March's 20.3 percent rise, official data showed on Monday, and missing analysts' expectations for an 18 percent rise. Exports rose 8.0 percent from a year earlier, slowing from a 16.4 percent rise in the previous month and short of expectations of 10.4 percent. While the data shows trade remained robust at the beginning of the second quarter, analysts say the spurt in China's economic growth seen in the first three months of the year may be as good as it gets as policymakers seek to tighten speculative investment, especially in the property sector. "Looking ahead, we expect export growth to hold up well given the relatively bright outlook for the global economy this year," Capital Economics China economist Julian Evans-Pritchard said in a note. "Growth in inbound shipments will continue to face headwinds, however. In particular, policy tightening will further weigh on domestic demand in coming quarters." April's numbers left the country with a trade surplus of $38.05 billion, which compared with forecasts for $35.50 billion, and above $23.93 billion in March. The April trade figures are preliminary, with revised data due on May 23.China's imports of crude oil, iron ore and copper all fell by volume compared with March, with the data in line with a recent survey of purchasing managers in the manufacturing sector showing April expansion was the slowest in six months. Despite the slowdown, imports year-to-date are still up 20.8 percent by value, compared with 8.1 percent growth for exports over the first four months, though analysts say imports could slow further this year. 

China’s Q1 Import Surge, Disaggregated - One of the challenges China poses is that by the time something shows up cleanly in the numbers, things often have changed. I feel that risk acutely now. The latest high frequency indicators (iron ore prices…) suggest China’s economy is now decelerating on the back of what appears to be a significant policy tightening.But that deceleration looks to have come after a very significant upturn.The hard numbers for q1 2017 point to substantial acceleration in growth late last year and early this year. The trade numbers for one.In the first quarter of 2017 China’s headline exports totaled $482 billion and its imports $417 billion, up 8 percent and 24 percent, respectively, over the same period last yearTo be sure, a large part of the story comes from the rebound commodity prices over the last year (commodity prices were particularly low in q1 2016). Comparing the year-over-year changes of commodity prices to the value of China’s imports of primary products (the Chinese trade dataspeak for commodities) makes that point pretty clearly:That said, it’s neither all commodities nor just a price effect. Volumes of both imports and exports are up big year-over-year: q1-2017 import volumes are up just over 15 percent, and export volumes are up almost 10 percent. The rise in in China’s import volumes reflects a real upturn in growth— driven by its 2015-2016 stimulus. That credit-driven stimulus may well be bad for China, but it clearly has been a boon for the rest of the world. All the major regions of the world economy have seen their exports to China jump. Middle East, Africa, and Latin America, Asia, the United States, and the European Union have all seen solid growth in their exports to China over the last year. The U.S. has done a bit better than Europe and Asia recently. But this actually isn’t surprising. Nor is it a sign Trump has struck a better deal with China. The real reason is simple: a decent share of U.S. exports to China are commodities, and thus U.S. exports to China tend to be influenced by commodity prices more than European or Asian exports to China. Manufactured exports are up just under 10 percent y/y, while commodity exports are up over 40 percent (soybeans aren’t the only driver here—they are only up around 25 percent year-over-year).

Chinese Producer Prices Miss, Slide For Second Month As Burst Commodity Bubble Spills Over With the entire world's focused on the last remaining reflationary dynamo in the world, China, today's inflation data out of Beijing, fabricated as it may be, was closely watched.  After all, just one month ago, UBS declared China's reflationary phase over, and a dark, deflationary era of negative credit impulse-driven deflation would soon be unleashed on the world. Again. It wasn't quite so dramatic.After surging to almost 8% at the start of 2017, the fastest pace in 9 years, PPI declined for a second consecutive month, slowing to just 6.4% YoY in April, down 0.4% from March, and missing expectation, c onfirming (as if it was needed) that China's commodity boom is now in the rearview mirror.  The accelerating producer price plunge has been all too obvious to those who have watched the recent crash (most recently previewed here) in Chinese iron ore and coal prices, which tumbled after rising sharply on a construction boom, or rather bubble, that drove China's strongest economic growth since 2015.At the same time consumer prices rose fractionally more than expected, although CPI remained at just 1.2% YoY, up from 0.9% in March. This was driven entirely by non-food inflation which jumped 2.4%, while food inflation plunged 3.5% from a year ago.And in the backward logic of the "good is good and bad is great" world, the burst commodity bubble (declining PPI)  and lower purchasing power (rising CPI) allowed the  PBOC to be a little more generous with its liquidity, ending the three drought of no reverse repos, even if the central bank still drained a net of CNY80 billion today, and so Chinese stocks are higher... for now.

 Duterte plays cat-and-mouse game with US and China -  When Donald Trump recently invited Philippines President Rodrigo Duterte to the White House, he signalled that he would take a different stance on relations with Manila from his predecessor, turning the page on a rocky period for two allies. Mr Duterte last year called Barack Obama a “son of a whore”. Yet the White House described his call with Mr Trump as “very friendly” and said the two countries’ alliance was “now heading in a very positive direction”. Democrats and some Republicans accused Mr Trump of ignoring concerns about claims of extrajudicial killings in Mr Duterte’s war on drugs. Those concerns were heightened a few days later, when Rex Tillerson, secretary of state, told US diplomats that “in some circumstances if you condition our national security efforts on someone adopting our values, we probably can’t achieve our national security goals”. Mr Tillerson was not referring specifically to the Philippines, but his comments came as Manila is improving its ties with China after years of tension over the South China Sea. The latest evidence of a shift came last week when the Chinese navy made their first port call to the nation in years and Mr Duterte said he was open to holding joint exercises with the Chinese military. “It is definitely a shift and it takes some getting used to,” said a US official. “But . . . we think it is important for our own interests in the region for the Philippines to have good relations with China.” The official said the US has maintained “very close security co-operation” with Manila even under Mr Duterte. The official added that while the Chinese ship visit was a “little more sensitive”, Washington was not that concerned about one joint exercise, although “if it was a signal of long-term change we might be worried”.

"North Korea's Favored Candidate", Liberal Moon Jae-in Wins South Korea Presidential Election -- Having lost to Park Geun-hye in the 2012 presidential election, liberal Moon Jae-in is poised to become the new South Korea president according to an exit poll from today's South Korean election, according to which Moon was estimated to have collected 41.4% of all votes. The front-runner was followed by Hong Joon-pyo of the conservative Liberty Korea Party with 23.3% . Ahn Cheol-soo of the center-left People's Party came in third with 21.8%. North Korea has indicated that Moon is its favored candidate, with state media recently calling on South Korean voters to “punish the puppet group of conservatives” associated with Park.  The son of North Korean refugees, Moon criticized the early installation of a U.S. missile shield on South Korean soil and has said he’d meet with Kim Jong Un under the right circumstances. As Bloomberg observes, the left-leaning Moon has long led opinion polls in an election triggered by the impeachment of former President Park Geun-hye, who was ousted in March and is now in jail while on trial for corruption charges. He has pledged a softer touch with North Korea and tougher action against family-run conglomerates that dominate Asia’s fourth-biggest economy.  Moon's expected victory is perhaps most notable because Moon’s expected victory could herald an era of rapprochement with North Korea, and an unlikely meeting of minds with Donald Trump over Pyongyang’s nuclear and ballistic missile programmes.

South Korea's new president has been sworn in — and immediately declared his willingness to visit North Korea : (AFP) - South Korea's new president was sworn in on Wednesday, just a day after a landslide election victory, and immediately declared his willingness to visit Pyongyang amid high tensions with the nuclear-armed North. Left-leaning Moon Jae-In, a former human rights lawyer, backs engagement with North Korea in the quest for peace -- in contrast to the threatening rhetoric from the Trump administration in recent weeks. "If needed I will fly to Washington immediately," Moon said in an inauguration speech after taking the oath of office in front of lawmakers at Seoul's National Assembly building. "I will also go to Beijing and Tokyo and even Pyongyang in the right circumstances." Moon will have a difficult diplomatic path to tread in his approach to the North, which dreams of a missile capable of delivering a nuclear warhead to the continental United States, and has vast artillery forces trained on Seoul. At the same time the South is embroiled in disputes with China over a US missile defence system, and former colonial occupier Japan over wartime history. He named former journalist Lee Nak-Yon, a four-term lawmaker, as prime minister -- a largely coordinating role and appointed a new head of the National Intelligence Service, Suh Hoon, who played a key role in preparing the past two inter-Korea summits of 2000 and 2007.

South Korea Rejects US Foreign Policy -- South Korea has a new president: Moon Jae-in. Moon’s election is a major win for the Korean liberal party, who had been out of power for a decade. While Moon was likely helped by the corruption scandal that brought down former president Park Geun-hye, the darkest shadow had to be the growing tensions between the US and North Korea. From that perspective, Moon’s election is a strong rebuke against the US status quo. Lost in all the news last week regarding the House’s vote on replacing Obamacare was the near-unanimous vote to increase US sanctions on North Korea. This was simply the latest in a serious of moves by Washington to escalate a showdown with the unpredictable “hermit kingdom.” The Trump administration is also looking for other nations to follow suit. Secretary of State Rex Tillerson has said America’s aim is to “to fully implement the United Nations Security Council resolutions regarding sanctions, because no one has ever fully implemented those.” While China has taken steps of its own to pressure the North Korean regime, Washington and Beijing differ in their aims. While Tillerson has suggested the US seeks North Korea to abandon its arsenal, a request that would likely require the removal of the Kim regime, China desires de-escalation. Moon has made it clear he favors the latter approach, viewing sanctions as a means “to bring North Korea back to the negotiating table.” Moon and Trump will also have a key disagreement on the THAAD missile-defense system. While the US had the agreement of the prior government to install the weapons system, the program has been highly controversial – even before Trump suggested South Korea may have to pay for it. Not only has China raised concerns about the scope of THAAD’s radar into their own country, but it was so unpopular that it was even opposed by Ahn Cheol-soo, Moon’s conservative opponent. The missile system becoming partially operational sparked protests throughout South Korea from those worried about war with the North. Protests signs throughout the country have carried messages like “Hey, U.S.! Are you friends or occupying troops?" The concern of South Korea becoming a puppet to Washington was undoubtedly an asset to Moon. While it is easy for Americans to sable rattle for war with North Korea from the safety of half the world away, it is South Koreans who are the most in danger.

Japan bolsters evacuation plans as missile threat grows - Nikkei  -- North Korea's increased aggression has spurred Japan to begin revamping outdated evacuation measures against possible missile attacks. Though questions remain concerning these procedures, the steps being taken are welcome indeed. It was only in October that the government started addressing more seriously an evacuation in the event of a missile strike. The cabinet secretariat opened a civil protection web portal that describes various emergency scenarios, such as if a missile lands on Japanese soil or in territorial waters. Citizens can learn how and when the government issues alerts and sirens, as well as what to do during those situations.In March, the government conducted its first missile attack evacuation drill in the northwestern city of Oga. Just over 100 citizens reportedly took part in the event, which assumed that the missile ultimately landed outside of Japanese terrain.Though small in scale, the drill was revolutionary in that it used the J-Alert nationwide disaster warning system. Japan is expected to conduct this training jointly with local governments nationwide starting in June. People from Yamagata and Nagasaki prefectures look forward to taking part in the drills.Japan's government soon will adopt a policy to begin evacuations immediately upon detecting a missile launch.Currently, the U.S. military would detect a launch and relay the information to Tokyo and the Japanese Self-Defense Forces. The central government would alert the public, then track the missile to determine the probability of it landing within the nation's borders. If the likelihood is high, people would be evacuated.But because this interval between alerting the public and issuing an evacuation order could cost one or two vital minutes, the government will move to start evacuations concurrently with the missile warning. Apparently Chief Cabinet Secretary Yoshihide Suga pushed for the change.

Japan's gov't debt reaches record high by end of fiscal 2016 - Xinhua | (Xinhua) -- Japan's central government debt reached a record high of 1,071.56 trillion yen (9.4 trillion U.S. dollars) by the end of fiscal 2016, the Japanese government said on Wednesday. According to data from Japan's Finance Ministry, the central government debt as of March 31, 2017 consisted of 934.90 trillion yen in general bonds, 54.42 trillion yen in borrowings from financial institutions, and 82.24 trillion yen in financing bills. The figure was up by 22.19 trillion yen from that at the end of fiscal 2015, with long-term general bonds over 10 years rising by 36.03 trillion yen to 610.8 trillion yen, according to the government data. Meanwhile, outstanding government guaranteed debts stood at 40.28 trillion yen, down by 1.50 trillion yen from the end of fiscal 2016. The Japanese government has been embattled by its heavy debt which continues to stand as the highest in the industrialized world, amounting to more than twice the size of Japan's economy. The Abe administration has pledged to turn the government's primary balance deficit into a surplus by fiscal 2020, but the outlook seems slim, as Prime Minister Shinzo Abe has decided to postpone the second round of the sales tax hike to October 2019.

India Empowers RBI to Resolve World’s Worst Bad Debt Problem -- India’s financial regulator will gain new powers to order banks to clean up as much as $180 billion of soured loans on their balance sheets, which has been choking credit and weighing on growth.  With the new rules bolstering its regulatory authority, Reserve Bank of India, is seeking to resolve the country’s 60 largest delinquent-loan cases in about nine months, a person familiar with the matter said. The central bank is also planning to set up a secretariat to oversee the resolution process and will unveil details in two weeks, the person said, asking not to be identified as the information isn’t public. Various programs proposed by the central bank to resolve the bad-loan problem have been unsuccessful so far, with lenders reluctant to write down assets sufficiently and company owners unwilling to negotiate repayment plans. That’s hindered credit growth and job creation in Asia’s third-largest economy.   “India’s stressed asset scenario is a tough one to resolve and the rule changes announced by the government are another small step in the right direction,” Mumbai-based Madan Sabnavis, chief economist at Credit Analysis & Research Ltd., said on the phone. “This will empower RBI in giving time-bound instructions, which would have to be met by the banks in terms of cleaning up their books.” The amendment to the Banking Regulation Act, which came into effect on Thursday, will enable the RBI to order lenders to initiate insolvency proceedings against defaulters and to create committees to advise banks on recovering non-performing loans, according to a statement on the Gazette of India website. Stressed assets in the banking system have reached “unacceptably high levels” requiring urgent measures to resolve them, the nation’s government said in the statement.

Patel's War on $180 Billion India Bad Debt Gets Modi Support -- Reserve Bank of India Governor Urjit Patel has been given the ammunition to finish a war that his predecessor Raghuram Rajan started -- the fight to eliminate $180 billion of stressed assets.  After at least three proposals to reduce the world’s highest bad-loan ratio failed to reduce delinquent debt, India amended a law to give the central bank power to spur lenders and borrowers to take write downs. The move is an opportunity for Patel, who has surprised the market with his monetary policy decisions, and has been criticized for his lack of communication in the wake of Prime Minister Narendra Modi’s move to ban 86 percent of the nation’s cash, to revive credit growth that’s expanding at the slowest pace since 1992. To help Patel build on “ rock star” Rajan’s success in pushing lenders to recognize and make increased provisions for soured credit, Modi dumped a proposal to create a so-called bad bank. Instead the amendment allows Patel, who obtained his doctorate in economics from Yale University, to kick start the stalled process of resolving delinquent debt that may help revive India’s investment cycle and add jobs.“This is the most important announcement in recent times,” to address the bad loan problem, Ashutosh Khajuria, chief financial officer at Federal Bank Ltd. said in a phone interview. “While many tools were provided earlier to deal with stressed assets the new announcement will force banks to use those.”Resolutions of bad loans stalled because banks weren’t able to agree on write downs while company founders balked at renegotiating loan terms that included losing control of their firms. That’s where Patel’s push to get the Banking Regulation Act amended will be useful. Following the change in rules, the central bank will be allowed to set up panels that will vet the non-performing loans and prompt lenders to take write downs, while reducing the risk of anti-graft probes.The central bank also plans to set up a secretariat and expects to resolve as many has 60 bad-loan cases in nine months, a person familiar with the matter said last week. It wants to target settling as many as 100 cases by the end of 2018, the person said, asking not to be identified citing rules.

Six months after demonetisation, those who lost their jobs in Delhi’s factories struggle to get work - For months after demonetisation, there was a severe shortage of cash across the country. Though the Reserve Bank of India’s currency presses worked overtime to print enough bank notes to replace those that had been declared illegal, it was simply not enough. At that time, unemployment soared as many manufacturing units cut or curtailed production. Some faced a plunge in demand from clients. Others simply didn’t have enough cash to buy raw materials to keep working. In Delhi’s Mayapuri – the busiest industrial area in the national capital – several thousand factory workers lost their jobs. Six months after demonetisation, many of them have not yet their jobs back.  Women factory workers who lost their jobs have especially found it difficult to resume earning a living again.  Unlike men who offer their services at labour chowks in industrial areas for daily wages, women workers are often not employed for heavy tasks like loading and unloading of heavy materials and a range of jobs that involve heavy machinery and engineering works, said Rajesh Kumar, general secretary (Delhi), of the Indian Federation of Trade Unions.According to both workers and employers in Mayapuri Industrial Area, the most obvious reason for the lack of jobs in factories six months after demonetisation is that the majority of the units that shut down or curtailed manufacturing after November are yet to start working at full capacity despite a distinct improvement in the availability of cash.

India finding it hard to end love affair with cash  (AFP) - Fat wads of bank notes move across counters in Old Delhi's gold and diamond district in one of many challenges to six months of Indian government efforts to suffocate the black market. Cash has been king in the musty narrow streets of Chandni Chowk since the jewellery market was set up by Emperor Shah Jahan in the 17th century. The owners now largely shrug off "demonetisation" by modern day ruler Prime Minister Narendra Modi. In a shock move on November 8 last year, Modi cancelled all 1,000 ($15) and 500 rupee notes in circulation, rendering about 86 percent of India's currency void. Amid street protests, the decision triggered massive queues outside banks as the authorities struggled to print enough new notes. Chandni Chowk is not alone in resisting the digital economy. At least 80 percent of business in India is estimated to be conducted in cash, much of it avoiding tax as well as fuelling corruption. Most of the gold, silver and diamond dealers approached in Chandni Chowk told AFP that while a percentage of their transactions had switched to digital cards, cash still dominates. But it is not just the sellers who prefer the tax-friendly cash system. "Customers still want to pay in cash to save paying tax," Ranjeev Panjali, whose family has been in the jewellery business for the past 60 years. The government followed up the bank note action by banning all cash transactions above 200,000 rupees in March. It has promoted e-wallets and offered incentives for businesses that adopt digital payments.  But the action so far has not deterred wily and wary Indians. All sales witnessed by an AFP reporter during a visit to the gold market on a recent afternoon were in cash. "Demonetisation has had no impact at all," said the proprietor of a store who declined to give his name. "You can never remove cash from our system."

Carmakers take direct route to Indian middle class -The Indian car market is the world’s fifth-largest by sales, generating $35bn in financial year 2016, according to CLSA. It is set to overtake Japan and Germany to become the world’s third-biggest car market by 2020, according to analysts at IHS. With sales slowing in key markets such as China, global carmakers now see India as a vital source of growth. “The industry is going to virtually double every three to five years,” says Anurag Mehrotra, executive director of Ford’s operation in India. Hyundai alone sold more than 500,000 vehicles in India last year, making it the second-ranked player by volume in a passenger car market where total sales hit 2.8m. Last month, its affiliate Kia Motors announced plans to invest $1.1bn in building its first Indian factory in the eastern state of Andhra Pradesh. “India is the key country, with sustainable growth every year,” Mr Koo says, noting that Hyundai last year sold more cars there than in the whole of Europe. And with uncertainty hanging over the two biggest markets — China, where the tax break that drove huge growth in 2016 is to expire, and the US, where higher import tariffs are being considered — the Indian market is starting to look a surer bet. Executives portray investment in the Indian car market as a long-term bet on the rising spending power of an upper-middle class that has snowballed in size since the liberalising reforms of the 1990s. The single biggest beneficiary has been Suzuki Motor, which in 1982 set up a joint venture with the Indian government. Using the latest Japanese production techniques, Maruti Suzuki swiftly seized a dominant share of the small Indian car market from lumbering state-controlled players.

 Jakarta’s Christian governor gets two-year sentence for blasphemy - AFP – Jakarta’s Christian governor was jailed for two years Tuesday after being found guilty of committing blasphemy, capping a saga seen as a test of religious tolerance in the world’s most populous Muslim-majority nation. Islamic hardliners outside the Jakarta court cheered and shouted “God is greatest!” as news came through that Basuki Tjahaja Purnama, better known as “Ahok,” was to be sent to prison, a shocking decision after prosecutors recommended only two years probation. Purnama was hauled into court last year to face trial for allegedly insulting Islam while campaigning for re-election, in a case critics said was politically motivated. The trial came after a series of major protests against the leader in the capital that drew hundreds of thousands onto the streets. His once unassailable opinion poll lead shrank amid the controversy and he lost the race to lead Jakarta last month to a Muslim challenger, fueling fears that Indonesia’s moderate brand of Islam is under threat of increasingly influential radicals. The five-judge panel at the Jakarta court found Purnama guilty of blasphemy and jailed him for two years. 

From shrub to shirt to shelf: The journey of an African cotton boll | The Economist: Several African countries have tried in the past to become tailors and cloth-makers to the world. Nigeria’s northern cities of Kaduna and Kano were once home to textile mills that employed 350,000 people. Yet these factories are now rusting, and employ perhaps a tenth of that number. This mirrors a wider trend. In 1990 African countries accounted for about 9% of the developing world’s manufacturing output. By 2014 that share had slumped to 4%. As the world’s labour-intensive jobs left the rich world for countries with lower wages, Africa lost out to Asia because of bad governance, political instability and poor infrastructure. Another shift of similar proportions now seems in the offing as China grows richer. But there are some signs that, this time, Africa might catch the wave of industrialisation. Western Uganda Cotton Company (WUCC), a ginnery with British shareholders, is trying to get more of the fluffy stuff by training farmers about when to weed and how to space out the seeds as they plant. Those who follow these instructions have seen their yields double to about 600kg an acre (twice as much as farmers in America manage—a testament to Uganda’s fertile soil). “I will double my cotton planting next year,” says Joshua, a middle-aged man. But farmers face huge hurdles in doing so, even though there is plenty of land available. One says that after setting aside money for her children’s school fees she will have enough left to rent only a single acre again next year. Borrowing is not an option. Bank loans are too expensive and cheap ones from government agencies are wrapped in red tape.

The Very Survival of Africa’s Indigenous Peoples ‘Seriously Threatened’(IPS) - The cultures and very survival of indigenous peoples in Africa are seriously threatened. They are ignored, neglected and fall victims of land grabbing and land dispossession caused by extractive industries, agribusiness and other forms of business operations. These are some of the key findings of a major report “The Indigenous World 2017,” on the state of indigenous peoples worldwide, issued on the occasion of the tenth anniversary of the United Nations Declaration on the Rights of Indigenous Peoples. The report, launched on 25 April by the International Working Group for Indigenous Affairs (IWGI) during the UN Permanent Forum on Indigenous Issues meeting (24 April—5 May), emphasises that in spite of progress, there are still major challenges facing indigenous peoples in Africa. Africa is home to an estimated 50 million indigenous peoples, that’s around 13 per cent of the total of 370 million indigenous peoples worldwide. They live in all regions of Africa, with large concentrations in North Africa where the Amazigh people live. In West Africa, there are large pastoralist populations in countries like Niger, Mali, Burkina Faso, Cameroon etc.  There are also large concentrations of indigenous peoples in East Africa with big pastoralist populations in countries like Ethiopia, Kenya, Uganda and Tanzania. Hunter-gatherers are found in many countries in central and Southern Africa, though they are smaller in numbers than the pastoralist groups.  In several African states, explains IWGIA, “indigenous peoples are yet to be recognised as such.” Arguments of all Africans being indigenous or that the concept “indigenous peoples” is divisive and unconstitutional are persistently expressed in political statements and continue to shape policies of a number of African countries. Large-scale dispossessions of indigenous peoples’ lands remain a significant challenge in several African states, says the report, adding that the global drive for raw materials, agro-business and building major infrastructure projects are pushing indigenous peoples to their last boundaries.

Brazil sacks head of indigenous agency amid land conflicts | Reuters: - Brazil's government sacked the head of the country's aboriginal rights agency on Friday amid increasing territorial conflict between indigenous groups and farmers. No immediate reason was given for Antonio Fernandes Toninho Costa's removal as president of Brazil's National Indian Foundation (FUNAI), the arms-length government agency responsible for demarcating land for indigenous people. However media reports suggested the sacking, announced in a government statement, was at least partially due to the increased violence. Costa's dismissal also came three days after he criticized lawmakers for cutting FUNAI's budget by more than 40 percent as Brazil struggles with a recession and a government deficit. He said the cuts made it difficult for the agency to fulfill its mandate in safeguarding the rights of Brazil's 900,000 indigenous people. "I'm being removed for being honest and for being a defender of the cause of the indigenous," Costa was quoted as saying by Brazilian news outlet G1 on Friday. No replacement to head FUNAI was announced in the government statement.

Shocking Footage: Venezuelan National Guard Truck Drives Through Crowd Of 'Dissidents' --For several weeks Venezuela has been rocked with protests and riots as the Maduro regime increasingly tightens its grip on the population. It seems as if security forces are brutally cracking down on dissidents on a daily basis now. Wednesday in particular, saw some incredibly tense clashes between protesters and government forces in the capital city of Caracas. According to Bloomberg:Injuries throughout the city included 134 traumas and 17 cases of people overcome by gas, Mayor Ramon Muchacho of the opposition-dominated Chacao municipality said in a post on his Twitter account. Those hurt included lawmakers Freddy Guevara and Julio Montoya. The opposition coalition, known as MUD, said in a statement that more than 300 people were injured in today’s clashes.The South American nation has been riven by protests for weeks, and President Nicolas Maduro has called for a popular assembly to write a new constitution, a fresh attempt to consolidate control. Hundreds of thousands have taken to the streets to protest what they say is a plummet into autocracy. Protests over the past month have resulted in at least 30 deaths, and opposition politicians have vowed to continue street actions. Of course, those are just statistics. To really appreciate the human costs of these events, you have to see it with your own eyes rather than just read about it. Take a look at what happened yesterday in Caracas, after an armored vehicle owned by the Venezuelan National Guard caught fire.

Venezuela Starving: Citizens Lose Avg 19 Pounds - Jean Pierre Planchart, a year old, has the drawn face of an old man and a cry that is little more than a whimper. His ribs show through his skin. He weighs just 11 pounds.His mother, Maria Planchart, tried to feed him what she could find combing through the trash—scraps of chicken or potato. She finally took him to a hospital in Caracas, where she prays a rice-milk concoction keeps her son alive.“I watched him sleep and sleep, getting weaker, all the time losing weight,” said Ms. Planchart, 34 years old. “I never thought I’d see Venezuela like this.”Her country was once Latin America’s richest, producing food for export. Venezuela now can’t grow enough to feed its own people in an economy hobbled by the nationalization of private farms, and price and currency controls.Venezuela has the world’s highest inflation—estimated by the International Monetary Fund to reach 720% this year—making it nearly impossible for families to make ends meet. Since 2013, the economy has shrunk 27%, according to local investment bank Torino Capital; imports of food have plunged 70%.

What Is to Be Done in Venezuela? -- The news from Venezuela is grim: A “fall in oil prices, soaring interest rates…have intensified an already deep-rooted recession. The country is being pauperized. It has the highest inflation in Latin America, increasing unemployment and more than 40 percent of the population lives in extreme poverty.” With economic immiseration comes political violence: Over the course of one year, “security forces killed 126 people, 46 in extra-judicial executions, and 28 when they were in police or military custody. Authoritarianism and repression are growing. Of 13,941 arbitrary detentions, 94 percent occurred during anti-crime operations mainly in poor neighborhoods.… Violent death has become a feature of Venezuelan life. On Monday mornings, the newspapers carry a grim roll call of those killed in stabbings and shootings in the city’s slums. The figure often reaches 40 or 50, mostly young, male and poor.”There are “frequent riots,” the suspension of basic rights, and daily police raids in “poor shanty towns to root out alleged subversives. Rising street crime and violence in Caracas” is skyrocketing. Prisons are a Dantesque nightmare: “More than 30 prisoners were killed in a riot and fire at a jail in central Caracas yesterday.” Earlier, another prison riot protesting conditions led to “more than 100 inmates [being] burned or hacked to death.”  “All this,” writes one reporter—the shortages of basic goods, including medicine; dysfunctional hospitals; a spiraling murder rate; protests and riots; prison massacres, loss of basic rights; political prisoners and state repression; falling oil prices—“makes Venezuela one of the most important economic stories in the Americas at the moment.”  Why, the reporter wanted to know, aren’t the US media paying attention?

 Macron wins French presidency, to sighs of relief in Europe | Reuters: Emmanuel Macron was elected president of France on Sunday with a business-friendly vision of European integration, defeating Marine Le Pen, a far-right nationalist who threatened to take France out of the European Union. The centrist's emphatic victory, which also smashed the dominance of France’s mainstream parties, will bring huge relief to European allies who had feared another populist upheaval to follow Britain's vote to quit the EU and Donald Trump's election as U.S. president. Pollsters' projections gave Macron a winning margin of around 65 percent to 35 - a gap wider than the 20 or so percentage points that pre-election surveys had suggested. Even so, it was a record performance for the National Front, a party whose anti-immigrant policies once made it a pariah in French politics, and underlined the scale of the divisions that Macron must now try to heal. "I know the divisions in our nation, which have led some to vote for the extremes. I respect them," Macron said in an earnest address at his campaign headquarters, shown live on television.His immediate challenge will be to secure a majority in next month's parliamentary election for En Marche! (Onwards!), a political movement that is barely a year old, in order to implement his programme. 

Is France’s Political Crisis Just Beginning? -- Emmanuel Macron, the next president of France, campaigned on a slogan of “Together, France!” And why not? He is a sunny centrist who attracted votes from the left and the right to decisively defeat the far-right nationalist Marine Le Pen on Sunday. The center seems not only to have held, but to have swelled. But Macron’s victory could further fracture French politics rather than bridge the country’s political divisions, illustrating a challenge confronting many democracies at the moment, especially in Europe: A disenchanted public has blown up the political establishment, but it’s difficult to then fashion a well-functioning government out of the pieces. This can produce more disillusionment with politics, not less.  For signs of trouble ahead, consider the fact that a full quarter of the French electorate didn’t cast a ballot in this weekend’s runoff presidential election—one of the highest abstention rates in the history of France’s Fifth Republic, which was established by Charles de Gaulle in 1958. French voters are so disillusioned with their political leaders that, for the first time in the history of the Fifth Republic, the runoff didn’t feature a representative from the main parties of the left and right. Whether that’s a response to the government’s failure to boost a stagnant economy, secure the nation from ISIS-inspired terrorism, or assimilate immigrants and address the downsides of globalization, the French consistently express low levels of trust in government. In the run-up to Sunday’s vote, a survey found that French voters are more polarized than the citizens of other European countries, with 20 percent describing themselves as politically extreme (compared with 7 percent in the EU as a whole) and 36 percent identifying as centrist (compared with 62 percent in the EU). So much for togetherness.

Paris Afterparty -- Kunstler - First mistake: Emmanuel Macron’s handlers played Beethoven’s “Ode to Joy” instead of the French national anthem at the winner’s election rally. Well, at least they didn’t play “Deutschland Über Alles.” The tensions in the Euroland situation remain: the 20 percent-plus youth unemployment, the papered-over insolvency of the European banks, and the implacable contraction of economic activity, especially at the southern rim of the EU. The clash of civilizations brought on by the EU’s self-induced refugee glut still hangs over the continent like a hijab. That there was no Islamic terror violence around the election should not be reassuring. The interests of the jihadists probably lie in the continued squishiness of the status quo, with its sentimental multiculture fantasies — can’t we all just get along? — so En Marche was their best bet. LePen might have pushed back hard. Macron looks to bathe France’s Islamic antagonists in a nutrient-medium of Hollandaise lite. The sclerosis of Europe is assured for now. But events are in charge, not elected officials so much, and Europe’s economic fate may be determined by forces far away and beyond its power to control, namely in China, where the phony-baloney banking system is likely to be the first to implode in a global daisy-chain of financial uncontrolled demolition. Much of that depends on the continuing stability of currencies. The trouble is they are all pegged to fatally unrealistic expectations of economic expansion. Without it, the repayment of interest on monumental outstanding debt becomes an impossibility. And the game of issuing more new debt to pay the interest on the old debt completely falls apart. Once again, the dynamic relationship between real capital creation and the quandaries of the oil industry lurks behind these failures of economy. In a crisis of debt repayment, governments will not know what else to do except “print” more money, and this time they are liable to destroy faith in the value of “money” the world over. I put “money” in quotation marks because the dollars, euros, yuan, and yen are only worth what people believe them to be, subject to measurement against increasingly fictional indexes of value, such as interest rates, stock and bond markets, government-issued employment and GDP stats, and other benchmarks so egregiously gamed by the issuing authorities that Ole Karl Marx’s hoary warning finally comes to pass and everything solid melts into air.

France's victorious Macron reminded of huge, immediate challenges | Reuters: Emmanuel Macron was confronted on Monday with pressing reminders of the challenges facing him as France's next president, even as allies and some former rivals signaled their willingness to work closely with him. The 39-year-old centrist's victory over far-right nationalist Marine Le Pen in Sunday's election came as a huge relief to European Union allies who had feared another populist upheaval to follow Britain's vote last year to leave the EU and Donald Trump's election as U.S. president. "He carries the hopes of millions of French people, and of many people in Germany and the whole of Europe," German Chancellor Angela Merkel told a news conference in Berlin. "He ran a courageous pro-European campaign, stands for openness to the world and is committed decisively to a social market economy," the EU's most powerful leader added, congratulating Macron on his "spectacular" election success. But even while pledging to help France tackle unemployment, Merkel rejected suggestions Germany should do more to support Europe's economy by importing more from its partners to bring down its big trade surplus. European Commission President Jean-Claude Juncker put it bluntly: "With France, we have a particular problem ... The French spend too much money and they spend too much in the wrong places. This will not work over time."

French Election: Protest Vote for 'Nobody' Was Highest In Half a Century - NBC News: It wasn't just a defeat for populism, but a rejection of the entire political establishment. Four million French voters spoiled their ballot or voted "blank" to indicate they wanted neither centrist Emmanuel Macron nor far-right Marine Le Pen in Sunday's presidential election — the highest number recorded in over half a century. That comes on top of the worst abstention rate in a French presidential runoff since 1969, with 12 million registered voters staying away from the polls. Added together, 16 million people — one in three French voters — rejected both the candidates on offer. That's more than the 11 million who actually voted for far-right Le Pen. "Neither" became the second-most popular choice in the runoff, said Marta Lorimer, a researcher at London School of Economics European Institute. "There are a huge number of people who don't feel represented by either of the two candidates," she said.  Macron celebrated his decisive victory over populist Le Pen Sunday, his success was somewhat tinged by the millions of dissatisfied voters who could not bring themselves to lend him their vote.

Watch Live: French Activists, Unions Clash With Riot Police In First Anti-Macron Protest --Macron won the French presidential elections against Marine Le Pen. Now comes the hard part. Emmanuel Macron may have won Sunday's presidential election by a comfortable margin, but even his supporters' enthusiasm is tempered by the scale of the challenge that the inexperienced politician faces in tackling France's deep-seated economic, social and security problems, Reuters notes. Macron, the former economy minister of the Francois Hollande - whose regime led to a dramatic deterioration in the French economy - and who had never previously stood for elected office, is facing his first major protest less than 24 hours after being elected, with activists and unions holding a protest on Monday against Macron’s proposed labour reforms plans.And, according to French press reports, tensions are rising in the post-vote protest in Paris against President-elect Emmanuel Macron, as well as against the upcoming economic reforms. Police have briefly engaged in scuffles with protesters, according to Reuters. Riot police stands in a street while people take part in a demonstration on May 8/ AFP “He is not our president”, “Say No to the new labor reform!”, “Say No to repression”, read the banners held by demonstrators.

Whistling Past the Geopolitical Graveyard - Nouriel Roubini - – With Emmanuel Macron’s defeat of the right-wing populist Marine Le Pen in the French presidential election, the European Union and the euro have dodged a bullet. But geopolitical risks are continuing to proliferate. The populist backlash against globalization in the West will not be stilled by Macron’s victory, and could still lead to protectionism, trade wars, and sharp restrictions to migration. If the forces of disintegration take hold, the United Kingdom’s withdrawal from the EU could eventually lead to a breakup of the EU – Macron or no Macron.   At the same time, Russia has maintained its aggressive behavior in the Baltics, the Balkans, Ukraine, and Syria. The Middle East still contains multiple near-failed states, such as Iraq, Yemen, Libya, and Lebanon. And the Sunni-Shia proxy wars between Saudi Arabia and Iran show no sign of ending. In Asia, US or North Korean brinkmanship could precipitate a military conflict on the Korean Peninsula. And China is continuing to engage in – and in some cases escalating – its territorial disputes with regional neighbors. Despite these geopolitical risks, global financial markets have reached new heights. So it is worth asking if investors are underestimating the potential for one or more of these conflicts to trigger a more serious crisis, and what it would take to shock them out of their complacency if they are.  There are many explanations for why markets may be ignoring geopolitical risks. For starters, even with much of the Middle East burning, there have been no oil-supply shocks or embargos, and the shale-gas revolution in the United States has increased the supply of low-cost energy. During previous Middle East conflicts – such as the 1973 Yom Kippur War, Iran’s Islamic Revolution in 1979, and Iraq’s invasion of Kuwait in 1990 – oil-supply shocks caused global stagflation and sharp stock-market corrections.

French ex-prime minister Valls offers to back Macron in elections | Reuters: French president-elect Emmanuel Macron won an offer of support from Socialist ex-prime minister Manuel Valls on Tuesday as he and his aides worked on strategy ahead of parliamentary elections crucial to his reform plans. The 39-year-old centrist's emphatic election victory over the anti-European Union Marine Le Pen of the National Front on Sunday brought relief to France's EU allies and financial markets. But, once he has moved into the Elysee Palace next week, Macron faces the task of securing a second election victory in June for his start-up party, now renamed "La Republique en marche" or "Republic on the Move", in order to get the majority needed to implement his plans for economic recovery. Successive center-right and center-left governments have failed to pull France out of deep economic malaise which includes slow growth, high unemployment of around 10 percent and dwindling competitiveness. Macron's "En Marche" party currently has no seats in parliament, though an opinion poll last week predicted it would emerge as the largest in the parliamentary elections next month. A majority would provide Macron with a decent chance of implementing a blueprint for lower state spending, higher investment and reform of the tax, labor and pensions systems. Politicians from the traditional parties in France have taken on the air of survivors from a ship-wreck following Macron's triumph which in particular dealt a death blow to the Socialists. Their candidate, Benoit Hamon, secured only six per cent of the vote in the first round on April 23.

Macron's plan to freshen up French politics gets off to rocky start - President elect Emmanuel Macron presented 428 candidates for the French Parliament on Thursday... but some of the candidates didn't even want to be on the list (and some should never have been there). Macron, 39, has vowed to inject new blood into France's jaded political system. His La Republique en Marche (Republic on the Move) party presented a total of 428 candidates on Thursday - a mix of men, women, new faces on the political scene, and at least one female ex-bullfighter (more on her later). But as soon as the list was released, some of the people featured were quick to point out that they weren't supposed to be there. Mourad Boudjellal, the president of the Toulon Rugby Union club (pictured below) denied having anything to do with the list. He told Le Monde newspaper: "I'm not a candidate for anything".It was a similar message from Augustin Augier, the secretary general of the humanitarian medical INGO Alima who took to Twitter to say he was not a candidate "contrary to the list published by En Marche!" Other hiccups include the inclusion of François Pupponi, a Socialist MP, who "never asked to be a candidate and intends to run as a Socialist", reported Le Monde. 

 Greece Passes New Austerity for New Loans - TRNN. Michael Hudson interview & transcript - The European Commission announced on May 2, that an agreement on Greek pension and income tax reforms would pave the way for further discussions on debt release for Greece. The European Commission described this as good news for Greece. The Greek government described the situation in similar terms. However, little attention has been given as to how the wider Greek population are experiencing the consequences of the policies of the TROIKA. On May Day thousands of Greeks marked International Workers Day with anti-austerity protests. One of the protester's a 32-year-old lawyer perhaps summed the mood, the best when he said ...  Speaker 2:​"The current Greek government, like all the ones before it, have implemented measures that has only one goal, the crushing of the workers, the working class and everyone who works themselves to the bone. We are fighting for the survival of the poorest who need help the most."    ​To discuss the most recent negotiations underway between Greece and the TROIKA, which is a European Central Bank, the EU and the IMF, here's Michael Hudson. Michael is a distinguished research professor of Economics at the University of Missouri, Kansas City. He is the author of many books including, "Killing the Host: How Financial Parasites and Debt Bondage the Global Economy" and most recently "J is for Junk Economics: A Survivor's Guide to Economic Vocabulary in the Age of Deception".

  Germany's top regulator on international cooperation, blockchain, capital requirements – podcast - Andreas Dombret, the head of banking supervision for the German central bank, talks with American Banker's John Heltman about the need for international cooperation, how blockchain changes regulation, and the difference between the German and U.S. banking systems. 

 Non-EU parents may have EU residence right, ECJ rules -- Non-EU citizens may have the right to residence in the EU if their children are EU citizens, the European Court of Justice (ECJ) has ruled. It made the judgement in the case of a woman from Venezuela who had a child with a Dutch citizen from whom she has since legally separated. She was denied social welfare and child benefit payments by Dutch authorities. The rights of non-EU citizens in the EU have come to the fore as Britain prepares to negotiate to leave. The European Union says questions about the status of Britons in the remaining 27 EU countries, and of those countries' nationals in the UK, must be resolved as a priority in negotiations. The ECJ's "interference" in national court judgments about migration was cited by some who advocated for the UK to leave the EU. Wednesday's ruling concerned a Venezuelan national who came to the Netherlands on a tourist visa. In 2009, she had a child with a Dutch national with whom she lived in Germany until their separation in 2011, when she and the child left the family home and she became responsible for care of her daughter without support from the father. But because she did not have a right to residence, Dutch authorities rejected the mother's application for welfare payments. But the ECJ has now ruled that EU law does not allow a member state to take decisions which block the legal rights of a family member of an EU citizen - in this case, the woman's child, who is a Dutch citizen via her father. The court argued that any threat to the mother's right to remain in the EU would deprive the child of the "genuine enjoyment" of her own rights under European law. The ruling applies to cases where the child has a relationship of dependency on a parent which means the child would have to leave the territory of the EU if the parent did. That would require assessment of a number of factors including age, the child's development and its emotional ties to each parent. It is now left to the Dutch courts to make a final decision on the individual case involving the family in the light of the decision handed down by the European judges.

EU Infighting: Merkel & Tusk Slam Juncker For Sabotaging Brexit Negotiations – Mish  - Donald Tusk, president of the European Council went after Jean-Claude Juncker, president of the European Commission for Juncker’s leak of his dinner meeting with UK prime minister Theresa May.Following ill-fated dinner meeting, Juncker phoned Angela Merkel “Theresa May Lives in a Different Galaxy”. Someone, presumably Juncker’s chief of staff, Martin Selmayr, leaked the results of the dinner meeting and Juncker’s phone call to the German press.Since then, Juncker stated, “Brexit will never be a success”.  In a Speech on Friday, delivered in French, Juncker also stated the “English language is losing importance”.Finally, Juncker stated he will not spend more than 30 minutes a week dealing with Brexit. As a result of his antics, Tusk and Merker both laid into Jucker. Politico reports Brexit will never be a success: Juncker’s top aide. Striding into the war-of-words between London and Brussels over the coming negotiations between Britain and the EU, Selmayr — the powerful German bureaucrat who runs the European Commission — said at a POLITICO event that “Brexit will never become a success. It is a sad and sorry event.” Commission president Juncker will not spend more than 30 minutes a week dealing with Brexit, added Selmayr. Also consider ‘English is Losing Importance’.Jean-Claude Juncker, the European Commission president, opted to deliver a speech in French on Friday morning because he said “English is losing importance” in Europe.He gave the comments, which are unlikely to mend fences after a war of words between Brussels and London over Brexit negotiations, at the “State of the Union” conference in Florence’s Palazzo Vecchio — an annual event for European dignitaries. The European Commission is now under fire from the European Council for the incompetent handling of the private dinner between Jean-Claude Juncker and Theresa May. Frankfurter Allgemeine has talked to Donald Tusk and his people and hears criticism of Juncker – and, we presume, Juncker’s chief of staff Martin Selmayr – who leaked the information to a German newspaper. The view from the council is that the leak had gone too far and did not help anybody. The negotiations are going to be difficult enough as they are. And Tusk himself is quoted as saying that if we start to quarrel at the beginning of the negotiations, we will never come to conclude a deal. The Commission yesterday doubled down on with an assertion that they will only spend 30 minutes a week on Brexit – which is another way of saying that Juncker is not supporting a Brexit agreement.

 Theresa May's bizarre EU conspiracy theory has made an extreme Brexit more likely — Theresa May on Wednesday accused unnamed European politicians and officials of conspiring to swing the general election against the Conservatives.  "Britain's negotiating position has been misrepresented in the continental press," May said. "The European Commission's negotiating stance has hardened, threats against Britain have been issued by European politicians and officials. All of these acts have been deliberately timed to affect the result of the UK general election that will take place on the 8th June."  The intervention is a bizarre and worrying one for several reasons.   Of course, May is free to claim that her position has been "misrepresented" by the EU press. Individual newspapers do misrepresent politicians from time to time and accounts of her conversation with Jean-Claude Juncker may, or may not, have been falsely briefed or misreported. These things happen. However, her claim that this has been "deliberately timed" to swing the general election result is a bizarre one reminiscent of the worst kind of fringe conspiracy theory. As with all such grand conspiracy theories, the first questions you must ask is how and why anyone would actually bother to attempt such a thing? And here the answers are clear.  Both the major political parties in the UK are now pro-Brexit. Both voted to trigger Article 50, both want to come out of the Single Market and both want to end freedom of movement from the EU. Indeed, until last summer, Labour leader Jeremy Corbyn was significantly and openly more Eurosceptic than May herself. Given the power and left to his own devices, Corbyn would have taken the UK out of the EU decades ago.  So even if the EU had the power to swing the election against the Conservatives, which given that the party is up to 23 points ahead seems a big ask, why would they bother?

Jeremy Corbyn says elites want to ‘hijack Brexit‘ - Jeremy Corbyn has said wealthy elites are trying to "hijack" Brexit as he formally launched Labour's campaign. Speaking in Manchester, the Labour leader promised a reckoning for "tax cheats, rip-off bosses and greedy bankers" if Labour wins the election. But in a BBC interview, he declined to say categorically whether he would take Britain out of the EU if elected. Asked by Laura Kuenssberg if he would go through with Brexit if there was a bad deal on the table, he wouldn't say. The Labour leader earlier told activists that the question of whether the UK would leave the EU had been "settled" and the task now was to act in the national interest and not show "who can be toughest with Brussels". In what the Conservatives dismissed as an "angry and divisive" speech, Mr Corbyn told activists that his mission was to transform Britain, saying "we have four weeks to take our wealth back and four weeks to show what kind of country we are". Repeating his argument that the economy was "rigged" against ordinary people, he said a Labour government would take action against asset strippers, tax evaders and those who "ripped off workers and consumers". "We have four weeks to ruin their party," he said. Speaking afterwards to the BBC's political editor Laura Kuenssberg, he said that he was angry at levels of poverty and inequality in the country, which he believed were shared by the public. "They are very angry. They see the growth of the super-rich and very wealthy corporations and they see their communities left behind. Their anger is palpable and I think we have to address that."

Jeremy Corbyn repeatedly refuses to rule out keeping the UK in the EU -- Jeremy Corbyn has repeatedly refused to rule out keeping the UK in the European Union if he was elected Prime Minister on June 8. Mr Corbyn today insisted that the General Election “isn’t about Brexit” because the issue had already been “settled”. But the Labour leader was asked seven times to commit to taking the UK out of the EU but he failed to do so.

100 moderate Labour MPs to form breakaway group if Jeremy Corbyn stays on after a Tory landslide - Labour faces a historic split after the election with as many as 100 of the party's MPs set to walk out and form their own breakaway group in an attempt to force out Jeremy Corbyn, The Telegraph can disclose. Moderate Labour candidates are already in talks with potential donors about a new “Progressives” group forming in Parliament if Mr Corbyn stays on as leader after a Tory landslide. One potential scenario is for the MPs to resign the Labour whip and become independents grouped together in the Commons under the Progressives banner.  They could then rejoin the Parliamentary Labour Party once Mr Corbyn had been replaced with a leader they supported. Dan Jarvis, Yvette Cooper and Sir Keir Starmer could be asked to lead the group, although there is no suggestion they have been approached or been involved in the talks.

London MPs defy Labour Party on Brexit, demand single market membership | Reuters: A group of 16 opposition Labour Party lawmakers seeking re-election in London said on Friday Britain needed to remain a member of the European single market after Brexit, contradicting the party's official position ahead of a June 8 election. Labour is trailing badly in opinion polls, with leader Jeremy Corbyn criticised by some supporters for not opposing Prime Minister Theresa May's EU exit strategy strongly enough, and by others for not embracing Brexit more enthusiastically. The party's official position is to seek to retain the benefits of the single market in exit talks with Brussels, but its Brexit spokesman has previously said that full membership is incompatible with a need to tighten immigration rules. However the 16 candidates from London, home to the country's financial centre, said it was vital to remain in the single market and the customs union which allow free trade in goods and services with Europe's 27 other states. "We are not 'Remoaners', and we do not underestimate the challenge of connecting with the many Labour voters who supported Brexit," the group, lead by the party's former business spokesman Chuka Umunna, said in a pamphlet. "But we want the best, most prosperous and most equal future for our city and our country. Pointing out that there is a better way is not moaning, and we cannot reach out to communities that voted for Brexit by backing a policy that makes them poorer." The decision to campaign on a different platform from their leader underscores deep divisions within Labour around Brexit and Corbyn's decision to shift the party back towards its socialist roots and away from the political centre ground.

New poll finds huge public support for Jeremy Corbyn’s manifesto promises — Labour's leaked manifesto pledges are hugely popular with the public according to a new poll for Jeremy Corbyn's party.  According to a poll by Comres for the Daily Mirror, the following plans have majority support from among the public:

  • Plans to renationalise the railways;
  • Freeze the retirement age;
  • Ban zero hours contracts;
  • Increase taxes on the rich;
  • Build hundreds of thousands of new council homes.

By contrast, Theresa May's plans to axe the ban on fox-hunting and increase the retirement age, received the support of just 12% and 15% of voters respectively.  Of the 13 promises listed in the poll, only Labour's immigration policy was opposed by more people than supported it.

U.K. House Prices Post First Quarterly Decline Since 2012 -  U.K. house prices recorded their first quarterly decline in more than four years, adding to signs that the property market is cooling.In the three months to April, prices fell 0.2 percent compared with the previous three months, lender Halifax said in a report on Monday. In April alone, prices slipped 0.1 percent, meaning they haven’t risen for the past four months.  Almost every U.K. gauge is now pointing to a housing slowdown. Annual growth based on data from Nationwide Building Society is at the weakest in almost four years, while gains in asking prices for homes have also lost momentum. Mortgage approvals fell to a six-month low in March, according to the Bank of England. Halifax said that in the three months through April, prices rose 3.8 percent compared with a year earlier, less than half the 10 percent rate reached in early 2016.Huge gains in house prices in recent years -- a time of weak wage growth -- have pushed home ownership out of reach for many, which Halifax says has curbed demand. Still, with shortage of supply also an issue in the U.K. market, that’s providing some support to prices. “Signs of a decline in the pace of job creation, and the beginnings of a squeeze on households’ finances as a result of increasing inflation, may also be constraining the demand,” said Halifax housing economist Martin Ellis.

Hospitals Across England Go Dark After Massive "Cyber-Attack"; Hackers Demand Ransom -- Hospitals across the UK have been hit with a large-scale, cyber-attack, resulting in the loss of phonelines and computers, with some diverting all but emergency patients elsewhere. At some hospitals patients are being told not to come to A&E with all non-urgent operations cancelled, the BBC reports.The UK National Health Serivce said: “We’re aware that a number of trusts that have reported potential issues to the CareCERT team. We believe it to be ransomware.”It added that trusts and hospitals in London, Blackburn, Nottingham, Cumbria and Hertfordshire have been affected and are reporting IT failures, in some cases meaning there is no way of operating phones or computers.At Lister Hospital in Stevenage, the telephone and computer system has been fully disabled in an attempt to fend off the attack. NHS England says it is aware of the issue and is looking into it. According to the Telegraph, doctors across the country have seen this message - what appears to be ransomware - flash up on their screens One source told Health Service Journal that  multiple trusts had been affected by a suspected malware attack around 1.30pm. They said trusts had their computer systems almost entirely shut down. East and North Hertfordshire NHS trust said in a statement: “Today the trust has experienced a major IT problem, believed to be caused by a cyber attack.  “The trust is postponing all non-urgent activity for today and is asking people not to come to A&E - please ring NHS111 for urgent medical advice or 999 if it is a life-threatening emergency. There are reports that trusts affected include East and North Hertfordshire, North Cumbria, Morecambe Bay hospitals, Blackpool, and Barts Health in London. A number of GP surgeries also say they are also unable to use their systems.

"Massive" Ransomware Attack Goes Global: "This Is Huge" –-- We earlier reported in the disturbing fact that hospitals across the United Kingdom had gone dark due to a massive cyber-attack. The situation has got significantly worse as The BBC reports the ransomware attack has gone global.  Screenshots of a well known program that locks computers and demands a payment in Bitcoin have been shared online by parties claiming to be affected. It is not yet clear whether the attacks are all connected. One cyber-security researcher tweeted that he had detected 36,000 instances of the ransomware, called WannaCry and variants of that name.  There have been reports of infections in the UK, US, China, Russia, Spain, Italy, Vietnam, Taiwan and others.  The BBB details a number of Spanish firms were among the apparent victims elsewhere in Europe.Telecoms giant Telefonica said in a statement that it was aware of a "cybersecurity incident" but that clients and services had not been affected.Power firm Iberdrola and utility provider Gas Natural were also reported to have suffered from the outbreak. There were reports that staff at the firms were told to turn off their computers. In Italy, one user shared images appearing to show a university computer lab with machines locked by the same program. Bitcoin wallets seemingly associated with the ransomware were reported to have already started filling up with cash.

74 countries hit by NSA-powered WannaCrypt ransomware backdoor - The WannaCrypt ransomware worm, aka WanaCrypt or Wcry, today exploded across 74 countries, infecting hospitals, businesses including Fedex, rail stations, universities, at least one national telco, and more organizations.In response, Microsoft has released emergency security patches to defend against the malware for unsupported versions of Windows, such as XP and Server 2003, as well as modern builds.To recap, WannaCrypt is installed on vulnerable Windows computers by a worm that spreads across networks by exploiting a vulnerability in Microsoft's SMB file-sharing services. It specifically abuses a bug designated MS17-010 that Redmond patched in March for modern versions of Windows, and today for legacy versions – all remaining unpatched systems are therefore vulnerable and can be attacked.This bug was, once upon a time, exploited by the NSA to hijack and spy on its targets. Its internal tool to do this, codenamed Eternalblue, was stolen from the agency, and leaked online in April – putting this US government cyber-weapon into the hands of any willing miscreant. Almost immediately, it was used to hijack thousands of machines on the internet.Now someone has taken that tool and strapped it to ransomware: the result is a variant of WannaCrypt, which spreads via SMB and, after landing on a computer, encrypts as many files as it can find. It charges $300 or $600 in Bitcoin to restore the documents. It is adept at bringing offices and homes to a halt by locking away their data. And it installs Doublepulsar, a backdoor that allows the machine to be remotely controlled. That's another stolen NSA tool leaked alongside Eternalblue. The malware is also controlled via the anonymizing Tor network by connecting to hidden services to receive further commands from its masters.

Ransom Hackers Who Hit Hospitals Dealt Setback; May Return -- The cyber-attack that spread rapidly around the globe was stifled when a security researcher disabled a key mechanism used by the worm to spread, but experts said the hackers were likely to return as many computers remain at risk.Hackers can still gain easy access to personal computers that lack a security update issued in March by Microsoft Corp. to fix the vulnerability in its Windows operating system. The company had labeled the patch as “critical.”  The malware, using a technique purportedly stolen from the U.S. National Security Agency, stopped care in hospitals across the U.K., affected Russia’s Ministry of Interior and infected company computer systems in countries from Eastern Europe to the U.S. and Asia. While most organizations won’t suffer as much as the U.K. health-care facilities, the incident renewed the debate about the risk of governments stockpiling flaws in commercial technology and using them for hacking attacks.  In the U.K., sixteen organizations in the National Health Service were infected, and hospitals in London, North West England and Central England urged people with non-emergency conditions to stay away as technicians tried to stop the spread of the malicious software.Health-care organizations are notoriously slow to apply security fixes, in part because of the disruption caused by taking critical systems offline. That has made them a reliable victim of ransomware attacks, such as that on Friday in which hackers encrypted data on infected computers and demanded $300 in bitcoin to unlock it. Many security professionals and even some in law enforcement recommend paying the ransom in such cases as the fastest way to get the data back.

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