The Fed Is Making a $2 Trillion Mistake -- Narayana Kocherlakota - Sometime later this year or early in 2018, the U.S. Federal Reserve intends to embark on an unprecedented maneuver: Reducing the vast bond holdings that it has accumulated in its efforts to support the economy over the past decade. I think this is a mistake, in both concept and implementation.The reduction is likely to be large. Fed officials have suggested that it would be appropriate to shrink the balance sheet, which currently exceeds $4 trillion, by $2 trillion or more over the next few years. They plan to do so in large part by letting bonds mature and not replacing them with new purchases.Even if one assumes that the Fed is right to aim for a smaller balance sheet, letting it run off is the wrong way to go. The assets consist largely of mortgage-backed securities, which mature at a rate that depends heavily on when people decide to pay off their mortgages (because they either sell or refinance their homes). As a result, the central bank could lose control of an important monetary policy tool: If a lot of people suddenly chose to pay, they would slash the Fed's holdings and effectively tighten policy. Reducing assets through deliberate sales based on economic conditions would be a better approach.That said, it's hard to see why the Fed should want to shrink its balance sheet at all. In choosing a "neutral" position consistent with its goals of low unemployment and 2 percent inflation, the central bank has essentially two options:
- A smaller balance sheet and relatively low interest rates;
- A bigger balance sheet and relatively high interest rates.
Which is better? The first approach requires the Fed to boost its balance sheet by buying a lot of assets whenever it confronts a deep recession -- a policy path that tends to generate intense political resistance (remember how Sarah Palin called on then-Chairman Ben Bernanke to “cease and desist” when the Fed launched its second round of bond-buying in November 2010). The second, by contrast, allows the Fed to prepare now by maintaining a large balance sheet. It can offset any resulting inflationary pressures by raising short-term interest rates -- a policy that has the added advantage of giving the central bank more room to lower rates when the next recession comes.
Fed's Kashkari says don't use rate hikes to fight bubbles | Reuters: Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday warned against using interest-rate hikes to address unwanted asset bubbles, saying that bubbles are hard to identify and such hikes would likely do more harm than good. Kashkari is a voting member this year on the U.S. central bank's policy committee, and in March was the lone dissenter on a Fed vote to raise rates for the third time since the Great Recession. He has previously said he opposed the rate hike because he felt keeping rates low would result in more jobs for Americans who want to work. Some Fed officials have worried that keeping rates too low for too long could create asset bubbles that could set the U.S. economy up for another recession. But the main reason Fed Chair Janet Yellen and others have given for raising rates is not to tamp down bubbles, but to keep a now nearly fully employed economy from going into overdrive. Kashkari's latest essay argues that keeping a sharp eye out for potential bubbles and using supervisory powers to protect banks from failures are better options than raising rates. "Given the challenges of identifying bubbles with any confidence and the costs of making a policy mistake, I believe the odds of circumstances ever making sense to use monetary policy to try to slow asset prices down are very low," he wrote. "I won’t say never—but a whole lot of evidence would have to line up just right for it to be the prudent course of action."
Merrill: "Will it be a summer break for the Fed?" -- A few excerpts from a Merrill Lynch research piece: Will it be a summer break for the Fed? The US stock market witnessed its biggest sell-off of the year on Wednesday while Treasuries rallied and the market priced in a shallower path for rate hikes. The expectation for a June hike slipped to approximately 70% from near certainty earlier in the week. We are puzzled that the market remains committed to a hike in June but skeptical about future hikes in 2018. In our view, June is a close call and will be sensitive to financial conditions in the next few weeks. We are therefore holding to our forecast that the Fed will pause at the upcoming meeting, but the Fed’s narrative between now and June 3rd (blackout period begins) will be critical for the call. Even before this week’s events, we had been arguing that June was a close call for the following reasons:1. Inflation has slowed: While the March weakness was due to "special factors" the disappointment in April was widespread. This has prompted us to revise down our forecast for core PCE inflation this year to 1.7% from 1.9% previously (see the Hot Topic). Meanwhile, wage growth remains sticky, which could lead the Fed to revise down their estimate of NAIRU in June’s SEP.
2. Credit conditions have deteriorated: According to the Fed's own loan officer survey, demand for consumer loans declined over the prior three months while banks have continued to tighten lending standards.
3. Real activity data have surprised to the downside: Survey measures have come off the highs and hard data have been mixed to slightly weaker, sending data surprise measures lower.
4. The Fed's narrative is stale: The April FOMC statement was a placeholder given the uncertainty around the data. The Fed can easily change the narrative about the June meeting in the coming two weeks.
We think the June meeting remains a close call and would put the probability of a hike at just under even odds – 45% chance of a hike and 55% of a pause. Conditional on the Fed not hiking in June, we think the probability of a hike in September is about 70%.
Inflation Isn't Cooperating With the Fed - Tim Duy - The Federal Reserve can’t catch a break on the inflation numbers, which are simply not helping in its drive to normalize monetary policy.Monetary policy makers have three possible responses to the weak inflation data. First, they can define down the extent of an acceptable miss on their target. Second, they can dismiss the numbers as transitory and focus instead on full employment. Third, they can rethink their estimates of full employment and the subsequent implications for the path of interest rates.Early indications are that the Fed will pursue some combination of the first two options. That means a June rate hike remains the best bet. But if inflation stays low into the latter half of this year, the Fed will eventually turn to the third option and adjust down the expected path of tightening. For the moment though, expect Fedspeak to dismiss this option.Consumer price inflation was soft in April, after a surprise drop in March: So, is this a head fake? The Fed will want to see it that way. Like the first quarter gross domestic product numbers, it will look at the low unemployment rate and attempt to conclude that the recent inflation numbers are transitory and thus that the basic forecasts can remain in place. Hence policy makers will keep a laser focus on June as the next opportunity to tighten up policy a notch. Still, the central bank is taking a bit of a risk with this approach. It was little noticed that the economy may have drifted away from the Fed’s mandate in March (we don’t have April personal consumption expenditures price data yet). This can be illustrated with the Fed objective function utilized by St. Louis Federal Reserve President James Bullard:
Early Q2 GDP Forecasts -- From the Altanta Fed: GDPNow The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 3.6 percent on May 12, unchanged from May 9. The forecast for second-quarter real consumer spending inched up from 2.7 percent to 2.8 percent after [last week's] retail sales release from the U.S. Census Bureau and [last week's] Consumer Price Index report from the U.S. Bureau of Labor Statistics. From the NY Fed Nowcasting Report The FRBNY Staff Nowcast stands at 1.9% for 2017:Q2.
Wow! 4.1% -- Latest GDP Now Forecast -- May 16, 2017 -- From GDPNow: Latest forecast: 4.1 percent — May 16, 2017The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 4.1 percent on May 16, up from 3.6 percent on May 12. The forecast of second-quarter real residential investment growth increased from 6.0 percent to 8.3 percent after this morning's housing starts release from the U.S. Census Bureau. The forecast of second-quarter real final sales to private domestic purchasers growth increased from 3.3 percent to 3.6 percent after this morning's industrial production (IP) report from the Federal Reserve Board of Governors. 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—increased from 0.32 to 0.59 after the report. The forecast of the contribution of inventory investment to second-quarter real GDP growth increased from 1.00 percentage points to 1.20 percentage points after the IP report. Much of the increase was concentrated in motor vehicle and parts dealer inventories as motor vehicle assemblies increased 6.4 percent in April, according to the IP report.
U.S. Stats Officials Say Measurements of GDP, Inflation Are Off -- Top officials from two U.S. government economic-statistics agencies said their measurement tools are understating growth and overstating some components of inflation by modest amounts, while cautioning that this doesn’t explain the sluggish expansion in recent years. “The Bureau of Labor Statistics and Bureau of Economic Analysis agree that price index mismeasurement continues to lead to understated growth in real output over time,” five current and former officials from the agencies wrote in a paper published May 3 in the American Economic Association’s Journal of Economic Perspectives and presented last week at a meeting of the BEA’s advisory committee. Economists for years have questioned whether statistical agencies are keeping up with changes, resulting from an increasingly digitized and innovation-based economy, that improve the quality of goods and services. The answer: It’s hard, especially in technology and medical services where innovations can be rapid and the results hard to capture. Health-care spending represented about 17.5 percent of gross domestic product in 2014, they note.Despite the BLS’s improvements in capturing changes in the economy, “our quality corrections are not as complete as they could be, so they are not taking into account some of the innovations that are actually going into the goods,” said Erica Groshen, one of the paper’s authors, who served a four-year term as BLS commissioner that ended in January. The methods for improved accuracy haven’t been implemented for reasons including “high computational intensity and cost” and the need for larger sample sizes, according to the paper.The U.S. economy has grown by about 2.1 percent a year during the expansion that began in 2009, compared with 2.8 percent during the previous expansion, according to the BEA.
The American Way of War Is a Budget-Breaker -- When Donald Trump wanted to “do something” about the use of chemical weapons on civilians in Syria, he had the U.S. Navy lob 59 cruise missiles at a Syrian airfield (cost: $89 million). The strike was symbolic at best, as the Assad regime ran bombing missions from the same airfield the very next day, but it did underscore one thing: the immense costs of military action of just about any sort in our era. While $89 million is a rounding error in the Pentagon’s $600 billion budget, it represents real money for other agencies. It’s more than twice the $38 million annual budget of the U.S. Institute of Peace and more than half the $149 million budget of the National Endowment of the Arts, both slated for elimination under Trump’s budget blueprint. In this century of nonstop military conflict, the American public has never fully confronted the immense costs of the wars being waged in its name. The human costs — including an estimated 370,000 deaths, more than half of them civilians, and the millions who have been uprooted from their homes and sent into flight, often across national borders -- are surely the most devastating consequences of these conflicts. But the economic costs of our recent wars should not be ignored, both because they are so massive in their own right and because of the many peaceable opportunities foregone to pay for them. The Costs of War Project at Brown University’s Watson Institute released a paper demonstrating that, since 2001, the U.S. had racked up $4.79 trillion in current and future costs from its wars in Iraq, Afghanistan, Pakistan, and Syria, as well as in the war at home being waged by the Department of Homeland Security. That report was certainly covered in a number of major outlets, including the Boston Globe, the Los Angeles Times, the Atlantic, and U.S. News and World Report. Given its importance, however, it should have been on the front page of every newspaper in America, gone viral on social media, and been the subject of scores of editorials. Not a chance. Yet the figures should stagger the imagination…
President Trump: Toss Your Generals' War Escalation Plans In The Trash - by Ron Paul - By the end of this month, Defense Secretary James Mattis and National Security Advisor HR McMaster will deliver to President Trump their plans for military escalations in Afghanistan, Iraq, and Syria. President Trump would be wise to rip the plans up and send his national security team back to the drawing board – or replace them.There is no way another “surge” in Afghanistan and Iraq (plus a new one in Syria) puts America first. There is no way doing the same thing over again will succeed any better than it did the last time. Near the tenth anniversary of the US war on Afghanistan – seven years ago – I went to the Floor of Congress to point out that the war makes no sense. The original authorization had little to do with eliminating the Taliban. It was a resolution to retaliate against those who attacked the United States on September 11, 2001. From what we know now, the government of Saudi Arabia had far more to do with the financing and planning of 9/11 than did the Taliban. But we’re still pumping money into that lost cause. We are still killing Afghanis and in so doing creating the next generation of terrorists. The war against ISIS will not end with its defeat in Mosul and Raqqa. We will not pack up and go home. Instead, the Pentagon and State Department have both said that US troops would remain in Iraq after ISIS is defeated. The continued presence of US troops in Iraq will provide all the recruiting needed for more ISIS or ISIS-like resistance groups to arise, which will in turn lead to a permanent US occupation of Iraq. The US “experts” have completely misdiagnosed the problem so it no surprise that their solutions will not work. They have claimed that al-Qaeda and ISIS arose in Iraq because we left, when actually they arose because we invaded in the first place. President Trump’s Generals all seem to be pushing for a major US military escalation in the Middle East and south Asia. The President goes back and forth, one minute saying “we’re not going into Syria,” while the next seeming to favor another surge. He has given the military much decision-making latitude and may be persuaded by his Generals that the only solution is to go in big. If he follows such advice, it is likely his presidency itself will be buried in that graveyard of empires.
U.S. nears $100 billion arms deal for Saudi Arabia: White House official | Reuters: The United States is close to completing a series of arms deals for Saudi Arabia totaling more than $100 billion, a senior White House official said on Friday, a week ahead of President Donald Trump's planned visit to Riyadh. The official, who spoke to Reuters on condition of anonymity, said the arms package could end up surpassing more than $300 billion over a decade to help Saudi Arabia boost its defensive capabilities while still maintaining U.S. ally Israel's qualitative military edge over its neighbors. "We are in the final stages of a series of deals," the official said. The package is being developed to coincide with Trump's visit to Saudi Arabia. Trump leaves for the kingdom on May 19, the first stop on his maiden international trip. Reuters reported last week that Washington was pushing through contracts for tens of billions of dollars in arms sales to Saudi Arabia, some new, others already in the pipeline, ahead of Trump's visit. The United States has been the main supplier for most Saudi military needs, from F-15 fighter jets to command and control systems worth tens of billions of dollars in recent years. Trump has vowed to stimulate the U.S. economy by boosting manufacturing jobs. The package includes American arms and maintenance, ships, air missile defense and maritime security, the official said. "We'll see a very substantial commitment ... In many ways it is intended to build capabilities for the threats they face." The official added: "It's good for the American economy but it will also be good in terms of building a capability that is appropriate for the challenges of the region. Israel would still maintain an edge."
Saudis to Boost U.S. Ties With $40 Billion Investment -- Saudi Arabia is preparing to cement ties with President Donald Trump by committing to unprecedented investments in the U.S.The kingdom’s sovereign wealth fund is set to announce plans to deploy as much as $40 billion into U.S. infrastructure, according to people familiar with the matter. The investment may be unveiled as early as next week to coincide with Trump’s visit to the kingdom, said the people, asking not to be identified as the information is private. No final decisions have been made and the announcement may still be delayed, they said.Saudi Arabia is eager to reset relations with the new U.S. administration after feeling shunned by President Barack Obama, who crafted the 2015 nuclear deal with their Shiite rival Iran. 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. A White House official, speaking on condition of anonymity, confirmed 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. A representative for Saudi Arabia’s Public Investment Fund declined to comment. The Ministry of Finance didn’t immediately respond to requests for comment. Trump in March offered his support for developing a new U.S.-Saudi program in energy, industry, infrastructure and technology that could be valued at more than $200 billion in direct and indirect investments within the next four years, according to the White House. The president has said he intends to push for $1 trillion in U.S. infrastructure investments over the next decade, with $200 billion coming from taxpayers and the rest from the private sector.
Will The $40 Billion Saudi Infrastructure Gift Influence Trump? - It’s “Infrastructure Week” in Washington, and foreign powers are taking note. Ahead of President Donald Trump’s upcoming visit to the Middle East, Saudi Arabia has promised to make $40 billion of its sovereign wealth fund available to the United States to bankroll part of the roughly $1 trillion in infrastructure improvements that Trump promised on the campaign trail. The move is reminiscent of the KSA’s strategy amongst its allies in the Gulf Cooperation Council (GCC), as well as Morocco and Jordan. This GCC + 2 group of kingdoms is regularly showered with billions of dollars in gifts from its wealthiest members, earmarked for similar construction projects, allowing the most stable Arab countries to remain intimately connected through financial obligations. The monarchial structure of these countries allows the lead executive to accept the sizeable donations without much fuss from the public. It’s just the way things are done there, and citizens of those regions generally accept. But using foreign funds, especially those from a country such as Saudi Arabia - which only garnered favorable reactions from 31 percent of Americans polled by Gallup in February 2017 – could be another political trap for Trump.The KSA had gone all-in on Hillary Clinton before the election, expecting her to continue to tweak policies put in place by Barack Obama. Contributions from GCC nations, especially Saudi Arabia, to the Clinton Foundation total in the millions. Reports of the serial grand donations made voters question Clinton’s allegiances in the 2016 elections. Trump could suffer a similar loss in faith if he begins accepting funding from monarchies willy-nilly – though censuring the new commander-in-chief in the media for any questionable action has led to fierce resistance from the White House and far right. Riyadh’s most recent $40 billion gift is an effort to court support in the Trump administration, especially as the Saudi Aramco IPO approaches next year. Deputy Crown Prince Mohammed Bin Salman met Trump at the White House in the early days of the new administration. Local media took to labelling the trip a “historic turning point” in bilateral relations – a marked shift from rumors regarding friction between the two countries during Obama’s tenure. Nonetheless, the Department of Defense continued to approve the KSA’s weapons orders for use in Yemen and other regional squabbles, and Trump will likely continue that legacy.
Trump considering how move of U.S. Embassy in Israel could affect Mideast peace | Reuters: President Donald Trump is trying to determine how keeping his promise to move the U.S. Embassy in Israel to Jerusalem could affect his hopes of brokering a peace deal between the Israelis and the Palestinians, his secretary of state said on Sunday. Since taking office in January, Trump has shown signs of shelving his campaign pledge to move the embassy from Tel Aviv, while vowing to do what is necessary to clinch a Middle East peace agreement. "The president is being very careful to understand how such a decision would impact a peace process," Secretary of State Rex Tillerson told NBC's "Meet the Press." He spoke just days before Trump starts a Middle East trip that includes meetings with Israeli and Palestinian leaders. Israel regards Jerusalem as its eternal and indivisible capital and wants all foreign countries to base their embassies there. The relocation is strongly opposed by many U.S. allies as the Palestinians also claim the city as their capital. Tillerson said Trump's decision would depend greatly on how it is seen by governments in the region, including "whether Israel views it as being helpful to a peace initiative or perhaps a distraction." His comments drew a quick response from Israeli Prime Minister Benjamin Netanyahu. "Israel's position has been stated many times before to the American administration and the world," Netanyahu's office said in a statement."Moving the American embassy to Jerusalem will not harm the peace process, it will do the opposite. It will advance it by righting a historical wrong and by shattering the Palestinian fantasy that Jerusalem is not the capital of Israel."
Trump to reassure Saudi allies, promote business, talk tough on radicalism | Reuters: When U.S. President Donald Trump meets Saudi princes in Riyadh on Saturday, he can expect a warmer welcome than the one given a year ago to his predecessor Barack Obama, who Riyadh considered soft on arch foe Iran and cool toward a bilateral relationship that is a mainstay of the Middle East's security balance. Beneath the pomp, Riyadh will be looking for assurances that the Trump administration will continue its notably harsher tone toward Iran and keep up pressure, through both rhetoric and action, to stop what Saudi Arabia sees as Tehran's destabilizing activities in the region. The U.S.-Saudi alliance has experienced turbulence since Riyadh faulted what it saw as Obama's withdrawal from the region, a perceived tilt toward Iran since the 2011 Arab uprisings and a lack of direct action against Syrian President Bashar al-Assad, an Iranian ally. Saudi Arabia will also want to showcase high-profile investment deals with American companies to show progress on its ambitious "Vision 2030" economic and social reform agenda, while Washington says U.S. arms sales arms worth tens of billions of dollars are in the pipeline. Trump's visit to Saudi Arabia is the first stop on his maiden international trip since taking office in January. U.S. and Saudi officials are eager to highlight the powerful symbolism of an American president choosing to visit the birthplace of Islam as his first stop rather than to neighbors Canada or Mexico. Besides meeting with Saudi officials, Trump will also meet with leaders of the six-nation Gulf Cooperation Council (GCC) and have lunch with leaders of more than 50 Muslim countries.
Saudis Have a Red Carpet Ready for Trump, and a Steep Wish-List - Saudi Arabia is putting on a show for Donald Trump on his first overseas trip as U.S. president. Muslim leaders will assemble in Riyadh, and there’ll be an exhibition of classic American cars as well as sports matches and concerts. An online clock counts down the seconds until the big day.Behind the pageantry are high expectations that won’t be easy to meet. Among Gulf leaders, enthusiasm for Trump -- who looks increasingly embattled at home -- is driven by the desire for a like-minded partner in the oil-rich kingdom’s struggle against Iran, its main Middle Eastern rival. That, to Saudi eyes, overrides his record of anti-Islamic rhetoric on the campaign trail, and his attempt to bar some Muslims from entering the U.S. once he took office. As a candidate, Trump ripped into the accord signed by his predecessor Barack Obama that allowed Iran to keep a scaled-back nuclear program. As president, he’s imposed new sanctions on the Islamic Republic, launched strikes against Iran’s Syrian ally, and generally promised to get tough. That’s why Saudi Arabia’s predominant leader, Deputy Crown Prince Mohammed bin Salman, hailed the president as a “ true friend of Muslims” and their March meeting as a “historic turning point.” “The amped-up anti-Iran rhetoric from the Trump administration pleases Saudi leaders, who compare it favorably with the Obama administration’s willingness to do business with Iran,” said Paul Pillar, a professor at Georgetown University in Washington and former CIA officer. Still, while Iran and Russia have stepped up military engagement to advance their Mideastern interests, Trump got elected promising not to embroil America in more wars. And it’s not clear how much of his Iran rhetoric translates into action.
Trump to unveil plans for an ‘Arab NATO’ in Saudi Arabia -- When President Trump arrives in Riyadh this week, he will lay out his vision for a new regional security architecture White House officials call an “Arab NATO,” to guide the fight against terrorism and push back against Iran. As a cornerstone of the plan, Trump will also announce one of the largest arms-sales deals in history. Behind the scenes, the Trump administration and Saudi Arabia have been conducting extensive negotiations, led by White House senior adviser Jared Kushner and Saudi Deputy Crown Prince Mohammed bin Salman. The discussions began shortly after the presidential election, when Mohammed, known in Washington as “MBS,” sent a delegation to meet with Kushner and other Trump officials at Trump Tower. After years of disillusionment with the Obama administration, the Saudi leadership was eager to do business. “They were willing to make a bet on Trump and on America,” a senior White House official said. In that meeting and during a follow-up meeting three weeks later, the Saudis proposed a broad elevation of the U.S.-Saudi relationship and proposed various projects to increase security cooperation, economic cooperation and investment, White House officials said. The Trump team gave the Saudis a list of Trump priorities, calling on the kingdom to step up actions to combat radical Islamic extremism, intensify the fight against the Islamic State and share the burden of regional security. In recent weeks, the Trump administration has tasked various government agencies to develop a series of announcements Trump will make this weekend. Secretary of State Rex Tillerson is now heavily involved. One main objective is to put forth a framework and basic principles for a unified Sunni coalition of countries, which would set the stage for a more formal NATO-like organizational structure down the line.
The Two Most Dangerous Men in the World: Trump and Crown Prince Salman - Many people view Donald Trump as the most dangerous man on the planet, but next week he flies to Saudi Arabia for a three-day visit during which he will meet a man who surely runs him a close second as a source of instability. This is deputy crown prince Mohammed bin Salman, 31 – the de facto ruler of Saudi Arabia since his father King Salman, 81, is incapacitated by old age – who has won a reputation for impulsiveness, aggression and poor judgement in the two-and-half years he has held power. Early on he escalated the Saudi role in Syria, thereby helping to precipitate Russian military intervention, and initiated a war in Yemen that is still going on and has reduced 17 million people to the brink of famine. Combine his failings with those of Trump, a man equally careless or ignorant about the consequence of his actions, and you have an explosive mixture threatening the most volatile region on earth.Prince Mohammed, who is also defence minister, is not a man who learns from his mistakes or even notices that he has made them. Less than a year after his father became king in January 2015, the BND German intelligence agency issued a warning that Saudi Arabia had adopted “an impulsive policy of intervention” abroad and blamed this on the deputy crown prince whom it portrayed as a naïve political gambler. The degree of alarm within the BND about his impact on the region must have been high for them to release such a document which was swiftly withdrawn at the insistence of the German foreign ministry, but its predictions have been fulfilled disastrously in the following eighteen months.The deputy crown prince is turning out to be not only a gambler, but one who recklessly raises his stakes when in trouble. Proof of this came in an extraordinary but under-reported interview he gave earlier this month, broadcast on al-Arabiya TV and Saudi TV, in which he threatens military intervention in Iran. “We will not wait until the battle is in Saudi Arabia, but we will work so the battle is there in Iran,” he says.
Kushner called Lockheed CEO to get a better arms deal for Saudi Arabia | TheHill: President Trump's senior adviser and son-in-law Jared Kushner personally called the CEO of Lockheed Martin during a meeting with a Saudi delegation earlier this month to ask her to cut the price of a missile defense system, The New York Times reported Thursday. The call was part of Kushner's effort to secure a roughly $110 billion arms sale to Saudi Arabia before Trump's scheduled trip to the kingdom on Friday. During the meeting with the delegation, Kushner determined that cost could prohibit the Saudis from purchasing a THAAD missile defense system, which is designed to shoot down intermediate-range ballistic missiles. So in an unorthodox move, Kushner phoned Marillyn Hewson, the chief executive of Lockheed Martin, which manufactures THAAD, and asked her if her company could lower the cost of the antimissile system. She reportedly told him she would look into it, according to the Times. While unusual, the phone call does not appear to break any laws. Lockheed Martin is the only company that makes the antimissile system, meaning that the contract would not be offered to another firm.
Saudi-U.S. Ties Shift as Kingdom Turns to Trump for Investments - Just a few years back, the business relationship between the U.S. and Saudi Arabia was pretty simple: The Americans bought oil, and the Saudis spent much of what they earned on equipment to keep the crude flowing and on planes, tanks, and missiles to protect their borders. With crude prices down by half over the past three years, U.S. domestic oil production up dramatically, and the kingdom embarking on unprecedented economic reforms -- including the sale of a stake in its state-owned oil company -- the leverage is shifting toward the Americans as the U.S. emerges as a rival energy exporter. The changing relationship will come into sharp focus this weekend, as American corporate titans visit Riyadh for an investment summit scheduled to coincide with Donald Trump’s first foreign trip as U.S. president. “At this point, the Saudis need the U.S. more than the reverse,” “They need foreign direct investment to transform the economy, and the U.S. doesn’t need oil anymore.” For Trump, the visit could provide a welcome respite from the turmoil he has unleashed in Washington over his firing of FBI Director James Comey and the investigation into Russian meddling in the presidential campaign. Saudi King Salman bin Abdulaziz wants backing for a plan to reduce the role of the state and wean the economy off of oil -- without stoking popular discontent. The American executives will want deals. Some, like Jamie Dimon, chief executive officer of JPMorgan Chase & Co., and Morgan Stanley boss James Gorman, already have agreements to advise oil giant Saudi Aramco on its initial public offering, which may be the largest ever. JPMorgan and Citigroup Inc. helped arrange a $17.5 billion Saudi bond sale last year and a $9 billion Islamic bond issue in April. This weekend the banks will aim for more contracts as the Saudis prepare to sell other state assets.
Media to Trump: Don’t Cozy Up to Dictators–Unless They’re the Right Dictators -- After a series of friendly gestures by President Donald Trump toward Filipino President Rodrigo Duterte and Egypt’s Abdel Fattah el-Sisi over the past few months, US media have recoiled with disgust at the open embrace of governments that ostensibly had heretofore been beyond the pale.“Enabling Egypt’s President Sisi, an Enemy of Human Rights,” was the New York Times‘ editorial position (4/4/17)—followed by “Donald Trump Embraces Another Despot” (5/1/17). A week later, Sen. John McCain (R.-Ariz.) lectured Secretary of State Rex Tillerson on the Times op-ed page (5/8/17) on “Why We Must Support Human Rights.”“How Trump Makes Dictators Stronger” was Washington Post columnist Anne Applebaum’s lament (5/1/17).“Trump keeps praising international strongmen, alarming human rights advocates,” reported an upset Philip Rucker (Washington Post, 5/2/17). Post contributor Tom Toles (5/2/17) added, “Trump invites ruthless dictators to the White House.” Trump had gone too far, was the media message, crossing a line with his enthusiastic outreach to brutal tyrants.So the Trump administration’s announcement of a plan for not just a friendly visit to Saudi Arabia—scheduled for May 20–21—but also the sale of up to $300 billion in weapons to the oppressive regime, must have provoked the same outcry from these critics, right? Actually, no. Thus far, the LA Times, CNN, NBC, MSNBC, CNN, ABC and CBS haven’t reported on Trump’s massive arms deal with Saudi Arabia, much less had a pundit or editorial board condemn it. Saudi Arabia’s war on Yemen has killed at least 10,000 civilians, resulted in near-famine conditions for 7 million people and led to a deadly cholera epidemic—all made possible with US weapons and logistical support. John McCain, whose New York Times op-ed was unironically shared by dozens of high-status pundits, aggressively backs Saudi Arabia’s brutal bombing of Yemen, and has called for increased military support to the absolute monarchy.
Iran nuclear: Trump extends Obama’s ‘worst deal ever’ BBC -- Donald Trump's White House has renewed sanctions relief for Iran, despite the US president's past criticism. The easing of sanctions is part of a crucial nuclear deal brokered in 2015 under then-President Barack Obama with five other world powers. Mr Trump has described the landmark agreement as the "worst deal ever". However, the US Treasury issued fresh sanctions against specific officials and a Chinese business with links to Iran's missile programme. The move means that sanctions preventing any US companies selling to or dealing with Iran will remain suspended for the time being. In return, Iran has pledged to restrict its nuclear activities, reducing its uranium enrichment, plutonium production plans, and allowing inspectors access to facilities. The new sanctions from the Treasury are much more specific in scope, targeting two senior Iranian defence officials and suppliers of missile equipment, in apparent retaliation for a recent missile test, and for Iran's support of President Bashar al-Assad in Syria. US citizens and entities are now banned from dealing with the officials and companies involved. However, the White House stopped short of failing to renew the waivers on more widespread sanctions, which are not permanent and were due to expire this week. This is the first time Mr Trump has been faced with the issue, after former President Obama renewed the agreement shortly before he left office.
Trump Tries to Reassure Erdogan After U.S. Plan to Arm Kurds -- President Donald Trump sought Tuesday to repair relations with Turkish President Recep Tayyip Erdogan, who is alarmed about a U.S. plan to arm Kurdish fighters in Syria. Trump said he and the Turkish president would have a “long and hard discussion” as he welcomed Erdogan to the Oval Office for a meeting three days ahead of a Trump trip to the Middle East. Erdogan said the U.S. shouldn’t work with the YPG Kurdish militia, a group Turkey considers a terrorist organization, that Trump plans to arm. “Taking them into consideration in the region will never be accepted and it is going to be against the global agreement that we have reached,” Erdogan said in a statement to reporters, through a translator. Trump has worked since his election to improve relations with Erdogan that grew tense by the end of Barack Obama’s administration. Some of the people who shaped Trump’s presidential campaign also have worked on the Turkish president’s pet causes. A firm owned by Trump’s former national security adviser, Michael Flynn, received more than $500,000 during the election campaign, initially undisclosed, for work intended to discredit an Erdogan political rival. But the U.S. campaign to drive Islamic State from its self-proclaimed capital of Raqqa in Syria put Trump in a strategic bind. His administration concluded the best hope short of inserting U.S. troops would be to arm Kurdish fighters, and the president decided that was worth the inevitable blowback from Turkey, the official said.
Watch: 'Brutal Attack' on Turkish Demonstrators in Washington D.C — Supporters of President Recep Tayyip Erdogan of Turkey, including his government security forces and several armed individuals, violently charged a group of protesters outside the Turkish ambassador’s residence here on Tuesday night in what the police characterized as “a brutal attack.”Eleven people were injured, including a police officer, and nine were taken to a hospital, the Metropolitan Police chief, Peter Newsham, said at a news conference on Wednesday. Two Secret Service agents were also assaulted in the melee, according to a federal law enforcement official.The State Department condemned the attack as an assault on free speech and warned Turkey that the action would not be tolerated. “We are communicating our concern to the Turkish government in the strongest possible terms,” said Heather Nauert, a State Department spokeswoman.A group of Republican lawmakers went a step further, calling the episode an “affront to the United States” and calling for Turkey to apologize.
US complains to Turkey over embassy violence - BBC - The US has made a complaint to Turkey after violence erupted between protesters and Turkish security personnel in Washington, DC. Two people were arrested and 11 were injured in protests outside the Turkish ambassador's residence amid President Recep Tayyip Erdogan's visit. Video footage of the clash on Tuesday showed men in suits charging past police to kick and punch protesters. Police called the violence a "brutal attack on peaceful protesters". But the Turkish Embassy said the demonstrators were aggressively provoking Turkish-Americans who had gathered to greet the president, and they in turn responded in self-defence. The US State Department released a statement saying it was "concerned by the violent incidents" and confirmed Turkish security guards were involved. "Violence is never an appropriate response to free speech, and we support the rights of people everywhere to free expression and peaceful protest," the statement read. "We are communicating our concern to the Turkish government in the strongest possible terms."
New Video Shows Erdogan Watching Washington Brawl - Video has been released in which Turkish President Recep Tayyip Erdogan watches as his bodyguards attack Kurdish and Armenian protesters outside the Turkish ambassador's residence in Washington. It appears that Erdogan speaks to security guards before the attack begins. The incident has caused outrage in the United States, with legislators writing to Erdogan to complain. (VOA's Turkish Service)
Erdogan Watched His Guards Beat U.S. Protesters in Washington DC - U.S. officials and lawmakers may have been outraged when Turkish President Recep Tayyip Erdogan’s bodyguards attacked and beat peaceful protesters in Washington as their leader watched. Back in Turkey, however, that hard-line approach is welcomed by many of the president’s nationalist supporters. The clash Tuesday began when Erdogan’s motorcade pulled up in front of the Turkish ambassador’s residence, returning from a visit to the White House and a meeting with President Donald Trump. Erdogan, emerging from his limousine, stood and watched as his guards and supporters began punching and kicking their way through a group of mostly Kurdish protesters across the street. Eleven people were injured. Two U.S. senators protested to Erdogan Thursday about his guards’ behavior. “The violent response of your security detail to peaceful protesters is wholly unacceptable,” Senators Dianne Feinstein and John McCain said in a letter to Erdogan. They added that the incident was “unfortunately reflective of your government’s treatment of the press, ethnic minority groups and political opponents.” While some Turks also decried the use of force to quash a peaceful protest, calling it a blemish on the country’s international reputation and a violation of free speech, those who support Erdogan’s increasingly authoritarian rule felt it was justified. “Those terrorists deserved to be beaten,” Atakan, a taxi driver from the city of Erzurum, told a VOA reporter. “They should not be protesting our president. They got what they asked for.” Yusuf Kanli, a newspaper columnist and political analyst, said no matter how bad it may have looked, the scene played right into Erdogan’s image.
Russia steps up North Korea support to constrain US -- Despite efforts by the United Nations to impose isolating sanctions on North Korea in response to the country's continued development of nuclear weapons and intercontinental ballistic missiles, trade between Russia and North Korea soared more than 85 percent in the first four months of the year.. Citing Russian customs data, the Voice of America broadcaster has reported that bilateral trade climbed to $31.83 million (29 million euros) in the January-March quarter, with the vast majority being energy products going over the border into the North.This included $22 million worth of coal, lignite with a value of around $4.7 million, and oil estimated at $1.2 million. In return, North Korean exports to Russia were estimated to be worth $420,000. The most significant exports were chemicals and - curiously - wind instruments. In contrast, North Korea's trade with China, traditionally its most important economic partner, has plummeted. Pyongyang's exports of coal to China in March came to 6,342 tons, a fraction of the 1.44 million tons sent to China in January, with an estimated value of $126.39 million. Similarly, Beijing has stopped supplying critically-needed fuel oil to the North, a clear demonstration of China's displeasure at North Korea's ongoing weapons tests.
Mattis: North Korea Military Solution Would Be "Tragic On An Unbelievable Scale" -- With the media narrative once again focused squarely on Trump and the "Russian connection", something which will unlikely change over the next week absent "fireworks" elsewhere, the story of potential military intervention in South Korea has understandably dropped from the front pages. Although with a second US aircraft carrier now en route to the Korean Peninsula, and with Trump desperate for another "big bang" distraction, is it shortsighted to underestimate the potential of another geopolitical hotspot emerging in the next few days.While the answer is unknown, on Friday afternoon Defense Secretary Jim Mattis reminded the American public just how high tht potential stakes are when he said that any military solution to the North Korea crisis would be "tragic on an unbelievable scale" and that Washington was working internationally to find a diplomatic solution.Quoted by Reuters, Mattis told a Pentagon news conference that "we are going to continue to work the issue," and added that "if this goes to a military solution, it's going to be tragic on an unbelievable scale. So our effort is to work with the U.N., work with China, work with Japan, work with South Korea to try to find a way out of this situation." Pundits took the remarks as one of the clearest indicators yet that President Trump's administration will seek to exhaust alternatives before turning to military action to force Pyongyang's hand, although it would not explain US willingness to potentially provoke the Kim regime with a second aircraft carrier in close proximity to Pyongyang. The US which has 28,500 troops in South Korea to guard against the North Korean threat, has called on China to do more to rein in its neighbor. Mattis appeared to defend China's most recent efforts, even as he acknowledged Pyongyang's march forward.
Inside The US Government's Plan To Survive Nuclear War (While The Rest Of Us Die) -- In 2011, a staffer at Washingtonian found a government ID in a Metro parking garage and gave it to Garrett M. Graff (the magazine’s editor-in-chief at the time) to track down its owner. “Since I reported about that world, he figured I’d know what to do with it,”Graff says. Graff immediately noticed something strange. “The back of the ID had these evacuation instructions on it. And so I got on Google Maps and followed the instructions and they led to a road that very clearly went into the side of a mountain, and you can see on the Google satellite view big concrete bunker doors.” That discovery inspired Graff to comb through newly declassified documents to learn more about the U.S. government’s plans in the event of a nuclear war or other catastrophe. His research culminated in the new book “Raven Rock: The Story of the U.S. Government’s Secret Plan to Save Itself — While the Rest of Us Die.” At first, the government didn’t plan to let “the rest of us die.”“In the early 1950s, the government really hoped and believed it would be able to save most Americans,” Graff says. As bombs became more destructive, “plans and ambitions gradually shrunk until, realistically, the best they could hope to do is save the senior leadership.”
Trump Fails to Deliver a NAFTA Renegotiation Plan - The Trump administration notified Congress Thursday of its intent to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico. Throughout his candidacy, Trump proclaimed he would "announce" plans to "totally renegotiate" NAFTA on "day one" of his presidency. Today is the 119th day of his presidency. Today's notification from the Trump administration consists of two pages and does not offer any concrete plans for NAFTA renegotiation. Previously, a more detailed draft renegotiation notice from the administration leaked, revealing plans to keep many of NAFTA's most damaging elements intact. In contrast, the Sierra Club and other leading environmental groups have released eight specific and fundamental changes to NAFTA that must be included in any replacement deal. NAFTA remains broken, but Trump's empty rhetoric will not fix it. We need a serious plan to replace NAFTA with a people-first approach to trade. All indications thus far show that Trump will fail to deliver. Donald Trump promised that he'd fix NAFTA on his first day in office. 119 days later he has managed to send Congress a two-page letter that fails to include any real plan to fix a deal that has undermined environmental protections, eliminated jobs, undercut wages, polluted our air and water and fueled climate change . If Trump's cabinet full of corporate polluters and Wall Street billionaires is any indication of what he has planned, his NAFTA redux will likely include even more handouts to the corporations that have used NAFTA to profit off of Americans' misfortune for more than 20 years.
Will NAFTA Renegotiation Produce TPP 2.0 and Intensify Damage? Or Fulfill Trump Promise of a ‘Much Better’ Deal for Working Americans? Maintaining Secretive Process With 500 Official Corporate Advisers Does Not Bode Well - Lori Wallach - Note: Today, the Trump administration sent formal notice of NAFTA renegotiation to Congress. As a candidate, Donald Trump promised to make NAFTA “much better” for working people. Today’s notice is markedly vague. But Trump’s NAFTA renegotiation plan that leaked in late March described just what the corporate lobby is demanding: using NAFTA talks to revive parts of the Trans-Pacific Partnership (TPP), like expanded investor incentives to offshore jobs that could make NAFTA even worse for working people. The obvious measure of whether NAFTA renegotiation is intended to benefit working people is if Trump makes clear he will eliminate NAFTA’s special investor rights that make it easier to offshore American jobs and attack our laws before tribunals of three corporate lawyers who can award the firms unlimited sums of taxpayer money. If corporate elites are allowed to dictate how NAFTA is renegotiated, the agreement could become more damaging for working families and the environment in the three countries. And modest tweaks will not stop NAFTA’s ongoing damage, much less deliver on Trump’s promises for a deal that will create American jobs and raise wages. Already the 500 corporate trade advisers who got us into the TPP have been consulted on NAFTA renegotiations, while the few labor advisers were shut out of that March meeting. And the public and Congress are being left in the dark about negotiating plans and goals.
Democrats to Trump on NAFTA: Hit me with your best shot -The news that the U.S. will formally reopen NAFTA for negotiation drew little fanfare from congressional Democrats who see the trade deal redo as a chance for President Donald Trump to prove himself as a great negotiator. “Donald Trump ran for president as the best negotiator on the face of the Earth,” Rep. Dan Kildee, a Michigan Democrat whose district includes the hard-hit city of Flint, said at a press conference Thursday with other critics of U.S. trade agreements. “Here’s his chance to prove it — to have his first moment of success as president of the United States.”The lawmakers said they feared Trump would make only modest changes to NAFTA — as his bare-bones notification letter to Congress seems to indicate — after blasting the agreement as an economic disaster throughout last year's presidential campaign.But if Trump wants to use a NAFTA 2.0 to achieve one of his main goals — reducing the trade deficit — it would require actions like strengthening labor and environment rules, eliminating the controversial investor protections, eliminating a ban on “Buy America” procurement requirements, introducing currency rules and strengthening rules of origin, said Lori Wallach, director of Public Citizen's Global Trade Watch. "This is an agenda that is as appealing to the Republicans in Congress as eating ground glass," Wallach said. "The administration is going to have to figure out the politics of whether they actually want an agreement that satisfies what they pledged to American voters and that can get through Congress. If so, they're going to be stuck ... having to do a lot of things that Democrats in Congress have been calling for for decades." Doug Palmer has the full story here.
Why the road to Trump’s $1 trillion infrastructure investment is marked with potholes -- For a variety of reasons, the mixed track record of rebuilding projects suggests that the $1 trillion that President Donald Trump wants to invest in U.S. infrastructure by way of public-private partnerships may not be a slam-dunk for investors. As several PPPs have demonstrated recently — such as the Chicago Skyway's $2.83 billion sale in 2015 and Westinghouse Electric's high-profile bankruptcy declaration in March — infrastructure funding can swing from success story to cautionary tale.Amid a patchwork of decaying U.S. roads, bridges, schools and water systems, an increasing share of municipal debt is being devoted to shoring up these structures. According to data from investment management firm PIMCO, about 58 percent of the outstanding tax-exempt municipal debt in the Barclays Muni IG Index is issued for infrastructure purposes.Yet experts warn that, for a variety of reasons, most infrastructure projects lack the revenue stream and return on equity needed to attract private investors."We see a lot of need for infrastructure investment, but the areas where [it's needed] are not necessarily aligned with what public-private partnerships may target, or with what the state and local governments might be willing to turn over to a private operator," David Hammer, executive vice president and head of municipal bond portfolio management at PIMCO, told CNBC in a recent interview.In view of past experiences, "it's unlikely that you'd see state and local governments use public-private partnerships to address water and sewer needs," for example, Hammer added.That's true even for cash-strapped cities like Detroit, whose water and sewer system is one of its more valuable assets — making officials reluctant to fully privatize the system, he added.
The trouble with infrastructure - The trouble with infrastructure is that it breaks down and needs to be repaired, it wears out and needs to be replaced, and it gets destroyed and needs to be rebuilt. All that requires energy, resources, labor and money. The bigger we make any part of our infrastructure--roads, pipelines, electricity grids, water and sewer systems--the more expensive it becomes just to keep it in operating order. The same is true for our industrial plant, transportation system, commercial buildings and private homes. Things fall apart over time; entropy makes sure of that. To keep things from degrading to the point where they cannot function requires resources, labor and money--all of which cannot be spent on new infrastructure or productive investment, that is, all of which must go to maintain what we have rather than grow the economy. Today, we don't think so much in terms of territory as Gross Domestic Product (GDP) when evaluating our material progress as nations. It turns out that one of the ways to keep the GDP growing is to skimp on maintenance. In the United States, water systems have been a good place to skimp. After all, much of that infrastructure is underground or at sites remote from the cities it serves. Few will notice. The American Society of Civil Engineers (ASCE) has given near failing grades to the American infrastructure. In a report the ASCE describes the problems with the drinking water infrastructure this way: Drinking water is delivered via one million miles of pipes across the country. Many of those pipes were laid in the early to mid-20th century with a lifespan of 75 to 100 years....there are still an estimated 240,000 water main breaks per year in the United States, wasting over two trillion gallons of treated drinking water.
House Democrats release $85B infrastructure plan | TheHill: House Democrats on Wednesday introduced a bill to spend at least $85 billion on infrastructure upgrades, staking out their position ahead of a congressional debate over infrastructure spending later this session. The bill from Democrats on the Energy and Commerce Committee includes funding for five years of infrastructure projects in the energy, environment, technology and healthcare spheres. It would spend:
- $40 billion to deploy broadband internet around the United States;
- $22.5 billion on drinking water infrastructure improvements;
- $17 billion on the electric grid, renewable energy and energy efficiency programs;
- $3 billion to improve hospitals and infectious disease research facilities; and
- $2.7 on the Brownfields industrial waste site cleanup program.
The bill, called the Leading Infrastructure For Tomorrow’s America, or LIFT, Act, “is a blueprint for critical investments in our nation's infrastructure that will also create jobs, promote economic growth and protect public health and the environment,” Energy and Commerce ranking member Frank Pallone (D-N.J.) said in a statement.
GSA starts translating Trump’s priorities into acquisition policy -- The General Services Administration is going to have its hands full this summer as it works toward translating President Donald Trump’s contracting priorities into policy. Jack St. John, GSA’s chief of staff, outlined a few of these priorities for a crowd of contractors at the May 11 Coalition for Government Procurement’s Spring Conference in Falls Church, Virginia. “We are in the process of making changes, one of which is switching the [Transactional Data Reporting] requirement from a mandatory to a voluntary process. We’re going to reexamine the burdens and benefits of TDR,” he said. GSA released the final data transaction reporting rule June 23, 2016, creating a requirement for government contractors to submit information about transactions through the schedule contracts and those governmentwide acquisition contracts run by the agency. GSA said transactional data refers to the information generated when the government purchases goods or services from a vendor. It includes specific details such as descriptions, part numbers, quantities and prices paid for the items purchased. But TDR came under fire from vendors who said that the new requirements simply shifted the burden in requirements, rather than alleviating them.
Trump Tax Plan Would Give 400 Highest-Income Americans More Than $15 Million a Year in Tax Cuts: CBPP - President Trump’s tax plan contains specific, costly tax cuts for the wealthy and profitable corporations but only vague promises for working families.[1] Even accounting for his proposal to restrict most itemized deductions, the top 1 percent would still receive annual tax cuts averaging at least $250,000 per household. But the tax cuts at the very top would be far larger. Their annual tax cuts would be more than five times the typical college graduate’s lifetime earnings.The 400 highest-income taxpayers — whose incomes average more than $300 million a year — would get average tax cuts of at least $15 million a year each, we estimate from IRS data. Their annual tax cuts would be more than five times the typical college graduate’s lifetime earnings.[2].. The total tax cut for these 400 households would be at least $6 billion annually. The Trump plan prioritizes these tax cuts for the highest-income Americans over many worthy programs that need more resources. For example, $6 billion is more than the federal government spends on grants for major job training programs to assist people struggling in today’s economy. An additional annual investment of $6 billion could enable roughly 1.5 million adults each year to train for a new career.[3]Also, $6 billion is roughly the cost of providing 600,000 low-income families with housing vouchers that would help them afford decent, stable housing. ...Yet, far from investing in these areas, President Trump has proposed to sharply cut the budget area (non-defense discretionary programs) that funds job training and housing vouchers, even as his tax plan delivers massive tax cuts to the top.[5] ...While the Trump tax plan would clearly shower windfall tax cuts on those at the very top, it provides little detail on whether or how it would help working families. Indeed, the plan wouldn’t provide any tax benefits to at least 17 million working families and individuals because they don’t earn enough to owe federal income taxes (though most pay significant payroll and other taxes). Those families would very likely be worse off under the plan because policymakers eventually would likely pay for the large tax cuts for the very wealthy at least in part by cutting programs on which they and millions of other low- and middle-income families rely.[9]
Treasury's Mnuchin concerned about alternate scoring models of Trump tax plan | Reuters: U.S. Treasury Secretary Steven Mnuchin told lawmakers on Thursday that he has some doubts that what are known as alternate scoring models will give enough credit to the potential for economic growth when assessing the impact of the Trump administration's tax plan. In late April, the administration put out a one-page overview of its tax reform plans, which would cut taxes for businesses to 15 percent, as well as cutting taxes and simplifying income tax brackets for individuals. Critics questioned how the tax cuts would be offset without driving up the federal deficit. "What I have said repeatedly is that any plan we put forward we believe should be paid for with economic growth," Mnuchin told the Senate Banking Committee. "I am concerned as to whether some of the models will attribute enough growth in dynamic scoring but when we present the details we will present how we think it should be paid for." Mnuchin has said the April plan was deliberately vague in order to allow the White House to more effectively work with lawmakers to come up with a joint agreement that could pass Congress. How to pay for the tax cuts remains a sticking point. Fiscal conservatives in the Republican-controlled Congress would strongly prefer a revenue-neutral plan as they are against increasing deficits. Mnuchin has said the cuts would pay for themselves under a dynamic scoring model analysis, which takes into account the effect of tax changes on economic growth and revenue.At Thursday's hearing, Mnuchin was also peppered by Democrats on the committee about details of the tax plan, including whether or not cuts would mostly benefit the wealthy.
Treasury Secretary Mnuchin Testifies Before Senate Banking, Housing, and Urban Affairs Committee – C-SPAN
The Pump's Already Primed So Hold the Tax Cuts - Noah Smith -- Donald Trump has proposed cutting taxes as a way of “priming the pump” -- that is, stimulating the economy. Paul Krugman retorts that now isn't the time for stimulus; because the economy is doing fairly well right now, the pump is already flowing, so the government should wait until it runs dry to start priming.Whether stimulus could help the economy is an interesting question, but it’s not the most important thing to be asking. The real question is whether tax cuts are the right thing to try. And the answer is probably not. Lots of people like the idea of tax cuts as stimulus. According to standard economic theory, taxes distort the economy and harm efficiency. And basic Keynesian theory says that tax cuts stimulate the economy in bad times. Therefore, if you want to get out of a recession, why not reduce taxes, thereby killing two birds with one stone? Economists who think taxes should be as low as possible tend to see the fiscal stimulus aspect as an added benefit.Republican presidents have often taken advantage of this ambiguity. Enacting tax cuts, they leave it to observers to decide why any positive effects occurred. As Silicon Valley conservative Peter Thiel once quipped: A mischievous person might even ask whether “supply-side economics” really was just a sort of code word for “Keynesianism.” Unfortunately for Trump, this wisdom probably no longer holds. Even if tax cuts once had the power to boost the economy, they are unlikely to do so now.
Goldman Slashes Trump Tax Cut Forecast By Over 40% -- It took the market about 6 months to realize that contrary to initial expectations, Trump's fiscal reform would be substantially delayed and implemented in 2018 at the earliest, if at all. Next, it's time to take the machete to the total size of the program, which is what Goldman's chief political economist Alec Phillips did today when he reported that Goldman is lowering the firm's expectations for fiscal policy changes over the next year: "Rather than the $1.75 trillion/10 years tax cut we had previously assumed, we now assume a cut of $1 trillion" or a cut of over 40%. This reflects an expectation of a tax cut that could be considered close to revenue-neutral under the loose definition that congressional Republicans have been using. What prompted the revision? The recent chaos in DC of course:Recent developments regarding the investigation into the Trump campaign have further weighed on a fiscal policy pro cess that was already bogged down by House passage of the AHCA, which will consume valuable time in the Senate, an uncertain outcome on the FY18 budget resolution, without which tax legislation would become much less likely, and a lack of clear forward movement on tax reform. As a result, this is Goldman's new base-case for Trump reform: The White House has proposed a tax cut that we expect might cost $3-4 trillion over ten years but House Republican leaders have insisted on revenue-neutral tax reform that does not add to the deficit and earlier this week, Senate Majority Leader Mitch McConnell called for revenue-neutral tax reform as well. While their definition of “revenue-neutral” includes dynamic scoring and other technicalities that might be worth several hundred billion dollars over ten years, even under a loose definition of “revenue neutral” this would seem to preclude a substantial net tax cut. In light of these developments, we are changing our fiscal policy assumptions. We already assigned a very low probability to comprehensive tax reform by 2018 but recent events make it even less likely in our view. Our base case has been that Congress would enact a reasonably simple corporate and individual tax cut, with incremental reform—limited base broadening and international corporate reform—that would reduce revenues by $1.75 trillion over ten years.
House May Need to Vote Again on GOP Obamacare Repeal Bill - House Republicans barely managed to pass their Obamacare repeal bill earlier this month, and they now face the possibility of having to vote again on their controversial health measure. House Speaker Paul Ryan hasn’t yet sent the bill to the Senate because there’s a chance that parts of it may need to be redone, depending on how the Congressional Budget Office estimates its effects. House leaders want to make sure the bill conforms with Senate rules for reconciliation, a mechanism that allows Senate Republicans to pass the bill with a simple majority. Republicans had rushed to vote on the health bill so the Senate could get a quick start on it, even before the CBO had finished analyzing a series of last-minute changes. The CBO is expected to release an updated estimate next week. "Unaware," said Representative Jeff Denham of California, with noticeable surprise Thursday, when advised that his party leaders still hadn’t sent the bill over to the Senate. Denham was one of the House Republicans who ended up voting for the measure, after earlier in the week opposing it. "I am on the whip team and we have a lot of conversations, but we have not had that one. So I am going to look into it," said Denham, a member of the party’s vote-counting team.
Obamacare premiums could skyrocket next year amid uncertain repeal efforts -- Early rate filings by Obamacare insurers suggest consumers will face significantly higher premiums for marketplace coverage next year due to regulatory and political uncertainty surrounding the Affordable Care Act. After significant premium hikes in 2017 corrected for underpricing by insurers the previous two years, most analysts expected rates to stabilize for marketplace coverage in 2018. But actions by the Trump administration and the GOP-led Congress have exacerbated problems in the struggling marketplace. Those include a lack of young, healthy enrollees, too many sick plan members and an exodus of insurance carriers from certain areas of country. In places that have posted rates – Connecticut, Maryland, Vermont and the District of Columbia – multiple insurers have submitted plans to participate. But they’re seeking “pretty significant rate hikes in most of these states,” said Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University. Vox reported that Anthem in Connecticut is seeking a 33.8 percent rate increase, while Virginia marketplace plan members could face an average of nearly 31 percent. Most insurers expect a smaller, sicker pool of plan members next year because of the Trump administration’s plan not to enforce the Affordable Care Act’s “individual mandate” requiring most people to carry health insurance or pay a fine, Corlette said Thursday in a conference call with reporters. “That will effectively have the same impact” as repealing the regulation, she said.
Democratic attorneys general seek to intervene in Obamacare case | Reuters: More than a dozen Democratic attorneys general on Thursday sought to intervene to defend a key part of the Obamacare healthcare law - subsidy payments to insurance companies - which is under threat in a court case. The 16 attorneys general, led by California Attorney General Xavier Becerra and New York Attorney General Eric Schneiderman, filed a motion to intervene in the case pending in the U.S. Court of Appeals for the District of Columbia Circuit. The case, which dates back to the Obama administration, was filed by the Republican-led House of Representatives against the federal government in an effort to cut off subsidy payments to insurers for the individual plans created by the Affordable Care Act, often called Obamacare. The subsidies payments help cover out-of-pocket medical expenses for low-income Americans. "The stakes are very high. In Maryland we have more than 400,000 people who depend on the Affordable Care Act to get normal healthcare. It sounds alarming, but it's true: lives are at stake," said Maryland Attorney General Brian Frosh, who signed on to the filing. Trump has repeatedly threatened to withhold the payments to insurers, which amount to about $7 billion this year, and referred to them as a "bailout." The attorneys general cited in the court filing Trump's own words vowing to let Obamacare "explode" as part of the reasoning for their intervention. Trump has made it clear he views decisions on health insurance for millions of Americans “as little more than political bargaining chips," the court filing said. The situation is extremely urgent, the Democratic officials argued, because state insurance regulators are making critical choices that will shape their insurance markets for the next year.
In travel ban case, U.S. judges focus on discrimination, Trump's powers | Reuters: U.S. appeals court judges on Monday questioned the lawyer defending President Donald Trump's temporary travel ban about whether it discriminates against Muslims and pressed challengers to explain why the court should not defer to Trump's presidential powers to set the policy. The three-judge 9th U.S. Circuit Court of Appeals panel was the second court in a week to review Trump's directive banning people entering the United States from six Muslim-majority countries. Opponents - including the state of Hawaii and civil rights groups - say that both Trump's first ban and later revised ban discriminate against Muslims. The government argues that the text of the order does not mention any specific religion and is needed to protect the country against attacks. In addressing the Justice Department at the hearing in Seattle, 9th Circuit Judge Richard Paez pointed out that many of Trump's statements about Muslims came "during the midst of a highly contentious (election) campaign." He asked if that should be taken into account when deciding how much weight they should be given in reviewing the travel ban's constitutionality. Neal Katyal, an attorney for Hawaii which is opposing the ban, said the evidence goes beyond Trump's campaign statements. "The government has not engaged in mass, dragnet exclusions in the past 50 years," Katyal said. "This is something new and unusual in which you're saying this whole class of people, some of whom are dangerous, we can ban them all." The Justice Department argues Trump issued his order solely to protect national security.
US considers banning laptops, iPads from all international flights - US aviation-security officials appear determined to ban large electronic devices in the cabin of flights from Europe and may expand the ban worldwide.Business travellers are worried about lost productivity, laptops in checked baggage being stolen or damaged, or even leaving the machine home if their employer won't let them check it on a plane. Parents are pondering how to keep children occupied.On Wednesday, US and European Union officials exchanged information about threats to aviation, believed to include bombs hidden in laptop computers. Airline and travel groups are concerned about the possibility that a ban on laptops and tablet computers that currently applies to mostly Middle Eastern flights will be expanded to include US-bound flights from Europe.The Financial Times reported that the US homeland security officials meeting European commissioners in Brussels said if Washington were to extend its ban on large electronic devices, "Europe would not be singled out and restrictions would apply to all flights to the US".
U.S. Yanks Scathing Report Blasting DHS for Catching Less than 1% of Visa Overstays - Judicial Watch - Fifteen years after Islamic terrorists exploited the U.S. government’s inept method of tracking visa overstays, the Department of Homeland Security (DHS) still uses an antiquated system that doesn’t have the capability to get the job done. This allows foreign individuals, who may “pose severe national security risks” to remain in the country, according to a federal audit that for unknown reasons was yanked from the public domain. A 45-page report was issued this month by the DHS Inspector General and Judicial Watch reviewed it thoroughly before the watchdog mysteriously pulled it from its website. Judicial Watch has repeatedly reached out to the DHS IG’s office but has received no response. Here’s the link that went bad as also noted by a few other outlets. To be sure, the findings are an embarrassment to the government because visa overstays have been a major national security issue for well over a decade. Several of the 9/11 hijackers remained in the U.S. after their visa expired to plan and carry out the worst terrorist attack on American soil. Just last year Judicial Watch obtained DHS figures showing that more than half a million foreigners with expired visas—like the 9/11 jihadists—remained in the country, thousands of them from terrorist nations like Pakistan, Iraq, Yemen, Libya and Syria. More than 45,000 Mexicans overstayed their visa, according to the DHS records, and thousands more from El Salvador, Ecuador, Venezuela and China. The visas are granted for “business or pleasure” and the foreigners come via sea or air port of entry. For nearly a decade a number of federal audits have offered the alarming figures associated with visa overstays, including one released back in 2011 that estimates half of the nation’s illegal immigrants entered legally with visas. This month’s DHS IG report exposes the disturbing reality that the U.S. government has done nothing to prevent another terrorist attack by dangerous elements that remain in the country with an expired visa. Many fall through the cracks because Immigration and Customs Enforcement (ICE), the DHS agency responsible for the task, must piece together information from dozens of systems and databases that aren’t reliable. The problem is so out of control that ICE must depend on often sketchy data provided by third parties such as commercial carrier passenger lists that often provide false visitor departure and arrival information.
Trump signs long-awaited cyber order, launching hacking defense review - President Donald Trump on Thursday signed a long-delayed cybersecurity executive order that launches sweeping reviews of the federal government’s digital vulnerabilities and directs agencies to adopt specific security practices. The directive is Trump’s first major action on cyber policy and sets the stage for the administration’s efforts to secure porous federal networks that have been repeatedly infiltrated by digital pranksters, cyber thieves and government-backed hackers from China and Russia. “The trend is going in the wrong direction in cyberspace, and it’s time to stop that trend and reverse it on behalf of the American people," White House Homeland Security Adviser Tom Bossert told reporters during a Thursday afternoon briefing. Cyber specialists say the order breaks little new ground but is vastly improved over early drafts, which omitted input from key government policy specialists. The final version, cyber watchers say, essentially reaffirms the gradually emerging cyber policy path of the past two administrations. But Bossert said that while the Obama administration made "a lot of progress" on cyber, that it didn't do "nearly enough."
Trump administration to move all federal IT into the cloud: Is it realistic? - On Thursday, US President Donald Trump signed his long-awaited executive order on cybersecurity, laying out his plans for addressing security in federal IT and across US infrastructure. The most ambitious mandate was that all federal IT systems move to the cloud. President Trump's homeland security adviser, Tom Bossert, said in a Thursday announcement that the government had spent too much time and money "protecting antiquated and outdated systems." Bossert cited the Office of Personnel Management (OPM) hack as evidence of failing legacy systems. Bossert said, "From this point forward, the President has issued a preference in federal procurement in federal IT for shared systems. We've got to move to the cloud and try to protect ourselves instead of fracturing our security posture." The executive order officially states: "Agency heads shall show preference in their procurement for shared IT services, to the extent permitted by law, including email, cloud, and cybersecurity services." It also calls for a report to be completed within 90 days describing the legal, budgetary, technical considerations for "shared IT services, including email, cloud, and cybersecurity services," along with a timeline for the initiatives and their potential cost-effectiveness. Peter Tran, the senior director of worldwide advanced cyber defense practice at RSA and former US Department of Defense employee, said the anchor for the executive order will initially be the NIST Cybersecurity Framework (CSF), to both assess current risk gaps and determine a strategy moving forward. This will be the pacesetter by which all building blocks will either rise or fall specifically on the call to action to go cloud in an expedited manner.....security being a forethought," Tran said. However, the effectiveness of a move to the cloud to improve security among these federal systems remains up to debate. John Pironti, cybersecurity expert and president of IP Architects, said that it could create a double-edged sword.
Anti-net neutrality spammers are flooding FCC's pages with fake comments - A bot is thought to be behind the posting of thousands of messages to the FCC's website, in an apparent attempt to influence the results of a public solicitation for feedback on net neutrality. Late last month, FCC chairman Ajit Pai announced his agency's plans to roll back an Obama-era framework for net neutrality, which rule that internet providers must treat all internet content equally. Since then, the FCC's public comments system has been flooded with a barrage of comments -- well over half-a-million responses at the time of writing -- in part thanks to comedian John Oliver, who raised the issue on his weekly show on Sunday. He asked Americans to leave comments in favor of keeping the rules. The FCC later said that it was hit by "multiple" cyberattacks shortly after the show aired designed to "bombard the FCC's comment system with a high amount of traffic to our commercial cloud host." The FCC, however, offered no evidence of the attacks, with at least one pro-net neutrality group expressing skepticism of the FCC's claims.But a sizable portion of those comments are fake and repeating the same manufactured response. So much so that more than 128,000 identical comments have been posted since the feedback doors were opened, now representing a significant slice of the comments on the FCC's feedback docket.
Any Half-Decent Hacker Could Break Into Mar-a-Lago - ProPublica - Two weeks ago, on a sparkling spring morning, we went trawling along Florida’s coastal waterway. But not for fish.We parked a 17-foot motor boat in a lagoon about 800 feet from the back lawn of The Mar-a-Lago Club in Palm Beach and pointed a 2-foot wireless antenna that resembled a potato gun toward the club. Within a minute, we spotted three weakly encrypted Wi-Fi networks. We could have hacked them in less than five minutes, but we refrained.A few days later, we drove through the grounds of the Trump National Golf Club in Bedminster, New Jersey, with the same antenna and aimed it at the clubhouse. We identified two open Wi-Fi networks that anyone could join without a password. We resisted the temptation.We have also visited two of President Donald Trump’s other family-run retreats, the Trump International Hotel in Washington, D.C., and a golf club in Sterling, Virginia. Our inspections found weak and open Wi-Fi networks, wireless printers without passwords, servers with outdated and vulnerable software, and unencrypted login pages to back-end databases containing sensitive information.The risks posed by the lax security, experts say, go well beyond simple digital snooping. Sophisticated attackers could take advantage of vulnerabilities in the Wi-Fi networks to take over devices like computers or smart phones and use them to record conversations involving anyone on the premises.“Those networks all have to be crawling with foreign intruders, not just ProPublica,” said Dave Aitel, chief executive officer of Immunity, Inc., a digital security company, when we told him what we found.
By sabotaging the 2020 census, Republicans make it harder to fight gerrymandering - The best way to fight gerrymandering is to prove to courts that electoral districts have been unfairly formed, a tactic that's been used successfully in places like North Carolina; but for this to work, you need good demographic data to show that the district is unfair, and for that, you need an accurate census.The next census is planned for 2020, and Republicans have turned it into a "train wreck" by gutting its budget and fearmongering about risks to immigrants who give data to government officials. Cathy O'Neil (previously) draws the line clearly between the ongoing sabotage of the census and the ongoing disenfranchisement project. Problem is, the census appears to be going through a crisis. The bureau's director recently announced his resignation amid concerns about inadequate funding. This is troubling, because statisticians won’t have good data to make their corrections unless there's sufficient money to do enough house-to-house sampling. Moreover, the quality of the census depends crucially on following norms and having respect for expertise, none of which seems guaranteed under President Trump. It’s possible that Republican self-interest will prevail. Although the party might benefit from undercounting minorities on a local level, it also has a big incentive to ensure that certain states with rapidly growing minority populations -- such as Texas -- are fully represented in Congress. Still, given what's at stake, it's a process that needs watching.
How Senators reacted to Comey dismissal – FT - (table) The FT has broken down how Republicans and Democrats have lined up on the issue, starting with members of the Senate intelligence committee, who are conducting their own probe, and the Senate judiciary committee, as the decision to appoint a special prosecutor falls to the US judicial branch.
Dutch Documentary May Have Contributed to Abrupt Dismissal of FBI Director Comey - Pam Martens - Six days after Zembla, a Dutch public broadcasting program, aired an investigation of U.S. President Donald Trump’s business ties to Russian oligarchs and mobsters, Trump fired the man in possession of a great many more details on that matter: FBI Director James Comey. Next, Trump announced that his law firm, Morgan, Lewis & Bockius, was providing a “certified” letter stating that he had no business interests in Russia. (That law firm, as ABC News was quick to point out, was itself named “Russia Law Firm of the Year” in 2016 by Chambers & Partners.) The Morgan, Lewis & Bockius letter was dismissed as meaningless by multiple tax experts since Trump could easily have investments with Russian partnerships and offshore entities. The letter pertained only to investments in which Trump is “sole or principal owner.” These omitted minority partnership entanglements are precisely what the Dutch documentary explored. From last Tuesday evening, when the news first broke that President Donald Trump had fired Comey, CNN has called in more than a dozen experts on everything from constitutional law to national security to Watergate to parse each utterance from the President in his Tweets or TV news interviews on the Comey matter. This mind-numbing, week-long repetition resulted in absolutely nothing that one could call substantive in terms of advancing the American public’s knowledge of the President’s longstanding and labyrinthine ties to Russian oligarchs and mobsters. In fact, it has clouded the real question that the Congressional Intelligence Committees and the FBI should be asking. The critical question is not whether Trump campaign associates colluded with Russia in the 2016 presidential election. That’s an important peripheral question but pales in comparison to the overarching question, which is: does Donald Trump have a long term business history with Russian criminal elements which renders him a national security risk to the United States.
Watergate's Bernstein Warns Trump White House "Potentially More Dangerous" Than Nixon's - Infamous Watergate journalist Carl Bernstein, having criticized both Comey and Clinton in recent months, is now taking aim at President Trump. In a Sunday interview on CNN,Bernstein said current White House conditions could be more dangerous than the Watergate scandal.As The Hill reports, Bernstein referred to President Trump's decision to fire former FBI Director James Comey last week. Comey was leading the FBI's investigation into the Russian meddling in the 2016 presidential election, including allegations that Trump's campaign colluded with Moscow."I think this is a potentially more dangerous situation than Watergate and we're at a very dangerous moment,""Because we are looking at the possibility that the president of the United States and those around him, during an election campaign, colluded with a hostile foreign power to undermine the basis of our democracy: free elections," Bernstein continued.Bernstein said the country does not yet know the facts."But what we do know is, is that the president of the United States seems to be doing everything in his power to keep us from knowing the facts," he said."Including firing the director of the FBI because, says the president of the United States, of 'this Russia thing.' So the question of a cover-up seems to me to have been answered a while ago."Bernstein said there is a cover-up going on to keep the public from knowing what happened."Whether that means the president of the United States obstructed justice or not, or those around him did, we don't know," he said. "But what we see is that at every turn, this president is impeding the ability of those who were chosen to investigate to do so...It's a truly dangerous moment. It's very different than Watergate."
Former Trump Employees Claim 30 Years Of Covert Taping - Once Even Used In Lawsuit -- Three former employees of Donald Trump claim to have personally witnessed him recording phone calls at Trump Tower in New York, and a fourth person said a recording of him was entered into evidence in a lawsuit - the Wall St. Journal reports.Mr. Trump sometimes taped phone conversations with associates and others from his Trump Tower office in New York, according to three people who say they have direct knowledge of the recordings.Mr. Trump had one or more recording devices that he used to tape his phone calls from his office, the three people said. All are former high-level employees who worked for Mr. Trump over a span of three decades. They said they saw devices in use recording phone calls.One employee claims Trump recorded 'virtually everything'"He recorded virtually everything in the office,” one former high-level Trump Organization employee said. “I know many of my conversations when I called him were recorded before and after I was working there.The new claims come on the heels of a Friday Tweet from the President suggesting former FBI Director James Comey better check himself before he further wrecks himself.James Comey better hope that there are no "tapes" of our conversations before he starts leaking to the press!— Donald J. Trump (@realDonaldTrump) May 12, 2017 Hours later, Comey announced he wouldn't be testifying before a closed session of the Senate Intelligence Committee.
U.S. lawmakers ask Trump to turn over any Comey tapes | Reuters: U.S. lawmakers on Sunday called on President Donald Trump to turn over any tapes of conversations with fired FBI chief James Comey, potentially setting up a showdown with the White House as Democrats considered a boycott of the vote on Comey's replacement. In a highly unusual move, Trump last week appeared to suggest on Twitter that he might have tapes of conversations with Comey and warned the former director of the Federal Bureau of Investigation against talking to the media. Trump and a White House spokesman declined to confirm or deny whether such tapes exist. Republican Senator Lindsey Graham of South Carolina said the White House must "clear the air" about whether there are any taped conversations. "You can't be cute about tapes. If there are any tapes of this conversation, they need to be turned over," Graham told NBC's "Meet the Press" program. Trump sparked a political firestorm when he abruptly fired Comey last week. The FBI has been investigating alleged Russian meddling in the U.S. election and possible ties between Moscow and the Trump campaign. Democrats have accused Trump of attempting to thwart the FBI's probe and have called for some type of independent inquiry into the matter. Trump has said he removed Comey because he was not doing a good job and that Comey had lost the support of FBI employees. Trump tweeted on Friday that "James Comey better hope that there are no 'tapes' of our conversations before he starts leaking to the press!"If there are recordings, Republican Senator Mike Lee of Utah told the "Fox News Sunday" program it was "inevitable" that they would be subpoenaed and the White House would have to release them.
ACLU Sues DOJ/FBI For "All Records Related To Trump's Dismissal Of FBI Director Comey" -- As he so often does, Trump took an already controversial decision last week and turned it into an absolute firestorm with one simple tweet. With Democrats already working themselves into a tizzy over the 'suspicious' timing of James Comey's abrupt dismissal, the cries of "witness intimidation" and comparisons to the Nixon administration quickly reached a fevered pitch from the Left with Trump's release of the following tweet:James Comey better hope that there are no "tapes" of our conversations before he starts leaking to the press! — Donald J. Trump (@realDonaldTrump) May 12, 2017 In fact, we're almost certain that Trump's tweet, at least in part, prompted the The American Civil Liberties Union's (ACLU) to file its Freedom of Information Act request today with the DOJ and FBI asking for all records related to President Trump’s dismissal of FBI Director James Comey. Painting White House interference with the ongoing FBI investigation of "Russian hacking" as a foregone conclusion, the ACLU's press release said that "the public has a right to know why Comey was fired so the president can be held accountable for any abuse of his position." “White House interference with any FBI investigation is incompatible with democratic safeguards, and that’s especially the case when the investigation involves the president or his associates. Political meddling with law enforcement investigations is a recipe for abuse of power,” said ACLU Hina Shamsi, director of the ACLU National Security Project. “The public has a right to know why Comey was fired so the president can be held accountable for any abuse of his position. It’s impossible to know the truth right now because the Trump administration has issued shifting explanations, each of which is increasingly troubling.” Among other things, the ACLU referenced the White House's rapidly changing story on the events leading up to Comey's dismissal as the primary reason for their FOIA request.
"He's Angry At Everyone": Trump Said To Plan "Huge Reboot" - Priebus, Bannon, Spicer Could May Be Fired In a report by Axios this morning, citing White House sources, President Trump is reportedly considering a "huge reboot" of his core staff and cabinet members that could lead to the termination of everyone from Chief of Staff Reince Priebus and chief strategist Steve Bannon, to counsel Don McGahn and press secretary Sean Spicer: "He's frustrated, and angry at everyone."According to Axios, the conversations intensified this week as the fallout from the Comey firing "pushed the White House from chaos into crisis" and notes that Trump's friends are telling him that many of his top aides don't know how to work with him, pointing out that "his approval ratings aren't rising, but the leaks are." As a result the advice he's getting is to "go big — that he has nothing to lose," the confidant said. "The question now is how big and how bold. I'm not sure he knows the answer to that yet." Additionally, Trump reportedly feels he has been "ill-served" by several of his Cabinet officials. Under threat are some of his key economic and domestic policy advisors, including:
- Wilbur Ross took what was perceived as a victory lap on a China trade announcement that does little new in actuality.
- Attorney General Jeff Sessions made a big announcement about increasing prison sentences, at the same time that Jared is working on criminal-justice reform.
- HHS Secretary Tom Price shares the blame for the glacial pace of health-care legislation.
Axios notes three caveats:
- i) no Cabinet member is expected to "go this soon", even though a West Wing shuffle looks likely. "One obstacle to recruiting new top aides is finding people who would have real clout with a president not prone to enforced order";
- ii) it could be just Trump venting: "Trump often talks about firing people when things go south and does not follow through on it. So it's possible these conversations are his way of venting, and seeking reassurance"
- iii) any internal moves could take a while: "Trump heads out on his first international trip at the end of the week. Also, there's an internal argument for minimizing drama by cutting people out of the information flow rather than firing them."
Ann Coulter trashes Trump: 'This is the great negotiator?' - Ann Coulter says she is ready to get off the Trump Train. The conservative author of "In Trump We Trust" told The Daily Caller on Sunday that President Trump is failing to live up to his promises, primarily his signature wall along the southern border. "People should start sending [Speaker] Paul Ryan bricks to indicate how much we want the wall," she quipped. "I’m not very happy with what has happened so far. I guess we have to try to push him to keep his promises," Coulter said. "This isn’t North Korea, and if he doesn’t keep his promises I’m out. This is why we voted for him." Coulter said the GOP's progress so far in a Trump administration is laughable. "Where is the bull in the china shop we wanted? That budget the Republicans pushed through was like a practical joke. ... Did we win anything? And this is the great negotiator?" Coulter asked. Trump, Coulter said, was supposedly the far-right's last chance. "Trump was our last shot. I kind of thought it was [Mitt] Romney, and then lo and behold like a miracle Trump comes along," she said. "I still believe in Trumpism. I have no regrets for ferociously supporting him, what choice did we have?" Coulter says she blames the Republican-controlled Congress for most of the delay in implementing Trump's agenda. "I do of course blame Congress most of all. They are swine. They only care about their own careers," Coulter accused. "Who knows how much of it is corruption and how much of it is pure stupidity."
Russian Election Meddling ‘Well Documented,’ Tillerson Says -- Russian interference in the 2016 U.S. election has been “well documented,” but it’s still in the interests of the U.S. to attempt to improve relations with Moscow, Secretary of State Rex Tillerson said. “I don’t think there’s any question that the Russians were playing around in our electoral processes,” Tillerson said in an interview on NBC’s “Meet the Press with Chuck Todd” on Sunday. He added that the impact of that meddling was “inconclusive.” Even so, “it’s in the interest of the American people, it’s in the interest of Russia, the rest of the world, that we do something to see if we cannot improve the relationship between the two greatest nuclear powers in the world,” Tillerson said. The top U.S. diplomat spoke before Donald Trump leaves on May 19 for his first overseas trip as president, and days after Trump fired FBI Director James Comey, who was leading the investigation into Russia’s meddling in the 2016 election campaign. Tillerson said the sudden dismissal of Comey, less than four years into a 10-year term, didn’t create concerns about how much independence he would have as America’s top diplomat.“I have a great relationship with the president. I understand what his objectives are. When I’m not clear on what his objectives are, we talk about it,” Tillerson said, adding that he would “never compromise my own values.” Tillerson said he didn’t know why Russian ambassador Sergey Kislyak was present at an Oval Office meeting this week between Trump and Russian Foreign Minister Sergei Lavrov. Kislyak is a central figure in the probe into Russian election meddling and the involvement of former National Security Adviser Mike Flynn. “You’d have to put that question to the White House staff and protocol people,” Tillerson said. “I can’t really answer that. I don’t know.”
Comey's Revenge: Leaks Memo To NYT Saying Trump Asked Him To End Flynn Investigation -- In what is seemingly becoming a daily event, the New York Times has just dropped yet another anonymously sourced bombshell on the White House. The latest provocative headline implies that President Trump directly asked former FBI Director James Comey to shut down an ongoing investigation of Trump’s former national security adviser, Michael Flynn, in an Oval Office meeting back in February shortly after Flynn was fired by the White House. Mr. Comey wrote the memo detailing his conversation with the president immediately after the meeting, which took place the day after Mr. Flynn resigned, according to two people who read the memo. The memo was part of a paper trail Mr. Comey created documenting what he perceived as the president’s improper efforts to influence an ongoing investigation. An F.B.I. agent’s contemporaneous notes are widely held up in court as credible evidence of conversations.“I hope you can see your way clear to letting this go, to letting Flynn go,”Mr. Trump told Mr. Comey, according to the memo. “He is a good guy. I hope you can let this go.”Mr. Trump told Mr. Comey that Mr. Flynn had done nothing wrong, according to the memo.Mr. Comey did not say anything to Mr. Trump about curtailing the investigation, only replying: “I agree he is a good guy.”This latest story allegedly comes from a memo that Comey wrote shortly after the meeting and is just part of a larger paper trail he created documenting what he perceived as the president’s improper efforts to influence an ongoing investigation. As the New York Times notes, an FBI agent’s contemporaneous notes are widely held up in court as credible evidence of conversations.
Why Did the FBI Leak the Comey Memo? - naked capitalism - Yves here. Trust me. Just read or listen to this Real News Network interview. (video & transcript)
Chaffetz ready to issue subpoena for Comey memo | TheHill House Oversight Committee Chairman Jason Chaffetz (R-Utah) indicated he’s willing to issue a subpoena to obtain a memo authored by former FBI Director James Comey stating that President Trump asked the FBI to stop its probe of Michael Flynn.Chaffetz tweeted Tuesday night that his committee "is going to get the Comey memo, if it exists. I need to see it sooner rather than later. I have my subpoena pen ready.".@GOPoversight is going to get the Comey memo, if it exists. I need to see it sooner rather than later. I have my subpoena pen ready. — Jason Chaffetz (@jasoninthehouse) May 16, 2017 Later Tuesday, Chaffetz sent a letter to acting FBI Director Andrew McCabe asking for all memos, summaries and recordings regarding Comey's communications with Trump. Speaker Paul RyanPaul RyanGOP nears total exasperation with Trump Chaffetz ready to issue subpoena for Comey memo House panel to examine border tax next week MORE (R-Wis.), through a spokeswoman, expressed support for Chaffetz's move. "We need to have all the facts, and it is appropriate for the House Oversight Committee to request this memo," Ryan press secretary AshLee Strong said. The New York Times reported hours earlier that, according to a memo authored by Comey, Trump asked the FBI stop investigating Flynn, his former national security adviser, over his ties to Russia.
Chaffetz demands Comey-Trump memos in letter to FBI - POLITICO: House Oversight Chairman Jason Chaffetz is demanding the FBI hand over all documents detailing communications between President Donald Trump and fired agency Director James Comey within the next week. The Utah Republican's request Tuesday comes after an explosive New York Times report that Trump asked Comey to put a stop to a federal investigation into his former National Security Adviser Michael Flynn. "If true, these memoranda raise questions as to whether the president attempted to influence or impede the FBI's investigation as it relates to Lt. Gen. Flynn," Chaffetz wrote to acting FBI Director Andrew McCabe. "So the committee can consider that question and others, provide, no later than May 24, 2017, all memoranda, notes, summaries, and recordings referring to or relating to any communications between Comey and the president." Comey detailed the conversation with Trump in a memo, reportedly one of several documents the former FBI chief wrote as he attempted to create a paper trail about his interactions with the president. “I hope you can let this go,” the president told Comey, according to the New York Times report.
NYT report: Trump told Comey to consider jailing reporters publishing leaks | TheHill: President Trump reportedly told now-ousted FBI Director James Comey to consider jailing reporters who publish leaked classified information, according to The New York Times. One of Comey's associates told the newspaper that the conversation occurred shortly after a joint meeting on Feb. 14 that included Vice President Pence and Attorney General Jeff Sessions. Following a terrorism threat briefing, Trump reportedly told everyone to leave the room except for the FBI director. The source told The Times that Trump then began discussing the leaks to the news media and asked Comey to consider jailing reporters for publishing classified information. According to the report, Trump also asked Comey to end the federal investigation into former national security adviser Michael Flynn. Following the meeting, Comey wrote in a memo that Trump told him, Flynn “is a good guy. I hope you can let this go.”
McConnell Calls for ‘Apolitical’ FBI Director, Less Trump Drama -- Senate Majority Leader Mitch McConnell said Tuesday that President Donald Trump should choose an "apolitical" FBI director, while adding he’d like to see "less drama" from the White House. In an interview with Bloomberg News on Tuesday, the Kentucky Republican said he recommended that Trump choose former Supreme Court nominee Merrick Garland to replace fired FBI Director James Comey. Last year, McConnell refused to allow a Senate confirmation hearing for Garland, who was nominated by President Barack Obama. "I think the most important thing is for the president to pick somebody who’s apolitical, who clearly has a deep law enforcement background," McConnell said. Someone like Garland, a judge and former federal prosecutor, would "create a kind of wow factor that the president fully understands the role of the FBI director."An apolitical nominee would rule out contenders like McConnell’s No. 2, Senate Republican Whip John Cornyn of Texas and former Republican Representative Mike Rogers of Michigan, who were among a group of eight people interviewed over the weekend for the job by Attorney General Jeff Sessions and Deputy Attorney General Rod Rosenstein. Cornyn said in a statement Tuesday that he told the Trump administration “the best way I can serve is continuing to fight for a conservative agenda in the U.S. Senate.” "Historically it’s been a solid law enforcement professional without a background in elective office," McConnell said. "That’s the kind of person who ought to be in the job and I think it would also make an important statement about the president himself."
Who Is Joseph Lieberman? Trump’s Top Choice For FBI Director Is A Supporter Of Mass Surveillance - If former Connecticut Sen. Joseph Lieberman becomes the new director of the Federal Bureau of Investigation, the agency will be run by one of America’s most outspoken supporters of mass surveillance. Lieberman has called for aggressive measures to crack down on government leaks, has tried to weaken whistleblower laws and has supported legislation that critics say would punish journalists. As FBI chief, he would be in a position to act on President Donald Trump’s reported desire to jail journalists who publish leaks of classified information.Lieberman is now reportedly the frontrunner for the FBI job. On Wednesday, after he met with Trump to discuss potentially taking fired FBI Director Jim Comey’s job, the president signaled his preference for the former Connecticut senator, aides told Politico.Lieberman currently works at Trump’s longtime law firm, Kasowitz, Benson, Torres and Friedman — a link prompting assertions that he would have an inappropriate conflict of interest for someone who would lead a law enforcement agency amid an investigation into the Trump administration’s contacts with foreign governments. Lieberman has in recent months publicly praised Michael Flynn — one of the key Trump figures in the law enforcement investigation — and his political group has previously labeled Trump a bipartisan problem-solver.Beyond his potential conflicts complicating the probe, Lieberman could also be a controversial nominee due to his positions on the law enforcement power that he would be in control of as FBI director. During his time in the Senate, Lieberman was one of the most ardent supporters of expanding government surveillance.
Senate Intel panel asks Comey to testify publicly | TheHill: The Senate Intelligence Committee has sent a request to former FBI Director James Comey to testify publicly in the wake of his firing by President Trump. Committee Chairman Richard Burr (R-N.C.) and ranking member Mark Warner(D-Va.) on Wednesday said they sent a letter to Comey asking him to testify during a public hearing as well as meet with members in a closed-door briefing. Warner said they hadn't received a response to the letter, but signaled he was optimistic Comey would testify. It was the committee’s second invitation after Comey last week declined to meet the committee behind closed doors, saying he wanted any testimony to be public. The Senate panel also sent a letter to Acting FBI Director Andrew McCabe requesting "any notes or memorandum" prepared by Comey tied to talks he had with White House or Justice Department officials about the FBI's investigation. Trump last week fired Comey, citing the FBI’s investigation into Russian election interference and links between Trump’s team and the Kremlin. The New York Times reported on Tuesday that Trump urged Comey to kill a probe into former national security advisor Michael Flynn, citing a memo written by Comey about the meeting. The White House has denied the report.
Justice Dept. names Mueller special counsel for Russia probe - POLITICO: The Justice Department on Wednesday named former FBI Director Robert Mueller to serve as special counsel investigating Russia's alleged involvement in the 2016 presidential election, including any possible involvement of President Donald Trump's campaign in that effort. Meeting the increasingly strident demands of Democratic lawmakers, Deputy Attorney General Rod Rosenstein tapped Mueller to oversee the probe, despite recent White House statements that they viewed the appointment of a special counsel as unnecessary."Based upon the unique circumstances, the public interest requires me to place this investigation under the authority of a person who exercises a degree of independence from the normal chain of command," Rosenstein said in a statement. "A special counsel is necessary in order for the American people to have full confidence in the outcome. Our nation is grounded on the rule of law, and the Public must be assured that government officials administer the law fairly."As special counsel, Mueller will have broad investigatory powers to look into how Russia may have influenced the 2016 election. The investigation, which could take months and will follow a separate track from congressional inquiries, likely will involve accessing classified documents and interviews, and Mueller can also convene grand juries and seek indictments if he deems it appropriate. He will have access to all the information the FBI and Justice Department have compiled so far.Trump said in a statement after the announcement that he expected the probe would find no collusion between his 2016 White House campaign and foreign countries."As I have stated many times, a thorough investigation will confirm what we already know – there was no collusion between my campaign and any foreign entity," Trump said. "I look forward to this matter concluding quickly."
Former FBI Director Mueller Appointed Special Counsel Of Russia Probe -- The Department of Justice has just announced the appointment of former FBI Director Robert Mueller as special counsel to oversee the federal investigation into Russian interference in the 2016 election, including potential collusion between Trump campaign associates and Russian officials. According to a letter obtained by CNN, Mueller was appointed by Deputy Attorney General Rod Rosenstein who has promised that Meuller will operate with a "degree of independence" from the DOJ. Here is the full press release from the DOJ: "In my capacity as acting Attorney General, I determined that it is in the public interest for me to exercise my authority and appoint a Special Counsel to assume responsibility for this matter. My decision is not a finding that crimes have been committed or that nay prosecution is warranted. I have made no such determination. What I have determined is that based upon the unique circumstances, the public interest requires me to place this investigation under the authority of a person who exercises a degree of independence from the normal chain of command."Mueller, 72, served as FBI director under Presidents George W. Bush and Barack Obama and was the longest serving head of the bureau since J. Edgar Hoover. In the aftermath of the Sept. 11 attacks, as the U.S. was ramping up security, he joined then-Deputy Attorney General Comey in threatening to resign if the White House overruled a Justice Department opinion that domestic wiretapping without a warrant was unconstitutional.
How a Special Counsel Alters the Russia Investigation — The decision by Deputy Attorney General Rod J. Rosenstein to appoint the former F.B.I. director Robert S. Mueller III as special counsel for the criminal investigation into Russia’s interference in the 2016 election has transformed the inquiry and increased the potential risk it poses to the Trump administration. Mr. Rosenstein, who was overseeing the investigation because Attorney General Jeff Sessions recused himself, had resisted pressure to take that step. But recent events — including President Trump’s firing of James B. Comey as F.B.I. director, in which Mr. Rosenstein played a role — made that resistance increasingly untenable. Mr. Rosenstein’s letter gave Mr. Mueller the authority to look into not only links or coordination between Russia and Trump campaign officials, but also “any matters that arose or may arise directly from the investigation.” And it included a reference to a Justice Department regulation that permits special counsels to investigate attempts to impede their inquiry — like obstruction of justice and witness intimidation. That mandate would seemingly give Mr. Mueller a writ, if he wants, to investigate whether Mr. Trump’s interactions with Mr. Comey amounted to obstruction of justice. Given the circumstances, “he is required to look” at whether there was obstruction of justice, said Julie O’Sullivan, a former federal prosecutor who teaches criminal law at Georgetown University. “He can’t ignore this.” Discussion of that possibility has spiked since Mr. Trump fired Mr. Comey. The president told NBC News that he had been thinking about his dissatisfaction with the Russia investigation when he decided to fire Mr. Comey, and seemingly threatened him in a Twitter post, saying Mr. Comey “better hope” there were no tapes of their conversations. And in a February memo, Mr. Comey recounted Mr. Trump’s pressuring him to drop the related investigation into Michael T. Flynn, the former national security adviser. Normally, United States attorneys directly oversee criminal investigations, working with the head of the Justice Department’s National Security Division in counterintelligence matters. But their decisions are subject to the oversight and control of the attorney general. In cases that raise questions about high-ranking executive branch officials, the attorney general — and here, Mr. Rosenstein is acting in that role — can appoint a special counsel to run a particular investigation with greater autonomy from the president’s political appointees.
WH told about special prosecutor appointment moments before it went public | TheHill: The White House was reportedly not aware of the special counsel appointment until shortly before it was made public on Wednesday. According to a report by CNN, Trump was meeting FBI director candidates when the White House was informed that a special prosecutor was appointed to oversee the Russia investigation. "It's still sinking in," one administration official said told CNN. "We were told about it. Not asked about it." The Justice Department on Wednesday made the decision to appoint the former FBI Director Robert Mueller as special counsel to spearhead the investigation into Russian interference in the 2016 election and alleged collusion between Russian government officials and the members of Trump's campaign. The decision was made in the wake of reports that claimed that Trump asked the now-ousted FBI Director James Comey to consider dropping the FBI investigation of the former national security adviser Michael Flynn.White House spokesman Sean Spicer on Monday said that there is "no need" for a special prosecutor, arguing that the ongoing investigations are enough to adequately probe the allegations."There's, frankly, no need for a special prosecutor. We've discussed this before," Spicer said according to CNN.
The Scope of the Special Counsel Appointment Is Totally Inadequate - EmptyWheel - Rod Rosenstein just appointed former FBI Director (and, before that, US Attorney) Robert Mueller as Special Counsel to take over the investigation into Trump and his associates.I’m agnostic about the selection of Mueller. He has the benefit of credibility among FBI Agents, so will be able to make up for some of what was lost with Jim Comey’s firing. He will be regarded by those who care about such things as non-partisan. With Jim Comey, Mueller stood up to Dick Cheney on Stellar Wind in 2004 (though I think in reality his willingness to withstand Cheney’s demands has been overstated). But Mueller has helped cover up certain things in the past, most notably with the Amerithrax investigation.My bigger concern is with the scope, which I believe to be totally inadequate. Here’s how the order describes the scope:
- (b) The Special Counsel is authorized to conduct the investigation confirmed by then-FBI Director James 8. Comey in testimony before the House Permanent Select Committee on Intelligence on March 20, 2017, including:
- (i) any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump; and
- (ii) any matters that arose or may arise directly from the investigation; and
- (iii) any other matters within the scope of 28 C.F.R. § 600.4(a).
As I read this, it covers just the investigation into ties between the Russian government and people associated with Trump’s campaign. Presumably, that includes Mike Flynn, Paul Manafort, and Carter Page, among others. But there are other aspects of the great swamp that is the Trump and Russia orbit that might not be included here. For example, would Manafort’s corrupt deals with Ukrainian oligarchs be included? Would Flynn’s discussions with Turkish officials, or Rudy Giuliani’s attempt to excuse Turkey’s violation of Iran sanctions? Would the garden variety money laundering on behalf of non-governmental Russian mobbed up businessmen be included, something that might affect Manafort, Jared Kushner, or Trump himself?
Democrats get a special counsel – but still want more - Congressional Democrats seeing a big political payoff from President Donald Trump’s troubles rejoiced as they got what so many had demanded: a special counsel to oversee the federal investigation into possible Russian ties to Trump’s 2016 campaign.Yet they still weren’t satisfied.Democrats on Thursday continued to want an independent commission or special congressional panel, called a select committee, to probe the Russia-Trump reports.And they wanted the investigations already underway by the Intelligence committees in the House of Representatives and the Senate to keep going, a sentiment Republicans shared.Democrats sense that their bid to gain the 24 seats in the House of Representatives and three Senate seats they need to win control of the chambers next year is getting tantalizingly easier. They claim, though, that their motives are not political. Nonsense, said Roger Pilon, founding director of the Center for Constitutional Studies at the Libertarian-leaning Cato Institute.
Appointment of Mueller could complicate other probes into alleged Russian meddling WaPo - Congressional probes related to alleged Russian meddling in the 2016 election are likely to be complicated or stalled by the appointment of former FBI director Robert S. Mueller III as a special counsel investigating the same topic, despite pledges by some lawmakers Thursday to forge ahead. Mueller has resources and a mandate lawmakers know they cannot match, and is the only one who can bring criminal charges — except against the president himself. Not responding to his subpoenas also comes with the real threat of criminal prosecution. Sen. Lindsey O. Graham (R-S.C.), a member of the Senate Judiciary Committee, said his group would probably “have a hard time finding a lane now,” and that when it comes to his panel’s probe, Mueller’s appointment “probably well shuts it down.” But other lawmakers leading committee probes contended that Mueller’s appointment would do nothing to affect the scope of their investigations. “We’ve got a job to do, we’ve got an investigation to run and a report to write,” said Rep. K. Michael Conaway (R-Tex.), who is running the House Intelligence Committee’s probe. “I don’t believe it’ll have an impact on us at all.” But behind closed doors, lawmakers are growing increasingly nervous that with Mueller’s rise, their committee probes may be pushed aside — especially if he chooses to pursue a broad inquiry encompassing everything from the earliest allegations of Russian hacks to the circumstances that led to the firing of former FBI director James B. Comey. Justice Department officials said Mueller would likely conduct his investigation almost entirely independent of Congress. But congressional investigators must take pains not to bump heads with the FBI’s inquiry. Committee leaders have already been having talks with senior Justice Department officials to “deconflict” their efforts — but lawmakers worry that if Mueller widens the scope of his investigation, they may have few witnesses at their disposal.
The Special Council Inquisition – Bad For Trump – And All of Us - The Trump administration made a huge mistake by not preventing the just announced special council investigation into the alleged, but likely non-existing "Trump-Russia" connections: The Justice Department appointed a special counsel Wednesday to investigate possible coordination between President Trump’s associates and Russian officials — a clear signal to the White House that federal investigators will aggressively pursue the matter despite the president’s insistence that there was no “collusion’’ with the Kremlin. The move marks a concession by the Trump administration to Democratic demands for the investigation to be run independently of the Justice Department. Calls for a special counsel intensified after Trump fired FBI Director James B. Comey last week. It is weird that the WaPo report above calls this "a concession by the Trump administration to Democratic demands for the investigation". It further states that the White House was not informed about it until it had been made:The White House did not learn of Rosenstein’s decision until just 30 minutes before the public announcement was made. Anyway. This is bad and the Trump administration should have pulled all strings to prevent it. Such investigations NEVER stick to their original, limited tasks but extend further and further. The order the Acting Attorney General wrote includes language which allows for nearly unlimited digging in "any matters that arose or may arise directly from the investigation.” It will thereby continue until -inevitably- some dirt will be found that can be blown out of all proportion and lead to prosecutions or impeachment. The Democrats, and especially progressives, work against their voters interest when they pursue a Trump impeachment which would let Vice President Pence take the White House: Pence is a horror—fiscal sadist, misogynist, homophobe, lover of the carceral state. Pence is way more conservative than Trump. With Republicans in power in Congress he could easily implement all the horrific policies he ever dreamed of. But the borg and the Democratic leadership are not concerned about that:Democrats cheered the [special council] announcement as a step forward in resolving the unanswered questions about Russian meddling in last year’s presidential election — and whether the president or anyone at the White House has interfered with the investigation. Trump believes that better relations with Russia are important for the well-being of the United States, Pence would likely pursue an anti-Russian policy. That, I believe, is the real issue here.
Bharara tweets out definition of ‘backfired’ –- A former U.S. attorney who was fired by President Trump on Wednesday tweeted out the definition of “backfired” following reports that the Justice Department had appointed a special prosecutor to investigate Russian election interference. Preet Bharara’s post came after a series of previous tweets he had shared commenting on the decision, and simply read "Urban Dictionary: backfired." Urban Dictionary: backfired https://t.co/FhPj9Xxiag — Preet Bharara (@PreetBharara) May 18, 2017Urban Dictionary’s entry for “backfired” describes it as “an attempt to fix something in which the fixing actually makes the situation worse for you. Common on the internet when an argument ‘backfires’ and makes you look stupid,” the entry adds.Deputy Attorney General Rod Rosenstein on Wednesday announced that the Department of Justice has appointed Mueller special counsel for its Russia investigation.Rosenstein added that Mueller, a former prosecutor who helmed the FBI for 12 years, had accepted the role. Mueller’s appointment follows Trump’s unexpected firing of former FBI Director James Comey last week.Comey’s ouster came amid the FBI’s probe of Russian intrusions in the 2016 race, including possible ties between Russia and Trump’s campaign.
The Impeachment Trap: Be Careful What You Wish For - In These Times: Donald Trump’s abrupt firing of an FBI director who was leading the investigation of the Trump campaign’s possible collusion with Russia has sparked a new flurry of calls for impeachment. The impulse is understandable. Comey’s firing is just the latest in a litany of outrageous behavior that’s shredding the credibility of the presidency: from the financial conflicts of interest to the pathological lying to the authoritarian attacks on the judicial branch and the press. But outrage aside, we must keep one thing in mind: how progressives and Democrats approach impeachment could shape our democracy and the domestic political landscape for a generation. We must focus on what is best for the American people, not on what is worst for our so-called president. I believe it would be a major strategic blunder for the Democratic Party to fall for what I call the Impeachment Trap—the powerful temptation to lead the charge for impeachment without considering the strategic implications. If Trump were impeached and convicted, Vice President Mike Pence, a right-wing, evangelical ideologue, would be a much more reliable and competent rubber stamp for the conservative policy agenda. Trump, for all his failings, cannot be counted on to support conservative Republican orthodoxy. While his cabinet picks and early policy proposals have largely catered to right-wing ideology, his policy flip-flops and incompetence make him a very unreliable partner for congressional Republicans. In particular, his positions on Russia, trade, entitlements, and deficits are antithetical to Republican dogma, and recently Trump even applauded Australia’s single payer health care system. And thus far, most of his attacks on immigrants and Muslim refugees have been turned aside by a wall of public outrage and judicial rulings, although we will need to remain extraordinarily vigilant about an emboldened ICE. Pence, on the other hand, who was given a 99 percent rating from the American Conservative Union, would be much more likely to cut Social Security, push National Right to Work, and try to restrict gay marriage, and would probably treat immigrants and refugees just as badly, in order to court the Trump base.
Conservatives begin to whisper: President Pence - Not since the release of the Access Hollywood tape, in which Donald Trump bragged about groping women by the genitals, have some conservatives thought so seriously, if a bit wistfully, about two words: President Pence. The scandals clouding Trump’s presidency — including, most recently, his firing of FBI Director James Comey, his alleged leak of classified information to Russian officials, and reports that he urged Comey to drop an investigation into a top aide — have raised once more the possibility that Trump could be pushed aside and replaced by Vice President Mike Pence.“If what the [New York Times] reported is true, Pence is probably rehearsing,” one House Republican who asked not to be named quipped Wednesday. “It’s just like Nixon. From the standpoint that it’s never the underlying issue, it is always the cover-up.” The still far-fetched proposition of removing Trump from office has increasing appeal to Republicans who are growing weary of defending Trump and are alarmed by his conduct in office. But such whispers are cringe-worthy for Pence and his aides, who have made an art of not upstaging the mercurial president. Pence’s press secretary declined to comment for this article. Still, some conservatives are hinting that Pence looks like a particularly good alternative right now, especially as the Justice Department moves ahead with a special prosecutor for the FBI’s Russia probe.Erick Erickson, a conservative pundit who was a strong Never Trumper but then pledged to give the president a chance, wrote on Wednesday that Republicans should abandon the president because they “have no need for him with Mike Pence in the wings.” And conservative New York Times op-ed writer Ross Douthat, argued that abandoning Trump now should be easier because someone competent is waiting in the wings. “Hillary Clinton will not be retroactively elected if Trump is removed, nor will Neil Gorsuch be unseated,” Douthat wrote in Wednesday’s Times.
Pence Takes Steps to Build War Chest as White House Stumbles - While President Donald Trump’s White House grapples with the fallout from his firing of the former FBI director, Vice President Mike Pence has taken steps to begin building his own political war chest. Pence launched Great America Committee, a leadership PAC, a move that will enable him to channel money to congressional Republicans ahead of the 2018 midterm elections. The political action committee’s registration was posted Wednesday on the Federal Election Commission website. “The Vice President is playing a leading role in passing legislation on the Hill,” said Nick Ayers, a senior adviser to Pence in the 2016 campaign who will be running the PAC. “He wants to support House and Senate members who are helping pass the president’s agenda.” It’s unusual for vice presidents to set up their own fundraising vehicles. Neither Joseph Biden nor Dick Cheney, the two vice presidents who preceded Pence, had one while in office. It’s not entirely unprecedented, though: George H.W. Bush formed the Fund for America’s Future when he was preparing for his 1988 presidential run. “Launching a leadership PAC sometimes signals an intent to run for higher office, which in Pence’s case, has been a topic of public interest ever since he was first nominated,” said Sheila Krumholz, executive director of the Center for Responsible Politics, which studies money in politics. The move comes as President Donald Trump’s biggest campaign promises -- such as overhauling the U.S. tax code and replacing the Affordable Care Act -- face stronger headwinds following reports that he asked former FBI Director James Comey to drop an investigation into former National Security Adviser Michael Flynn. Some Republican lawmakers have raised concerns that his agenda will stall as a result of the controversy.
Don’t Fear President Pence, Liberals. Welcome Him - “If Trump were impeached and convicted, Vice President Mike Pence, a right-wing, evangelical ideologue, would be a much more reliable and competent rubber stamp for the conservative policy agenda,” wrote Jeff Alson at In These Times. Megan Carpentier, writing at Dame, argued that “Pence may not tweet like a Ritalin-addicted teenager with an impulse-control problem, a deep sense of entitlement, and something to prove, and he probably has the good sense not to yell at other world leaders and constantly publicly praise the most murderous ones ... but in terms of actual, actionable policy decisions, the idea that Mike Pence would somehow be preferable to the man who is enacting every policy Mike Pence would himself enact is, and always was, the product of a fevered imagination.” But Cliston Brown, a columnist at the Observer (which is owned by the family of Jared Kushner, Trump’s son-in-law and a senior adviser), offered the most apocalyptic take on a Pence presidency. “While Pence clearly has more self-control and self-awareness than Trump, that’s exactly what makes him more dangerous. He has all the same ideas and goals as Trump—and, as an added bonus, a religious-right agenda that’s even worse—and a much better chance of actually implementing them,” Brown wrote. Trump’s presidency will continue to be a smoldering ruin, allowing Democrats to retake the House in 2018 and the White House in 2020 and putting the party “in a position to control the country for a decade.” By contrast, Brown argued, President Pence would win broad approval, cementing Republican control of government until 2024— at which point the Republicans could have a 7-2 Supreme Court majority that would cast a reactionary shadow for the next half-century.There’s no question that Pence, a creature of the religious right, would be a terrible president, although in ways different than Trump. As I argued in mid-November, when this meme first took hold on the left, “A Pence presidency would be one particular nightmare, the rule of Trump another one entirely. To use the language of Dungeons and Dragons: Pence is Lawful Evil and Trump is Chaotic Evil.” Trump is more likely to blunder into a nuclear war, while Pence is more likely to push America down the road to a rigid theocracy. The worst-case scenario under Trump is the world of Mad Max, while under Pence it would be The Handmaid’s Tale.
A Monster Eating the Nation --Kunstler --Is there any question now that the Deep State is preparing to expel President Donald Trump from the body politic like a necrotic organ? The Golden Golem of Greatness has floundered pretty badly on the job, it’s true, but his mighty adversaries in the highly politicized federal agencies want him to fail spectacularly, and fast, they have a lot of help from the NY Times / WashPo / CNN axis of hysteria, as well as such slippery swamp creatures as Lindsey Graham. There are more problematic layers in this matter than in a Moldavian wedding cake. America has been functionally ungovernable for quite a while, well before Trump arrived on the scene. His predecessor managed to misdirect the nation’s attention from the cumulative dysfunction with sheer charm and supernatural placidity — NoDrama Obama. But there were a few important things he could have accomplished as chief exec, such as directing his attorney general to prosecute Wall Street crime (or fire the attorney general and replace him with someone willing to do the job). He could have broken up the giant TBTF banks. He could have aggressively sponsored legislation to overcome the Citizens United SOTUS decision (unlimited corporate money in politics) by redefining corporate “citizenship.” Stuff like that. But he let it slide, and the nation slid with him down a greasy chute of political collapse. Which we find embodied in Trump, a sort of tragicomic figure who manages to compound all of his weaknesses of character with a childish impulsiveness that scares folks. It is debatable whether he has simply been rendered incompetent by the afflictions heaped on by his adversaries, or if he is just plain incompetent in, say, the 25th Amendment way. I think we’ll find out soon enough, because impeachment is a very long and arduous path out of this dark place. The most curious feature of the current crisis, of course, is the idiotic Russia story that has been the fulcrum for levering Trump out of the White House. This was especially funny the past week with the episode involving Russian Foreign Minister Lavrov and Ambassador Kislyak conferring with Trump in the White House about aviation security around the Middle East. The media and the Lindsey Graham wing of the Deep State acted as if Trump had entertained Focalor and Vepar, the Dukes of Hell, in the oval office. Why do you suppose nations employ foreign ministers and ambassadors, if not to conduct conversations at the highest level with other national leaders? And might these conversations include matters of great sensitivity, that is, classified information? If you doubt that then you have no understanding of geopolitics or history.
Comey-Probing Congressman Announces Early Resignation From Politics --Just a month after comments that he had begun exploring employment possibilities outside of Congress, Politico reports Rep. Jason Chaffetz is expected announce today that he is resigning before the end of this congressional term, according to three sources familiar with his plans. As Politico details, Chaffetz did not respond to a request for comment Wednesday evening or Thursday morning.Multiple sources say he will leave Congress on June 30.Chaffetz, 50, is chairman of the House Oversight and Government Reform Committee, the top investigative body in the chamber.He recently subpoenaed James Comey's memos, and invited the fired FBI director to testify next week before his panel. Additionally, the U.S. prosecutor overseeing price-fixing probes is said to step-down...(via Bloomberg) Brent Snyder, the head of criminal enforcement at the U.S. Justice Department’s antitrust division, is stepping down, according to two people familiar with the matter.
Mueller to ask Congress to step back Russia investigations: report | TheHill: Robert Mueller, the newly appointed special counsel in the Russia probe, will likely ask the multiple congressional investigations to curtail their public hearings in order to proceed with his own investigation, according to a Thursday New York Times report. Five different Senate and House committees also have ongoing investigations into whether Russia interfered in the presidential election and possibly colluded with Trump campaign aides. Deputy Attorney General Rod Rosenstein appointed Mueller Wednesday night, a week after Trump abruptly fired FBI Director James Comey. The timing of Comey's dismissal raised questions about the timing and motives as the agency continued its probe into Russian ties. The New York Times reported earlier this week that Trump asked Comey in February to drop of his investigation into former national security adviser Michael Flynn and his ties to the Kremlin state. Comey reportedly kept a paper trail to document what he perceived as the president's improper attempts to influence his investigation. Rosenstein met with lawmakers Thursday afternoon in a closed-door meeting to discuss the recent turn of events.
Advisers Urge Trump to Hire Outside Lawyer in Russia Investigation — Several White House advisers and personal associates of President Trump have urged him to hire an experienced outside lawyer to help him deal with issues arising from a surging controversy over whether his campaign had ties to Russia, according to several people briefed on the conversations.The recommendations came even before a special counsel was named on Wednesday to lead the investigation into any collusion between the Trump presidential campaign and Russian officials.Mr. Trump’s aides and allies were said to be especially concerned by the revelation that James B. Comey, the F.B.I. director fired by Mr. Trump, has contemporaneous, detailed memos reconstructing conversations with the president.While the office of the president is represented by the White House counsel, presidents in the past have employed outside lawyers when their private actions were called into question. Mr. Trump has signaled he is likely to hire a new lawyer, but has not yet made a decision, according to three people who have spoken with him. Aides to Mr. Trump did not immediately comment on his discussions.
Rosenstein Knew Trump Planned To Fire Comey: Senators --Following Deputy Attorney General Rod Rosenstein's closed door briefing of the entire U.S. Senate, Senators filed out one-by-one to take questions from the press. During those questions, Senator Claire McCaskill (D-MO) dropped yet another bomb when she told reporters that Rosenstein confirmed that he knew that Comey would be fired before he ever even released his controversial letter dated May 9th (letter can be read here).Sen. Claire McCaskill says deputy AG Rod Rosenstein knew Comey was going to be removed prior to writing his memo https://t.co/GvqXNlzG3E— The Situation Room (@CNNSitRoom) May 18, 2017Of course, this is a key revelation and potentially explains why rumors surfaced that Rosenstein had threatened to resign after the Trump administration initially attributed Comey's dismissal to his letter. Trump later walked back those claims in an interview in which he told Lester Holt that he had been planning to fire Comey pretty much from day 1. Speaking later, Senator Durbin (D-IL) confirmed that Rosenstein said he discovered that Comey would be fired on May 8th, one day before his letter was released by the Trump administration on May 9th. That said, Durbin also confirmed that Rosenstein told the closed session that he did not face any pressure from the White House to draft the letter.Reporter: "Based on what you heard today, do you believe that the Deputy Attorney General knew before he wrote that memo that James Comey was going to be fired?"Durbin: "Yes. He knew the day before." Durbin: Rosenstein said he knew the day before he wrote his memo that Comey would be fired (further debunking White House's initial story) pic.twitter.com/JOc2D6P2YT
Trump Team Knew Flynn Was Under Investigation Before He Came to White House — Michael T. Flynn told President Trump’s transition team weeks before the inauguration that he was under federal investigation for secretly working as a paid lobbyist for Turkey during the campaign, according to two people familiar with the case. Despite this warning, which came about a month after the Justice Department notified Mr. Flynn of the inquiry, Mr. Trump made Mr. Flynn his national security adviser. The job gave Mr. Flynn access to the president and nearly every secret held by American intelligence agencies.Mr. Flynn’s disclosure, on Jan. 4, was first made to the transition team’s chief lawyer, Donald F. McGahn II, who is now the White House counsel. That conversation, and another one two days later between Mr. Flynn’s lawyer and transition lawyers, shows that the Trump team knew about the investigation of Mr. Flynn far earlier than has been previously reported.His legal issues have been a problem for the White House from the beginning and are at the center of a growing political crisis for Mr. Trump. Mr. Flynn, who was fired after 24 days in the job, was initially kept on even after the acting attorney general, Sally Q. Yates, warned the White House that he might be subject to blackmail by the Russians for misleading Vice President Mike Pence about the nature of conversations he had with the Russian ambassador to Washington. After Mr. Flynn’s dismissal, Mr. Trump tried to get James B. Comey, the F.B.I. director, to drop the investigation — an act that some legal experts say is grounds for an investigation of Mr. Trump for possible obstruction of justice. He fired Mr. Comey on May 9.
Russian officials thought they could use Flynn to influence Trump: report | TheHill: Russian officials boasted during the 2016 presidential race that they had cultivated such a strong relationship with former adviser Michael Flynn that they could use him to influence then-presidential candidate Donald TrumpDonald TrumpChelsea Handler recalls run-in with Ivanka: 'I can’t even with you' Russian officials thought they could use Flynn to influence Trump: report Krauthammer: White House ‘protesting too much’ on leaks MORE, CNN reported Friday. The bragging reportedly troubled U.S. intelligence officials, some of whom sought to stymie what kind of information was given to him after Trump was elected and Flynn was tapped as his national security adviser. Flynn resigned from the top White House post in February amid revelations that he had discussed sanctions with Russia's ambassador in the month before Trump took office and failed to disclose the nature of those communications with top administration officials. Intercepted communications of Russian officials signaled that they viewed Flynn as an ally, CNN reported. U.S. officials also cautioned that the Russians may have exaggerated their relationship with Flynn in the communications. Federal investigators are currently probing Russian efforts to meddle in the 2016 election, as well as possible collusion between the Trump campaign and Moscow. The New York Times reported on Tuesday that Trump asked FBI Director James Comey in February to shut down his agency's investigation into Flynn, which Trump later denied. Trump abruptly fired Comey last week. Trump has repeatedly denied collusion between his campaign and Russia, and has assailed the ongoing investigations as a "witch hunt" and a political ploy by Democrats to undermine his presidency.
Flynn stopped military plan Turkey opposed – after being paid as its agent -- One of the Trump administration’s first decisions about the fight against the Islamic State was made by Michael Flynn weeks before he was fired – and it conformed to the wishes of Turkey, whose interests, unbeknownst to anyone in Washington, he’d been paid more than $500,000 to represent.The decision came 10 days before Donald Trump had been sworn in as president, in a conversation with President Barack Obama’s national security adviser, Susan Rice, who had explained the Pentagon’s plan to retake the Islamic State’s de facto capital of Raqqa with Syrian Kurdish forces whom the Pentagon considered the U.S.’s most effective military partners. Obama’s national security team had decided to ask for Trump’s sign-off, since the plan would all but certainly be executed after Trump had become president.Flynn didn’t hesitate. According to timelines distributed by members of Congress in the weeks since, Flynn told Rice to hold off, a move that would delay the military operation for months.If Flynn explained his answer, that’s not recorded, and it’s not known whether he consulted anyone else on the transition team before rendering his verdict. But his position was consistent with the wishes of Turkey, which had long opposed the United States partnering with the Kurdish forces – and which was his undeclared client. Trump eventually would approve the Raqqa plan, but not until weeks after Flynn had been fired.
Mike Flynn Refuses To Honor Senate Subpoena -- Just a few short days after receiving a subpoena from the Senate Intelligence Committee,requesting documents relevant to the Committee's investigation into Russian interference with the 2016 election, AP reports that Senator Burr, the top Republican on the committee, says that Michael Flynn's lawyers say he will not honor subpoena. Last week, in a joint statement from Commttee chair Richard Burr (R-N.C.) and ranking member Mark Warner (D-Va.) the committee disclosed that it had first requested the documents in an April 28 letter to Flynn, but he "declined" to cooperate with the request. CNN also reported that the FBI had also issued subpoenas relating to Flynn's business records, so the ousted National Security Adviser is now at at the center of both investigations, although as disclosed, he did not comply with the committee's earlier request.And today we get confirmation from Senator Burr, via AP, that Michael Flynn's lawyers say he will not honor subpoena. This is perhaps not entirely surprising given Yahoo's reporting that late last month, fired National Security Adviser Michael Flynn—under investigation by federal prosecutors, with his lawyer seeking immunity for him to testify to Congress–met with a small group of loyalists at a restaurant in the northern Virginia suburbs. Saddled with steep legal bills, Flynn wanted to reconnect with old friends and talk about potential future business opportunities. But one overriding question among those present were his views on the president who had fired him as national security advisor. Flynn left little doubt about the answer. Not only did he remain loyal to President Trump, he indicated he and the president were still in communication. “I just got a message from the president to stay strong,” Flynn said after the meal was over, according to two sources who are close to Flynn and are familiar with the conversation, which took place on April 25.
Exclusive: Trump campaign had at least 18 undisclosed contacts with Russians - sources | Reuters: Michael Flynn and other advisers to Donald Trump’s campaign were in contact with Russian officials and others with Kremlin ties in at least 18 calls and emails during the last seven months of the 2016 presidential race, current and former U.S. officials familiar with the exchanges told Reuters. The previously undisclosed interactions form part of the record now being reviewed by FBI and congressional investigators probing Russian interference in the U.S. presidential election and contacts between Trump’s campaign and Russia. Six of the previously undisclosed contacts described to Reuters were phone calls between Sergei Kislyak, Russia's ambassador to the United States, and Trump advisers, including Flynn, Trump’s first national security adviser, three current and former officials said. Conversations between Flynn and Kislyak accelerated after the Nov. 8 vote as the two discussed establishing a back channel for communication between Trump and Russian President Vladimir Putin that could bypass the U.S. national security bureaucracy, which both sides considered hostile to improved relations, four current U.S. officials said. In January, the Trump White House initially denied any contacts with Russian officials during the 2016 campaign. The White House and advisers to the campaign have since confirmed four meetings between Kislyak and Trump advisers during that time. The people who described the contacts to Reuters said they had seen no evidence of wrongdoing or collusion between the campaign and Russia in the communications reviewed so far. But the disclosure could increase the pressure on Trump and his aides to provide the FBI and Congress with a full account of interactions with Russian officials and others with links to the Kremlin during and immediately after the 2016 election.The White House did not respond to requests for comment. Flynn's lawyer declined to comment. In Moscow, a Russian foreign ministry official declined to comment on the contacts and referred Reuters to the Trump administration. Separately, a spokesman for the Russian embassy in Washington said: “We do not comment on our daily contacts with the local interlocutors.”
Comey Agrees To Testify In Open Hearing Before Senate Intel Committee -- Former FBI Director James Comey has agreed to testify before the Senate Intelligence Committee in open session, Senators Richard Burr and Mark Warner announced on Friday. In a statement released late on Friday, the committee said the open hearing will be scheduled after Memorial Day. Sen. Richard Burr, committee Chair, said “the Committee looks forward to receiving testimony from the former Director on his role in the development of the Intelligence Community Assessment on Russian interference in the 2016 US elections, and I am hopeful that he will clarify for the American people recent events that have been broadly reported in the media."Committee Vice Chair Mark Warner added that he expects the former FBI director to "shed light on issues critical" to the committee's investigation and that Comey "deserves an opportunity to tell his story" and that the "American people deserve an opportunity to hear it." Since the hearing will take place after its original scheduled date next Wednesday, it will take place after Trump has returned from his global tour next weekend.
Comey, called ‘nut job’ by Trump, to testify in open session before Senate - A current White House official has drawn the scrutiny of federal investigators in the widening inquiry into Russia's interference in the 2016 election, a person familiar with the matter said Friday.The person, who is not authorized to comment publicly, declined to identify the White House official. The development was first reported by the Washington Post. The New York Times reported that Trump told Russian officials that Comey is a "nut job," and that dismissing him meant the pressure of the FBI's Russia probe has been "taken off." White House officials did not deny either story, but only stressed that Trump and his staff had no collusion with Russia.“As the President has stated before, a thorough investigation will confirm that there was no collusion between the campaign and any foreign entity," White House spokesman Sean Spicer said in response to the Post story that a White House official is now ensnared in the probe.The president himself labeled the ongoing FBI probe a "witch hunt" this week after the Justice Department appointed a special counsel to oversee it in the wake of Comey's firing. Earlier this week, revelations that Comey kept memos detailing his conversations with Trump, including one in which the president apparently pressed his former FBI director to drop the inquiry into former national security adviser Michael Flynn, roiled Washington. Sen. Richard Burr, R-N.C., chairman of the Senate Select Committee on Intelligence, said he hopes Comey's testimony brings some much-needed clarity.
Russia probe reaches current White House official, people familiar with the case say -- The law enforcement investigation into possible coordination between Russia and the Trump campaign has identified a current White House official as a significant person of interest, showing that the probe is reaching into the highest levels of government, according to people familiar with the matter. The senior White House adviser under scrutiny by investigators is someone close to the president, according to these people, who would not further identify the official. The revelation comes as the investigation appears to be entering a more overtly active phase, with investigators shifting from work that has remained largely hidden from the public to conducting interviews and using a grand jury to issue subpoenas. The intensity of the probe is expected to accelerate in the coming weeks, the people said.The sources emphasized that investigators remain keenly interested in people who previously wielded influence in the Trump campaign and administration but are no longer part of it, including former national security adviser Michael Flynn and former campaign chairman Paul Manafort. Flynn resigned in February after disclosures that he had lied to administration officials about his contacts with Russian Ambassador Sergey Kislyak. Current administration officials who have acknowledged contacts with Russian officials include President Trump’s son-in-law, Jared Kushner, as well as Attorney General Jeff Sessions and Secretary of State Rex Tillerson.
Current WH Official Is 'Significant Person Of Interest' In Russia Probe: WaPo --The NYT/Wapo bombs are flying early today. Shortly after the NYT times dropped a story alleging that Trump bragged to the Russians about firing the "nut job" James Comey, theWashington Post has just dropped another bomb of their own alleging that a senior White House adviser and "someone close to the president" is under scrutiny by investigators.The law enforcement investigation into possible coordination between Russia and the Trump campaign has identified a current White House official as a significant person of interest, showing that the probe is reaching into the highest levels of government, according to people familiar with the matter.The senior White House adviser under scrutiny by investigators is someone close to the president, according to these people, who would not further identify the official.Of course, today's bombshell du jour, comes to us courtesy of more anonymous sources. That said, this time they went even one step further and left out the target of their political hit job describing him/her only as "someone close to the president."Meanwhile, WaPo's 'sources' said that the investigation remains focused on Michael Flynn and Paul Manafort.The sources emphasized that investigators remain keenly interested in people who previously wielded influence in the Trump campaign and administration but are no longer part of it, including former national security adviser Michael Flynn and former campaign chairman Paul Manafort.Flynn resigned in February after disclosures that he had lied to administration officials about his contacts with Russian ambassador Sergey Kislyak. Current administration officials who have acknowledged contacts with Russian officials include Trump son-in-law Jared Kushner, as well as Cabinet members Attorney General Jeff Sessions and Secretary of State Rex Tillerson.People familiar with the investigation said the intensifying effort does not mean criminal charges are near, or that any such charges will result.
The Kushner-Comey Connection – Marcy Wheeler - The WaPo is reporting that the FBI probe into ties between Russia and Trump’s campaign is looking at a person still in the White House, in addition to Mike Flynn and Paul Manafort.The law enforcement investigation into possible coordination between Russia and the Trump campaign has identified a current White House official as a significant person of interest, showing that the probe is reaching into the highest levels of government, according to people familiar with the matter. Further down in the article, WaPo names some people that might be this other person of interest — but just one of them is actually in the White House. Current administration officials who have acknowledged contacts with Russian officials include President Trump’s son-in-law, Jared Kushner, as well as Attorney General Jeff Sessions and Secretary of State Rex Tillerson. Still further down, the WaPo covers what first got me believing Jared Kushner is the ultimate target of this probe: his meeting with Sergey Gorkov, the FSB-trained head of the sanctioned Russian bank, Vnesheconombank. The White House also has acknowledged that Kushner met with Kislyak, the Russian ambassador to the United States, in late November. Kushner also has acknowledged that he met with the head of a Russian development bank, Vnesheconombank, which has been under U.S. sanctions since July 2014. The president’s son-in-law initially omitted contacts with foreign leaders from a national security questionnaire, though his lawyer has said publicly he submitted the form prematurely and informed the FBI soon after that he would provide an update. As I’ve noted since, there was a lot of smoke coming from Kushner’s direction: first, SSCI’s explicit interest in interviewing Kusher and then two competing stories about a Trump request for CIA’s Sergey Kislyak dossier that only makes sense if the audience were Kushner, not Flynn. But there are a few more dots (in addition to people claiming to have confirmed this point) that support the idea that Kushner is the ultimate target here, and that Trump, in his clumsy attempts to protect Mike Flynn by firing Jim Comey, is actually attempt to protect the father of his grandchildren.
Trump Is a Cornered Megalomaniac—and That’s a Grave Danger to the Country - With a cascade of leaks, a war with the FBI, and the announcement of the appointment of a special counsel to investigate allegations of wrongdoing, Donald Trump’s grotesque presidency now hangs by a thread. By the hour, it seems, the possibility of impeachment, of him being declared incompetent to govern—or, at the very least, of his own party bringing irresistible pressure on him to resign—grows.1And as that pressure grows, so balloons the peril of our moment. For the 18 months that Trump has been center-stage politically, he has shown an extraordinary commitment to demagoguery, to flirtations with mob violence, to peddling conspiracy theories, to military grandstanding to distract attention from his problems, and to race-and-religion-baiting whenever the mood suits. He has demonstrated utter contempt for the separation of powers, extraordinary hostility to the free press, and a disconcerting fondness for dictators the world over. He has also shown himself to be brittle and thin-skinned, relishing the ability to use his vast platform to attack those he deems to be his personal “enemies,” but unable to tolerate disagreement or dissent when it is directed at him.2Why do I rehash all these known traits now? Because—cornered, humiliated, and increasingly in legal peril—Trump will likely resort to all of the tricks of the demagogue as he fights for his survival. This is a man who has never played fair in his life, who takes pleasure in inflicting hurt on those weaker than himself, and who believes that ideals, or simply basic decency, are mere annoyances in the one game that matters: the game of power.3The fanatics in his administration could gin up an emergency in order to clamp down on dissenters and muzzle the press. For months, progressives have worried about a “Reichstag fire” moment: about the possibility that Trump, Bannon, Miller, and the other fanatics who people this administration could gin up an emergency scenario that would allow them to clamp down on dissenters, muzzle the press, and neutralize the courts and domestic political opponents. We have worried about emergency decrees that would be used to justify enemies lists, databases that would monitor people by their religion, and so on. And yet, for all of his bluster, for all of his middle-of-the-night, id-revealing tweets, for all of his childish, semiliterate boasting about his unprecedented popularity, speaking skills, and understanding of complex policy issues, Trump has not yet unleashed his mob quite as fully as he might.4
Trump revealed highly classified information to Russian foreign minister and ambassador -- WaPo - President Trump revealed highly classified information to the Russian foreign minister and ambassador in a White House meeting last week, according to current and former U.S. officials, who said Trump’s disclosures jeopardized a critical source of intelligence on the Islamic State. The information the president relayed had been provided by a U.S. partner through an intelligence-sharing arrangement considered so sensitive that details have been withheld from allies and tightly restricted even within the U.S. government, officials said. The partner had not given the United States permission to share the material with Russia, and officials said Trump’s decision to do so endangers cooperation from an ally that has access to the inner workings of the Islamic State. After Trump’s meeting, senior White House officials took steps to contain the damage, placing calls to the CIA and the National Security Agency.“This is code-word information,” said a U.S. official familiar with the matter, using terminology that refers to one of the highest classification levels used by American spy agencies. Trump “revealed more information to the Russian ambassador than we have shared with our own allies.”
McMaster Responds To Wapo: "I Was In The Room, It Didn't Happen. The Story Is False" -- Following the latest provocative story from the Washington Post earlier suggesting that Trump shared "highly classified information" with Russian Foreign Minister Sergei Lavrov and Ambassador Sergey Kislyak during their White House meeting last week, National Security Advisor H.R. McMaster just spoke to reporters outside the White House to offer an unequivocal denial of the story: "The story that came out tonight as reported is false. I was in the room. It didn't happen." "There is nothing that the President takes more seriously than the security of the American people.The story that came out tonight as reported is false. The president the foreign minister reviewed a range of common threats to our two countries, including threats to civil aviation.At no time, at no time were intelligence sources or methods discussed. And the president did not disclose any military operations that were not already publicly known.Two other senior officials who were present, including the Secretary of State, remembered the meeting the same way and have said so. Their on-the-record accounts should outweigh those of anonymous sources.I was in the room. It didn't happen." National Sec. Adviser H.R. McMaster: "The story that came out tonight as reported is false" https://t.co/EAHxTuWill https://t.co/dEJfwYdqoz— CNN (@CNN) May 15, 2017
Report: McMaster Leaked to Washpo Details of the Trump-Russian Meeting to Save His Job - The left's favorite e-celebrity, Alex Jones, is out with a report tonight, citing his sources deep within the White House saying that McMaster himself leaked the details of the Trump-Russian meeting last week, in order to make himself indispensable. Jones claims this machiavellian move by Mcmaster was designed to make it impossible for Trump to fire him -- since it would expose Trump to salacious rumors and only serve to derail his agenda.Here is Jones doing a Periscope with Roger Stone, gabbing about the latest drama.
Trump confirms he shared intel with Russia’s foreign minister - In an Oval Office meeting the day after firing FBI Director James Comey, President Donald Trump reportedly shared intelligence from an allied nation's sources on an Islamic State plot to bring down passenger airplanes with laptop computers turned into bombs. The intelligence, which was apparently behind reports that the US will extend a ban on laptops to include flights from Europe, had been highly classified because of the sensitivity of its source. Statements from President Trump on Twitter and from White House National Security Advisor Lt. Gen. H.R. McMaster did not directly contradict details initially reported by the Washington Post late on Monday. McMaster said that no sources or methods were exposed in the conversation. However, the unnamed officials cited in the Post report were concerned that Trump's citing of the exact location "in the Islamic State’s territory where the US intelligence partner detected the threat" could expose the source. Tuesday morning, Trump tweeted: As President I wanted to share with Russia (at an openly scheduled W.H. meeting) which I have the absolute right to do, facts pertaining.... ...to terrorism and airline flight safety. Humanitarian reasons, plus I want Russia to greatly step up their fight against ISIS & terrorism. — Donald J. Trump (@realDonaldTrump) May 16, 2017 While it may have fallen within Trump's purview to share the data, the passing along of sensitively sourced intelligence from another country to Russian authorities could have a significant impact on the US intelligence community's ability to share intelligence with other allied countries. That could have far-reaching implications for the Central Intelligence Agency and National Security Agency, both of which depend on shared access to data from counterpart organizations in the "Five Eyes" group (which also includes the United Kingdom, Australia, Canada, and New Zealand), as well as NATO and Middle Eastern allies, for intelligence in some areas of great concern for US national security policymakers.
McMaster: Trump’s sharing of sensitive intelligence with Russia was ‘wholly appropriate’ –-- President Trump's national security adviser said Tuesday that the president's decision to reveal highly classified information during a meeting with Russian officials last week was "wholly appropriate" — the latest attempt by the White House to contain the explosive disclosure that Trump potentially jeopardized a crucial intelligence source on the Islamic State. H.R. McMaster, the president's top security adviser, repeatedly described the president's actions in a press briefing just a day after a Washington Post story revealed that Trump had shared deeply sensitive information with Russian Foreign Minister Sergei Lavrov and Ambassador Sergey Kislyak during an Oval Office meeting last week. "In the context of that discussion, what the president discussed with the foreign minister was wholly appropriate to that conversation and is consistent with the routine sharing of information between the president and any leaders with whom he’s engaged," McMaster said. "It is wholly appropriate for the president to share whatever information he thinks is necessary to advance the security of the American people. That’s what he did." McMaster refused to confirm whether the information the president shared with the Russians was highly classified. However, because the president has broad authority to declassify information, it is unlikely that his disclosures to the Russians were illegal — as they would have been had just about anyone else in government shared the same secrets. But the classified information he shared with a geopolitical foe was nonetheless explosive, having been provided by a critical U.S. partner through an intelligence-sharing arrangement considered so delicate that some details were withheld even from top allies and other government officials.
McCain: Trump scandals reaching 'Watergate size and scale' | TheHill: Arizona Sen. John McCain (R) reportedly said Tuesday that scandals within President Trump's administration are reaching a "Watergate size and scale." McCain made the statement at a International Republican Institute dinner on Tuesday night. Multiple reporters said that during a speech at the event, McCain compared recent reports surrounding Trump's administration to Watergate.McCain's statement came just hours after a bombshell report that Trump asked former FBI Director James Comey inFebruary to stop his investigation of former national security adviser Michael Flynn. Trump has faced a major fallout over the last week following his surprise firing of Comey and reports that he revealed highly confidential information to Russian diplomats. McCain also reportedly criticized Trump during his speech, calling it "unacceptable" to have allowed Russian Foreign Minister Sergey Lavrov into the Oval Office. "I've known Lavrov for 30 years&he's an old KGB stooge&Putin is a murderer. To have the guy in the Oval Office...it's unacceptable " -McCain
White House scrambles to limit damage after latest bombshell | TheHill: The White House scrambled on Tuesday to limit the damage from President Trump’s latest controversy — even as an explosive new report said the president sought to quash an FBI investigation into his former national security adviser, Michael Flynn. The report from The New York Times said former FBI Director James Comey, whom Trump fired last week, had written a memo shortly after the meeting with Trump to document the White House pressure. “I hope you can let this go,” Trump told Comey, according to a memo read to a reporter from the Times by an associate of the ex-FBI director.The Times report, which was quickly denied by the White House, immediately led to questions about whether Trump had obstructed the justice system with his actions. It also suggested that Comey might have a long paper trail to use with Trump. The report was published in the midst of a separate White House crisis over a report that Trump had revealed highly classified information during an Oval Office meeting with Russian officials. National security adviser H.R. McMaster, who replaced Flynn, sought to defuse the situation, insisting on nine separate occasions that the discussions were “wholly appropriate” and amounted to a normal exchange of information. “What the president discussed with the foreign minister was wholly appropriate to that conversation and is consistent with the routine sharing of information between the president and any leaders with whom he’s engaged,” McMaster told reporters during a tense 11-minute Q&A session at the White House. But McMaster raised new questions when he suggested that Trump could not have compromised intelligence sources or methods because the president “wasn’t even aware of” the source of the information he discussed with the Russians.
Putin Ready To Give Recording Of Conversation Between Trump And Lavrov To US Congress --As the quest to unearth just what Trump told Lavrov continues, an unexpected development emerged moments ago when none other than Russian president Vladimir Putin said that Trump did not pass any secrets to foreign minister Sergey Lavrov, and that he was willing to give a recording of the talks between Putin and Lavrov to Congress if the US requests it. Russia's Putin says he can give record of Trump and Lavrov conversation to U.S. congress and senate https://t.co/W7wYd0D8nEpic.twitter.com/Wp1j8N7gNS— Reuters Politics (@ReutersPolitics) May 17, 2017 The reason: according to Putin reports about Trump allegedly revealing security secrets to Russian Foreign Minister Sergey Lavrov are "political schizophrenia. Some other headlines from Reuters: Putin also said that Lavrov did not share any secrets with either him or the secret service: ... And concluded that the US is losing its mind over Russia: As soon as more information is available, we will update this report of what is emerging as some pretty impressive trolling of the US by the Russian president.
Payoffs From Putin to Trump? McCarthy Says No, He Was Just Kidding — Did you hear the one about the Russians paying off the future president of the United States? It seems House Republicans have. Their two highest-ranking members on Wednesday walked into a firestorm of their own making, negotiating the latest Republican headache after The Washington Post reported that Representative Kevin McCarthy of California, the majority leader, said in a private session last year that President Trump, then a candidate, could be receiving payments from President Vladimir V. Putin of Russia. Speaker Paul D. Ryan of Wisconsin immediately intervened during the meeting and brought the conversation to a halt, according to a June recording reviewed by The Post, swearing his colleagues to secrecy amid laughter. The New York Times has not obtained a recording and cannot appraise the tone of Mr. McCarthy’s original remarks. On Wednesday, he said he was just kidding. “It’s a bad attempt at a joke; that’s all there is to it,” Mr. McCarthy told reporters at the Capitol. “No one believes it to be true from any stretch of fact.” The trouble began in June, with a meeting of Republican leaders on Capitol Hill. It was then, according to The Post, that Mr. McCarthy delivered his assessment, playful or otherwise: “There’s two people I think Putin pays: Rohrabacher and Trump,” Mr. McCarthy said. Representative Dana Rohrabacher, Republican of California, is known as Mr. Putin’s most vigorous defender in Congress. Mr. McCarthy’s comments drew some laughter, according to The Post, prompting him to add, “Swear to God.” Mr. Ryan then instructed other attendees not to share the conversation. “No leaks,” he said, according to The Post. “This is how we know we’re a real family here.”
Senators told of broadening Russia investigation | TheHill: Deputy Attorney General Rod Rosenstein dropped two bombshells during a hotly-anticipated appearance before the Senate on Thursday, less than 24 hours after he announced the appointment of a special prosecutor in the FBI’s investigation into Russian election meddling. According to lawmakers, Rosenstein confirmed that the bureau’s investigation into Russian interference in the election is no longer strictly a counterintelligence investigation — a kind of probe that does not normally result in charges — but also a criminal one. He also said he was aware President Trump intended to fire Comey prior to penning a memo that the White House later used as its justification for the dismissal. Lawmakers emerged from the closed-door meeting painting a sober picture of the briefing. Sen. Chris Coons (D-Del.) described the mood in the room as serious and thoughtful. Across town, as lawmakers descended into a secure facility to receive the briefing, Trump was ripping the appointment of the special counsel as something that “hurts the country.” “I believe it hurts the country terribly, because it shows we’re a divided, mixed-up, not-unified country,” Trump told news anchors at a luncheon at the White House. But Republicans declined to echo the president’s outrage amid an increasingly bipartisan swirl of concern that the White House may have tried to interfere with the FBI’s investigation.
NSA Director Uses "Russian Hacker Threat" To Gain Access To Voting Systems - In testimony before the Senate Armed Services Committee, U.S. National Security Agency (NSA) director Admiral Mike Rogers joined the chorus of other U.S. law enforcement and intelligence officials who are using Russia to leverage their own agencies into having a wider role in U.S. elections. In a statement to the committee on May 9, Rogers positioned NSA to oversee a wider role in conducting surveillance over elections, not only in the United States, but in other countries, including France and Britain. After accusing Russia of conducting «election hacking» of the 2016 U.S. presidential election, while offering no proof to back up his allegations, Rogers proceeded to tell the committee and its reflexively anti-Russian chairman, John McCain, that NSA also warned France, Britain, and Germany of Russian election penetration and offered up the assistance of the American spy agency to the targeted countries. Of course, there was no mention that NSA, thanks to the revelations by former NSA contractor Edward Snowden, has thoroughly penetrated the communications systems of France, Britain, and Germany and their political leadership. Rogers stated, «We [NSA] had talked to our French counterparts prior to the public announcements of the events publicly attributed this past weekend and gave them a heads up. 'Look, we're watching the Russians. We're seeing them penetrate some of your infrastructure'». Rogers added, «We're doing similar things with our German counterparts, with our British counterparts, they have an upcoming election sequence». The NSA’s «Tailored Access Operations» branch is strongly believed to have a sub-group that specializes in foreign election tampering, not from a defensive position but as an offensive tactic in conducting clandestine «regime change» operations
Family's Private Investigator: There is evidence Seth Rich had contact with WikiLeaks prior to his murder. - It has been almost a year since Democratic National Committee staffer Seth Rich was murdered in the nation's capital. There have been no solid answers about why he was killed until now. Rich was shot and killed last July in Northwest D.C and police have suggested the killing in the District's Bloomingdale neighborhood was a botched robbery. However, online conspiracy theories have tied the murder to Rich's work at the DNC.Just two months shy of the one-year anniversary of Rich's death, FOX 5 has learned there is new information that could prove these theorists right. Rod Wheeler, a private investigator hired by the Rich family, suggests there is tangible evidence on Rich's laptop that confirms he was communicating with WikiLeaks prior to his death. Now, questions have been raised on why D.C. police, the lead agency on this murder investigation for the past ten months, have insisted this was a robbery gone bad when there appears to be no evidence to suggest that. Wheeler, a former D.C. police homicide detective, is running a parallel investigation into Rich’s murder. Wheeler said he believes there is a cover-up and the police department has been told to back down from the investigation."[Neither] The police department nor the FBI have been forthcoming,” said Wheeler. “They haven't been cooperating at all. I believe that the answer to solving his death lies on that computer, which I believe is either at the police department or either at the FBI. I have been told both.”
Confirmed: DNC Emails LEAKED … Not Hacked -- We’ve reportedly documented that the DNC emails were leaked … not hacked. (And the “evidence” that it was the Ruskies has collapsed.) The head of Wikileaks – the organization which published the leaked DNC emails – has previously hinted that the leaker was DNC insider Seth Rich. Today, the local Washington DC Fox news channel reports that the Rich family’s private investigator – a former Homicide Detective in Washington DC and white collar criminal investigator for the Attorney General of the State of Ohio – says that evidence on Rich’s computers proves that he communicated with Wikileaks: WATCH: The P.I. hired to investigate the death of DNC staffer Seth Rich says he can prove Rich communicated with Wikileaks. pic.twitter.com/ILQyqpwobB
Murdered DNC Staffer Seth Rich Shared 44,053 Democrat Emails With WikiLeaks --For the past several months, Democrats have based their "Resist 45" movement on unsubstantiated assertions that the Trump campaign coordinated with Russian intelligence officials to undermine the 2016 Presidential Election thereby 'stealing' the White House from Hillary Clinton. Day after day we've all suffered through one anonymously sourced, "shock" story after another from the New York Times and/or The Washington Post with new allegations of the 'wrongdoing'.But, new evidence surfacing in the Seth Rich murder investigation may just quash the "Russian hacking" conspiracy theory. According to a new report from Fox News, it was former DNC staffer Seth Rich who supplied 44,000 DNC emails to WikiLeaks and not some random Russian cyber terrorist, as we've all been led to believe. According to Fox News, though admittedly via yet another anonymous FBI source, Rich made contact with WikiLeaks through Gavin MacFadyen, an American investigative reporter and director of WikiLeaks who was living in London at the time. According to Fox News sources, federal law enforcement investigators found 44,053 emails and 17,761 attachments sent between DNC leaders from January 2015 to May 2016 that Rich shared with WikiLeaks before he was gunned down on July 10, 2016. The Democratic National Committee staffer who was gunned down on July 10 on a Washington, D.C., street just steps from his home had leaked thousands of internal emails to WikiLeaks, law enforcement sources told Fox News. A federal investigator who reviewed an FBI forensic report detailing the contents of DNC staffer Seth Rich’s computer generated within 96 hours after his murder, said Rich made contact with WikiLeaks through Gavin MacFadyen, a now-deceased American investigative reporter, documentary filmmaker, and director of WikiLeaks who was living in London at the time.“I have seen and read the emails between Seth Rich and Wikileaks,” the federal investigator told Fox News, confirming the MacFadyen connection. He said the emails are in possession of the FBI, while the stalled case is in the hands of the Washington Police Department.
Was the Election Rigged Against Bernie Sanders? DNC Lawsuit Demands Repayment for Campaign Donors - A class action lawsuit alleging the Democratic National Committee worked in conjunction with Hillary Clinton's 2016 campaign to keep Bernie Sanders out of the White House has been raging on in the courtrooms for months on end–and yet, most people have no idea of its existence, in large part thanks to the mainstream media's total lack of coverage. Jared Beck, a Harvard Law graduate and one of the several attorneys who filed the suit against the DNC and its former chairperson Debbie Wasserman Schultz, wants retribution for donations made by supporters to the Vermont senator's campaign, citing six legal claims of the DNC’s deceptive conduct, negligent misrepresentation and fraud. The DNC violated Article 5, Section 4 of its own charter by working with a single campaign to effectively choose who would win the Democratic ballot, the attorneys stated in the suit.
Seth Rich, Craig Murray and the Sinister Stewards of the National Security State -- Why is it a “conspiracy theory” to think that a disgruntled Democratic National Committee staffer gave WikiLeaks the DNC emails, but not a conspiracy theory to think the emails were provided by Russia? Why? Which is the more likely scenario: That a frustrated employee leaked damaging emails to embarrass his bosses or a that foreign government hacked DNC computers for some still-unknown reason? That’s a no-brainer, isn’t it? Former-DNC employee, Seth Rich, not only had access to the emails, but also a motive. He was pissed about the way the Clinton crowd was “sandbagging” Bernie Sanders. In contrast, there’s neither evidence nor motive connecting Russia to the emails. On top of that, WikiLeaks founder, Julien Assange (a man of impeccable integrity) has repeatedly denied that Russia gave him the emails which suggests the government investigation is completely misdirected. The logical course of action, would be to pursue the leads that are most likely to bear fruit, not those that originate from one’s own political bias. But, of course, logic has nothing to do with the current investigation, it’s all about politics and geopolitics. We don’t know who killed Seth Rich and we’re not going to speculate on the matter here. But we find it very strange that neither the media nor the FBI have pursued leads in the case that challenge the prevailing narrative on the Russia hacking issue. Why is that? Why is the media so eager to blame Russia when Rich looks like the much more probable suspect?
JPMorgan's Dimon defends Trump advisory role, deregulation | Reuters: JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon on Tuesday responded to criticism from angry shareholders of his role advising President Donald Trump on economic matters, saying he would help "any president" in office. At the bank's annual meeting in Wilmington, Delaware, several attendees demanded answers from Dimon about his role on a White House business council and JPMorgan's involvement with financial deregulation efforts in Washington. "I would try to help any president of the United States, because I'm a patriot," Dimon said. "That does not mean we agree with all the policies that an administration comes up with." Asked whether he would step down from Trump's Strategic and Policy Forum, which includes over a dozen leaders of major corporations, Dimon said simply, "No." Like annual shareholder meetings held by other big U.S. banks this year, JPMorgan's was dominated by activists concerned about Trump's positions on immigration, minorities, human rights and the environment. The actual business of the meeting was less controversial: voting shareholders sided with management on all major resolutions, including the election of directors and executive compensation. Activists' proposals were rejected, though a proposal to allow investors with 10 percent of the total shares outstanding to call a special meeting received more than 42 percent support of shares voted, according to the bank's preliminary tally.
Republicans may be able to overturn two decades of regulatory guidance — Although the deadline to use the Congressional Review Act to reject Obama-era rules technically passed on Thursday, Republicans are working on a plan that could extend its reach so that it may be used to overturn certain policies all the way back to 1996. Sen. Pat Toomey, R-Pa., has led the effort to explore the outer bounds of the obscure legislative process that had hardly been used before President Trump took office. As part of that effort, Toomey recently sent a letter to the Government Accountability Office requesting an opinion on whether guidance — such as regulators’ guidelines on leveraged lending or the Consumer Financial Protection Bureau’s bulletin on auto lending — count under the congressional review law.
Democrats target GOP deregulation tool in new bill — Democrats in the House and Senate introduced a bill Tuesday that would get rid of an obscure legislative process that has handcuffed rulemakings from the Consumer Financial Protection Bureau and other regulators. Though the bill has no chance of becoming law in the current Congress, it signaled the Democrats' intent to roll back the Congressional Review Act if and when they ever do reclaim power. Republicans have used the 1996 law to reject 14 rules promulgated under the Obama administration and it has caused the CFPB to delay its prepaid card rule over fears of congressional intervention.
Policy Watch: Republican antiregulatory agenda continues despite losing the CRA -- EPI - This week was the first week in which the Congressional Review Act could no longer be used to block regulations issued in the final months of the Obama administration. But congressional Republicans were undeterred, and continued to advance an anti-regulatory agenda that threatens workers’ health and safety, wages, and retirement security. On Wednesday, the Senate Committee on Homeland Security and Government Affairs approved the Regulatory Accountability Act (RAA), a sweeping measure that threatens all kinds of important worker protections. That same day, the administration delayed a rule that requires employers to electronically submit injury and illness data that they already record. And yesterday, the House Subcommittee on Health, Employment, Labor and Pensions (HELP) held a hearing attacking the fiduciary rule, which requires that financial advisers act in their clients’ best interests when giving retirement advice. The RAA, which was advanced by the Senate Committee on Homeland Security and Government Affairs, would fundamentally alter the regulatory process, giving corporate interests unprecedented power to interfere with and delay the regulatory process. The bill lets big business and special interests submit alternative regulatory proposals, and requires that agencies consider these proposals and adopt the rule that is least costly for corporations. By prioritizing industry profits over health, safety, and other public goods, the RAA is a direct threat to workers and the American people.
Something Trump and Elizabeth Warren agree on: Bringing back Glass-Steagall to break up big banks - The roster of those who want to break up the biggest U.S. banks by restoring a key piece of legislation Glass and Steagall sponsored in the midst of the Great Depression includes President Trump; liberal firebrand Sen. Elizabeth Warren; Trump economic advisor and former Goldman Sachs executive Gary Cohn; avowed Democratic Socialist Sen. Bernie Sanders; Sen. John McCain, the 2008 Republican presidential nominee; and progressive icon Rep. Barbara Lee.Glass-Steagall, as the 1933 law was known, is credited with helping keep the U.S. financial system safe from a major crash until it was largely repealed in 1999. Within a decade, the financial system was in severe crisis. Whether the two events were related, and whether a restoration of Glass-Steagall would prevent another collapse, is up for debate. But demands have persisted from the left and right to bring back Glass-Steagall provisions that effectively separated commercial banking from riskier investment banking. The Republican Party’s official 2016 platform called for it. So did the 2016 Democratic Party platform.“There are, you know, some people that want to go back to the old system, right?” Trump said when asked about the issue in a recent interview by Bloomberg News. “We’re looking at it right now as we speak.”Cohn has indicated he supports restoring Glass-Steagall, but the Trump administration probably would want to accompany such a move with a reduction in other financial regulations.Last month, Warren (D-Mass.) joined with McCain (R-Ariz.) to introduce legislation to restore Glass-Steagall’s prohibition on banks with federally insured deposits from selling investments and insurance.Sanders is among the bill’s backers. Lee (D-Oakland) is among 47 co-sponsors of similar legislation in the House.The bills, opposed by big banks, would force large institutions such as Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. to spin off their sizable investment banking operations. The goal is to make those megabanks — whose share of overall bank assets has soared in the last 20 years — smaller and less exposed to risky behavior.
Mnuchin Says Trump Administration Never Intended to Restore Glass-Steagall Act -- Pam Martens - At a time of growing loss of confidence in the credibility of President Donald Trump, his Treasury Secretary, Steven Mnuchin, declared today that the Trump administration never had any intention of restoring the Glass-Steagall Act and separating the taxpayer-backstopped insured commercial banks from the high risk Wall Street investment banks. Under intense questioning from Senator Elizabeth Warren at a Senate Banking hearing today, Mnuchin effectively said that his idea of supporting a 21st Century Glass-Steagall Act meant doing the opposite of what Glass-Steagall did: he would leave the commercial banks and investment banks under the same roof. Senator Warren at one point called Mnuchin’s remarks “crazy” and “like something straight out of George Orwell.” Indeed they were. (See video below.)After reminding Mnuchin that the President had stated that he supported a 21st Century Glass-Steagall Act while running for President and Mnuchin himself had said the same thing during his Senate confirmation hearing, Warren chided Mnuchin: “There are aspects of Glass-Steagall that you support, but not breaking up the banks, and separating commercial banking from investment banking?” Warren said. “What do you think Glass-Steagall was, if that’s not right at the heart of it?”As the surreal exchange continued, Warren showed exasperation with Mnuchin’s preposterous position, stating: “So let me get this straight,” Warren said. “You are saying that you’re in favor of Glass-Steagall, which breaks apart the two arms of banking…except that you don’t want to break apart the two parts of banking.” Warren suggested that Trump and Mnuchin had reversed their position under pressure from Wall Street, stating: “In the past few months, you and the President have had a number of meetings with big bank CEOs and lobbyists. Is that the reason for the reversal on Glass-Steagall?” Mnuchin said “No, not at all.” He said there had been no reversal. The Republican Party platform promised the following: “The Dodd-Frank law, the Democrats’ legislative Godzilla, is crushing small and community banks and other lenders…We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.”
Trump Treasury Secretary Steve Mnuchin Renounces Commitment to Glass-Steagall While Saying He Isn’t - Yves Smith - I’ve seen some pretty brazen performances over the years, but this one is a standout in a bad way. Steve Mnuchin tells Elizabeth Warren, with a straight face, that Trump’s campaign pledge to implement Glass Steagall has nada to do with breaking up banks. He also makes the utterly false claim that separating commercial and investment banks would hurt small bank lending. The integration between small business activities and investment banking is nada, save at most for brokerage and investmetn management targeting the more successful small business owners. That has bupkis to do with lending. In fact, we’ve discussed repeatedly that large and even medium sized banks have exited small business lending almost entirely. Nothing Trump can do will bring it back because they don’t have the infrastructure and don’t want to rebuild it. In the hoary old ages of my youth, the big banks had tow year credit officer training programs. Among other things, some graduates of those courses would eventually become branch manager, which in those days had more autonomy than now. One of their big jobs was to review and approve more complex, character-based loans, meaning to small businesses and local developers. Thanks to Wall Street poaching more credit officers during the debt market boom of the 1980s, the rise of securitization, and the tender ministrations of consultants like McKinsey, banks moved away from the model of the branch manager as expert in his local economy and accordingly having some latitude to extend credit to branches as retail stores offering standardized products, and lending based on FICO scores. Lending to small businesses in this model dwindled to lending against collateral, like the owner’s residential or business real estate or other company assets that have resale value. Cash flow based lending has become rare save for much larger businesses than in the past. So what is the real reason for refusing to break up the banks? The big reason is is deprive the very large capital markets players of the ability to use bank deposits to fund derivative positions. Do watch this exchange with Warren. As the lawyers like to say, res ipsa loquitur.
Talk of Glass-Steagall reboot ignores this reality about C & I lending - The contours of the 21st-century Glass-Steagall Act that both the Trump administration and many in Congress are talking about are not at all clear, but it is important for everyone to understand what dangers lurk in reducing the ability of banking organizations to compete in a constantly evolving financial system.The Gramm-Leach-Bliley Act of 1999 formally overturned the Glass-Stegall provisions that prohibited affiliations between banks and firms that underwrite or deal in securities. Reinstating this prohibition seems to be the major goal of those who support a Glass-Steagall reboot. But there are important reasons for banks, through their holding companies, to be affiliated with securities firms. Since the mid-1980s, companies have increasingly chosen to finance their operations by issuing debt securities rather than borrowing from banks, and that gap is rapidly widening. According to Federal Reserve data, corporate debt securities totaled nearly $6 trillion last year, compared with nearly $2 trillion in C&I loans, a difference of 200%. In 1985, that difference was just over 34%.This trend is based on fundamental changes in the financial economy and appears to be irreversible. First, banks are heavily regulated principal intermediaries; they have to pay high regulatory costs as well as the costs of the deposits they lend to corporate borrowers. Securities firms, however, are agency intermediaries, have lower regulatory costs and do not have significant costs of funds. They can underwrite or place corporate debt securities for a modest fee, and the issuers, on net, can normally obtain lower rates from investors than from bank subsidiaries. In addition, although longer-term debt securities are generally issued under trust indentures, the cost of complying with the terms of these formulaic contracts are much lower than negotiating a loan agreement with a bank lender and responding to the regular and highly specific information requirements that loan agreements frequently entail. Finally, since the mid-1980s, technologically driven changes in communications have made corporate financial information more easily available to investment advisers and investors themselves. Xerox copying and fax machines permitted wide dissemination of the financial data that companies filed with the Securities and Exchange Commission, reducing or eliminating the information advantage that was once a unique property of banks.
Have central clearing policies worsened ‘too big to fail? – BankThink - Twice a year, the Bank for International Settlements releases global aggregate data regarding the derivatives markets. It provides an often illuminating window into broad trends in the derivatives markets. The data sets constitute some of the original “big data” given the volume and value of the contracts involved.The most recent round of data was released in time for various international regulatory policy meetings planned between now and June, including meetings of the Financial Stability Board and the Basel Committee.The data was released as debate rages over whether or not the post-crisis reform initiatives have stifled economic growth and whether certain reforms should even be implemented. A range of policymakers from France, Japan and the United States have all recently signaled an interest in reconsidering the scale, scope and substance of remaining reform initiatives. The FSB has been tasked by the G-20 to undertake a comprehensive review. Recently, the U.S. House Financial Services Committee passed the Financial Choice Act, which is designed to roll back many of the post-crisis reforms. One of the signature reforms following the crisis focused on the derivatives markets. The vast majority of derivatives market activity occurs in the interest rate market. Consequently, this article looks at BIS data regarding those markets. The remaining market segments (equity derivatives, foreign exchange derivatives, commodities derivatives) are much smaller markets which include comparable data trends to the interest rate segment. Here are some key questions and other considerations arising from the BIS data release.
The CHOICE Act is just Dodd-Frank 2.0. We can do better. | TheHill: As the Republicans consider financial reform, they appear to be making the same mistake the Democrats did with the original Dodd-Frank legislation in 2010. Rather than work with the Republicans to craft well-designed reforms, the Democrats hastily crammed through legislation that contained several serious flaws along with some much-needed fixes. It looks like the Republicans are about to do the same. They are hastily crafting a partisan bill with lots of patches for our financial system without dealing with the fundamentally dysfunctional structure of the hundreds of financial regulatory agencies at the state and federal levels.To be sure, there are a lot of problems with the 895-page Dodd-Frank Act. It contained many provisions that were political deals to get congressional votes that had nothing to do with the financial crisis. For example, the conflict minerals provision requires public companies (but not private ones) to reveal their use of various minerals from the Democratic Republic of the Congo. The Durbin amendment imposed price controls on the fees that banks could charge merchants on debit cards (but not credit cards). The bill was drafted so haphazardly that even the name of the new Consumer Financial Protection Bureau was not even written consistently. But there were more serious flaws. One of the scary parts of the original law was the provision that gave the secretary of the Treasury, in consultation with the president, broad powers to seize a financial institution that she or he determined was in danger of default. Imagine the leverage that this would give a Lyndon B. Johnson, let alone a Donald J. Trump, to coerce a large financial institution to fund his endeavors. “Do what I want, Goldman, or I will find you in danger of default and take you over.” To be sure, much of Dodd-Frank needed to be done. Establishing a regulatory scheme for previously unregulated over-the-counter (OTC) derivatives was long overdue. However, Dodd-Frank did not address the incoherent structure of our financial regulatory system. Instead, Dodd-Frank just prescribed regulatory nightmares like the Volcker Rule that required joint rulemakings from five different agencies to implement.
Dodd-Frank left a lot to regulators’ discretion. Why that matters now: BankThink -- The Dodd-Frank Act spanned 2,300 pages and mandated 390 new rules. One might think that that left little room for unelected regulators to use their own discretion to revise policies. Quite the contrary. Despite burying regulators and banks in paperwork, the Democratic-enacted law actually left plenty of room for regulators — in many cases — to ignore some of that paperwork and interpret the statute as they see fit. That flexibility may be more relevant today than when the law passed in 2010. Congress is now unlikely to repeal the law, yet the Trump administration appears willing to appoint regulators that could roll back significant portions on their own. Take the Volcker Rule. The ban on proprietary trading named for former Federal Reserve Board Chairman Paul Volcker was so central to Dodd-Frank that President Barack Obama held a whole press conference on it. Under the rule, Obama said, “Banks will no longer be allowed to own, invest, or sponsor … proprietary-trading operations for their own profit, unrelated to serving their customers.” Despite the ample guidance provided in the final regulation implementing the Volcker Rule — named for former Federal Reserve Board Chairman Paul Volcker — much is still left to regulators’ discretion in interpreting the rule. Bloomberg News Sounds simple enough. But it took regulators nearly three and a half years to come up with the criteria — encompassing several hundreds of pages — governing how exactly they would enforce the rule. Even with all of this guidance, the Volcker Rule continues to leave too much to discretion. But the level of regulator interpretation allowed by Dodd-Frank in the case of the Volcker Rule could be a positive for advocates of deregulation.Congressional Republicans want to repeal the Volcker Rule outright, but prospects for such legislative reform are dim. House Republicans support Jeb Hensarling’s Financial Choice Act, which would do away with the Volcker Rule, but analysts predict the bill would not fare well in the Senate.Volcker Rule critics have hit on another solution: President Trump’s appointees can simply refrain from enforcing the rule. The same could be true for many other aspects of Dodd-Frank, which similarly depend on appointees’ discretion. Regulators can use their own judgment to decide, for example, whether a big insurance company or other nonbank financial firm is “systemically important.” On the consumer compliance side, regulators have the power to determine which activities are, and are not, “abusive.” Dodd-Frank’s authors perhaps thought that the law’s breadth and complexity could cover all contingencies: regulators would have the power to do almost anything. But the law also gives regulators, in many instances, the power to do nothing.
More than 150 law professors defend CFPB - A group of 158 law professors and scholars on Tuesday defended the Consumer Financial Protection Bureau in a letter to top lawmakers, saying a bill to overhaul the Dodd-Frank Act would allow lax lending standards to creep back into the financial system. The 19-page letter was signed by prominent names in consumer finance and academia, including Michael Barr, a former Treasury official and key architect of Dodd-Frank who is now at the University of Michigan; Joseph William Singer, a Harvard law professor; and Jay Westbrook, a law professor at the University of Texas in Austin and the co-author with Sen. Elizabeth Warren of a book on bankruptcy.
New fake-accounts tally surfaces; Wells Fargo disputes it - Wells Fargo 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 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. The new estimate of 3.5 million fake Wells Fargo accounts made by plaintiffs’ lawyers is “based on a hypothetical scenario,” a company spokesman said in challenging the figure. The original estimate was roughly 2 million but covered fewer years. “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. “The unauthorized account number reported in yesterday’s filing are estimates made by the plaintiffs’ attorneys based on a hypothetical scenario and have not been verified. The number of unauthorized accounts estimated in the filing do not reflect actual unauthorized accounts,” Jim Seitz, a spokesman for the bank, said in an e-mailed statement.
SEC Halts Issuance Of Wall Street's Latest Mom-And-Pop Doomsday Machine: Quadruple-Levered ETF -- Earlier this month we were somewhat surprised when the SEC blatantly ignored numerous complaints and approved a request to trade new quadruple-leveraged exchange-traded funds, the so-called ForceShares Daily 4X US Market Futures Long and Short Funds, the first such products of their kind. The request to list ForceShares Daily 4X US Market Futures Long Fund, under the ticker UP, and ForceShares Daily 4X US Market Futures Short Fund, under the far more appropriate ticker DOWN, was filed by the NYSE Arca exchange. One of the funds is designed to deliver 400 percent of the daily performance of S&P 500 stock index futures, while another fund will aim to deliver four times the inverse of that benchmark. That means that - in theory - a fund could go up 8 percent on a day the index it tracks falls by 2 percent. However, due to the rebalancing nature of such products, it most likely won't, and instead will be used as another massively shorted vehicle by all those pension funds who scramble to capture the volatility roll "dividend" from markets that no longer see any risk, anywhere. Leveraged ETFs employ derivatives to deliver two or three times the daily price moves of benchmarks. The ForceShares quadruple-leveraged funds would be the first to move beyond 'uber-conservative' triple leverage products which simply no longer pack enough volatility for today's Wall Street gamblers. The SEC’s approval of the 4X funds on May 2nd appeared to signal, shockingly, that the SEC’s view of risky ETFs had changed after former Chairman Mary Jo White stepped down in January. But, according to the Wall Street Journal, this latest ForceShares digital slot machine may have skated through the regulatory process without catching the attention of SEC Commissioners because of a clever structuring tweak which resulted in it being presented to regulators as a commodity product rather than a traditional mutual fund or ETF product. Perhaps these same SEC Commissioners, who were absent from the first reviews of ForceShares' latest products, took the opportunity to read the "risk factors" section of their Form S-1:
The Giddy Messages Citi Traders Sent While Lehman Died -- As U.S. officials and bank executives scrambled to save the global financial system after Lehman Brothers’s bankruptcy in the fall of 2008, Citigroup Inc. traders were doing what traders always try to do. "Ringing the register, homey,” Thomas Giardi, a trader in the bank’s credit derivatives trading unit, said in a chat message at 6:40 a.m. on Sept. 17, two days after Lehman’s bankruptcy. Subject line: "YOU MAKING $$$." The most important market news of the day. Get our markets daily newsletter. Sign Up His gleeful boast -- along with at least a dozen from others -- came as Citigroup’s top traders were furiously trying to deal with thousands of derivatives terminated by Lehman’s collapse. Contained in chat messages and recordings from that turbulent September week, the exchanges are the most colorful, if not potentially damaging, evidence so far in a civil trial on allegations that Citigroup inflated its $2 billion bankruptcy claim related to those derivatives. At the time of the bankruptcy, Lehman Brothers Holdings Inc. and Citigroup had entered into more than 30,000 derivatives trades tied to an estimated $1.18 trillion of wagers on everything from interest rates to corporate and sovereign debt. Lehman’s bankruptcy gave New York-based Citigroup the right to determine its damages. Make Money At stake in the trial, which began in April in U.S. bankruptcy court, is whether Citigroup has to return any of the $2 billion to unsecured Lehman creditors. Those creditors allege that the messages help show how the bank profited from the very financial instruments that regulators worried would take down other banks.Lehman lawyers argue that heightened volatility in that period meant bigger profits for Citigroup. “This is the time to make a lot of money,” Carey Lathrop, head of Citigroup’s credit division, said in a Sept. 17, 2008, recording, according to Lehman’s exhibits. “There are a lot less competitors... and there’s a lot of bid/offer spread. And people have to do things.”
Hedge Fund Managers Don’t Always Beat the Market, but They Still Make Billions -- Good performance, mediocre results or even downright ugly returns. When it comes to hedge funds, it scarcely matters. Even as some investors begin to sour on these high-priced stock pickers, the top fund managers still haul in enormous paychecks.The 25 best-paid hedge fund managers earned a collective $11 billion in 2016, according to an annual ranking published on Tuesday by Institutional Investor’s Alpha magazine.Even managers who had a tough year were able to cash in. Nearly half of the top-25 earners made single-digit returns for their investors, a lackluster sum in a year when the Standard & Poor’s 500-stock index was up 12 percent, accounting for reinvested dividends.The top earner of 2016 was James Simons, the former code breaker for the National Security Agency and the founder of Renaissance Technologies, who made $1.6 billion. Ray Dalio, the founder of Bridgewater Associates who is best known for his philosophy of “radical transparency,” came in a close second with $1.4 billion. Further down the list was Robert Mercer, the co-chief executive of Renaissance and one of the biggest backers of Donald J. Trump’s presidential campaign, who earned $125 million.But some of the best-known names in the industry — including William A. Ackman, John A. Paulson and Edward S. Lampert — failed to make the list. Also missing from the list: women. The list is based on estimates drawn from each individual’s share of their firm’s management and performance fees. It also takes into consideration each manager’s own capital invested in the funds.
Private Equity’s Lousy Governance - Yves Smith - One of the many myths aggressively promoted about private equity is that it allegedly has a better governance structure than public markets. There fat cat executives are insulted from the wrath of shareholders, who find it easier to sell their shares than wage the difficult battle of trying to hold executives accountable for overpaying themselves and/or poor performance. The key claims made about private equity fund managers is that they have better incentives than public company officers, and that those incentives are also aligned with those of investors. Anyone who has been reading our coverage of private equity would know this is bunk. So it is gratifying to see an academic challenge the private equity party line in a well-researched article, which we have embedded at the end of this post. If anything, law professor William Magnuson’s The Public Cost of Private Equity winds up being charitable by virtue of needing to speak to non-experts and thus cover only the main features, as in deficiencies, of the private equity governance model. As you’ll see from the summary Magnuson wrote for the Columbia Law School’s Blue Sky Blog, he is also concerned about why investors have allowed such a lop-sided relationship to persist. His paper also does a good high level job of covering the recent literature on private equity returns, concluding that generally, they aren’t what they are cracked up to be even before allowing for the greater risk of private equity. And some of those studies also suggest that the idea that private equity improves the performance of the companies they buy isn’t well founded.
'Trump Trade' turns to trepidation as investors unwind - (Reuters) - Investors were shelving rosy hopes for U.S. tax reform and rethinking strategies premised on Donald Trump's economic growth promises on Wednesday, as the President faced his loudest criticism yet over possible collusion between his election campaign and Russia. From stocks to bonds to the U.S. dollar, a bevy of trades that have been fashionable since Trump's election last November, were getting dialed back or in some cases shredded as his reform agenda looked increasingly vulnerable amid the fallout from his firing last week of James Comey, the director of the Federal Bureau of Investigation. The uncertainty about Trump's future increased in the last 24 hours over allegations Trump had sought to end Comey's investigation into ties between the president's first national security adviser, Michael Flynn, and Russia, and even some Republicans were now calling for a deeper probe into possible obstruction of justice. The result was the harshest sell off yet in U.S. stocks since Trump was elected and a jettisoning of positions that were tied to the notion that his policies would stoke economic growth and inflation. "The Trump Trade is over as of today," Ross Gerber, co-founder and CEO of Gerber Kawasaki Wealth and Investment Management, who said they have been selling for the past 45 days and continued to be bearish on risky assets today. "We've seen cracks all year, but today, this is the first institutional selling we are seeing." Indeed, some "Trump trades" have been unwinding for weeks, especially in the bond and currency markets where bets on inflation risks and economic growth prospects are most prevalent.
Mr. Market Starts to Question Trump Trade Delusion --Yves Smith - Financial markets went into what in the old days of 2014 would have been called “risk off” mode, with the degree of upheaval in Washington leading investors to doubt the so-called Trump trade. The Dow was off 370 points and the NASDAQ declined 2.6%. Treasuries and gold rose. The dollar fell. European indexes were off, typically over 1%, and Asian markets opened down. A correction is overdue. What is curious is why it took so long. Trump was never going to be terribly successful, even if he had managed at age 70 to undergo a Prince Hal turns into Henry IV sort of metamorphosis, or that a Cabinet with enough presumed grownups in provided some badly needed ballast. Even during the campaign, at a 50,000 foot level, we’d repeatedly said that Trump was likely to be a Jimmy Carter cubed (in terms of getting little accomplished) in Silvio Berlusconi clothing. We’d also pointed out that the record of celebrity government executives was also poor. Jessie Ventura floundered. Arnold Schwarznegger, who has vastly better interpersonal skills than Trump plus the added advantage of marrying into a political family, found his star power lasted for about six months. Ronald Reagan was never a precedent for Trump because Reagan had been interested and involved in politics before his gubernatorial run. He’d had a politically oriented radio show for many years where he’d written his own scripts, and more important, had been the head of a union before running for state office. And that’s before you get to the fact that almost immediately after the election, the CIA and other members of the military-surveillance complex went into open warfare against Trump. Hard to get much done when you are fighting for survival. Here are some of the major elements of the Trump trade thesis and why they never made much sense:
Four Big Banks Lose $37.60 Billion in Market Cap in Trump Fallout - Pam Martens - Four of the largest Wall Street banks that were counting on a powerful President Trump to roll back Dodd-Frank financial reform regulations lost a combined $37.60 billion in their market capitalization yesterday. The worst hit in terms of percentage decline was Bank of America, parent of the giant brokerage firm Merrill Lynch, which fell 5.92 percent for a market cap loss of $14.14 billion.Goldman Sachs, which has become closely associated with President Trump as a result of a raft of its former partners and its immediate past President serving in his administration, fell an eyebrow-raising 5.27 percent yesterday for a market cap loss of $4.676 billion.JPMorgan Chase and Citigroup added to the carnage. JPMorgan Chase fell 3.81 percent with a hit to its market cap of $11.87 billion while Citigroup fell 4.02 percent, losing $6.91 billion in market cap.Both Goldman Sachs and JPMorgan Chase are among the 30 stocks that make up the Dow Jones Industrial Average. They helped to fuel the carnage there. The Dow closed down 372 points.None of these mega banks can afford hits to their common equity capital. A key strategy of ending too-big-to-fail, which dumps insolvent banks on the taxpayer for bailouts, is to strengthen the common equity capital at these behemoth institutions. So when the troubles swirling around the President of the United States gut almost $40 billion from the shares of four major Wall Street banks, people in Washington pay attention.
What banks should learn from WannaCry | American Banker --The WannaCry ransomware attack that swept the globe on Friday, hobbling several hospitals in the U.K. and wreaking havoc on tens of thousands of computers, is still active, leaving desktops and servers at risk. The ransomware’s effects are clearly devastating. Files are locked and inaccessible until a ransom—typically around $300 worth of bitcoin—is paid. No banks have confirmed that they have been affected by WannaCry. News sites reported on Friday that BBVA and Santander had been affected in Spain, but spokespeople at both banks firmly said the banks had not been affected in Spain or the U.S. Still, banks remain a top target for ransomware and it would be a substantial risk to the business if a bank were to become a victim. Imagine the fallout if banks were locked out of customer or transaction records for a long period of time.The good news is that any computer loaded with up-to-date, well-patched software, effective anti-phishing and anti-malware tools and hot and cold backup should in theory be safe from ransomware. But in even the most security aware companies, there are cracks in that security assumption. The desktops and laptops of work-from-home employees who don’t use the company’s VPN or whose computers are not maintained as securely as on-premises equipment, for instance, are at risk. (It was a home computer whose network access hadn’t been upgraded to two-factor authentication that allowed hackers to breach 83 million records at JPMorgan Chase in 2014, for instance.) Systems that are accessed by third parties, such as marketing service or infrastructure providers, are also vulnerable — there’s a chance that they don’t maintain strong security protocols. The Target breach was a high-profile example of this. In some cases, the WannaCry ransomware broke into a company’s network through a successful phishing attack. There are phishing attacks that can defeat the best phishing filters, for instance where hackers take control of a legitimate email server and send malicious messages from it. No filter that looks at domain names would question them. Software that opens all links and attachments in a secure vault might help in this scenario, however.
US Treasury to play key role protecting finance IT infrastructure (AFP) - The US Treasury Department said Saturday it will play a "leading role" in protecting the global financial system's IT infrastructure. The statement came as a massive wave of weekend ransomware attacks struck banks, hospitals and government agencies in dozens of countries around the world. "These global cyberattacks highlight the real world consequences of technological vulnerabilities," a senior US Treasury Department officials told reporters on the return flight from the G7 gathering of financial chiefs in Bari, Italy. US Treasury Secretary Steven Mnuchin "has made protecting America's financial infrastructure from cyberattacks a top priority." The Treasury Department "will continue to work across agency and with international partners to develop and spread best practices based on the highest established cybersecurity standards." President Donald Trump's administration "is committed to protecting Americans and the global financial system from the constantly evolving threat of cyberattack ... and Treasury will play a leading role in this critical national security effort." Mnuchin said earlier Saturday that he had productive meetings with his counterparts at Bari on the need to protect the financial IT infrastructure. G7 finance chiefs vowed Saturday to unite against cyber crime, stating that cyber incidents represent a growing threat to their economies and that tackling them should be a priority.
Does MoneyGram sale to Chinese firm pose cyber, AML risk? - Donald Trump ran for president on a message of economic nationalism that included a promise to protect America against cyberattacks from China. His campaign website declared: “China’s cyber lawlessness threatens our prosperity, privacy and national security.” Now, the Trump administration faces the choice of either approving a large Chinese company’s bid to acquire a prominent U.S.-based money transmitter, or nixing the deal on national security grounds.
Hackers Sell Second NSA-Developed Cyber-Weapon On Dark Web -- While a second variant of the WannaCry(pt) ransomware (based on NSA's EternalBlue exploit) was spreading across the globe yesterday, The FT reports criminal hacking groups have repurposed a second classified cyber weapon stolen from US spies and have made itavailable on the so-called dark web.On Monday, the WannaCry attack, which hit 370,000 computers across 150 countries, appeared to slow. Europol, the European police agency, said the spread of the virus had stalled in Europe. But while infection rates have slowed, a Europol spokeswoman warned, "we do not think this is the end of the crisis. The hackers have already evolved the malware, and will probably continue to do so."Notably as Europe woke up (and US opened), the infection rate started to rise once again...But as The FT reports, intelligence and law-enforcement officials said they fear WannaCry may foreshadow a wave of similarly damaging attacks, as criminals and others race to make use of digital weapons that for years were only available to the most technologically sophisticated nation states.At least a dozen other NSA tools are currently being discussed and worked on as the basis of potential new cyber weapons on hacking forums on the dark web, parts of the internet not accessible via normal search engines.The hacking tool, developed by the US National Security Agency and called EsteemAudit, has been adapted and is now available for criminal use, according to security analysts. As with the NSA’s EternalBlue, the tool on which WannaCry was based,EsteemAudit exploits a vulnerability in older versions of Microsoft’s Windows software in the way in which networked machines communicate with each other.
Financial Weapons Of Mass Destruction: Top 25 US Banks Have 222 Trillion Dollars Derivatives Exposure The recklessness of the “too big to fail” banks almost doomed them the last time around, but apparently they still haven’t learned from their past mistakes. Today, the top 25 U.S. banks have 222 trillion dollars of exposure to derivatives. In other words, the exposure that these banks have to derivatives contracts is approximately equivalent to the gross domestic product of the United States times twelve. As long as stock prices continue to rise and the U.S. economy stays fairly stable, these extremely risky financial weapons of mass destruction will probably not take down our entire financial system. But someday another major crisis will inevitably happen, and when that day arrives the devastation that these financial instruments will cause will be absolutely unprecedented. During the great financial crisis of 2008, derivatives played a starring role, and U.S. taxpayers were forced to step in and bail out companies such as AIG that were on the verge of collapse because the risks that they took were just too great. But now it is happening again, and nobody is really talking very much about it. In a desperate search for higher profits, all of the “too big to fail” banks are gambling like crazy, and at some point a lot of these bets are going to go really bad. The following numbers regarding exposure to derivatives contracts come directly from the OCC’s most recent quarterly report (see Table 2), and as you can see the level of recklessness that we are currently witnessing is more than just a little bit alarming…
Better fintech alternatives to high-cost credit are already here -- It’s clearly going take quite a bit longer than originally predicted for fintech disruptors to change the financial world. But there are cases where fintech can be truly transformational right now. Take, for example, the most hideously expensive, inefficient and damaging part of the U.S. financial universe — the system of payday, pawn and auto title loans, bank overdraft protection plans and other types of short- term, small-dollar credit (STSDC) provided to low-income working Americans. A new paper published by the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School shows that a set of currently available fintech alternatives to STSDC could potentially eliminate the need for products that are too costly for consumers, materially improve the financial resiliency and health of low-income working families, and help employers save money — all without the need for government financial support or new laws or regulations. Battered by economic forces over which they low-income working Americans little control — stagnant real wages, the loss of many higher-paying manufacturing and clerical jobs to technology and foreign competition, the decline of unions, and real estate price inflation in urban areas — many lower-income Americans are challenged to make ends meet on a consistent basis. Even the smallest change in monthly income or expenses can trigger a crisis. One of the consequences of income insecurity is severe personal financial stress that does real damage by shortening lives, worsening health and impairing decision-making — especially financial decision-making. And it’s not just a problem for individuals and families. It affects employers’ bottom lines too, as distracted and anxious employees have higher rates of turnover and absenteeism, and generally perform worse on the job. The financial services industry has responded by creating STSDC products that provide quick and easy liquidity injections for cash-strapped borrowers. These products have become a de facto liquidity support system for families dealing with the consequences of income disparity and volatility. While STSDC products satisfy urgent short-term needs, they carry a high price. The severe negative individual, social and economic impacts of this type of high-cost liquidity support have been very well-documented over the years by the Pew Charitable Trusts, the Center for Financial Services Innovation, the Aspen Institute, the Center for Responsible Lending and the Consumer Financial Protection Bureau, among others.
Tech giants will not be silent about blockchain for long – BankThink - The technology behind bitcoin and other cryptocurrencies has captured the imagination of fintech experts and pundits more than almost anything else in recent years. It is no wonder. Blockchain holds the keys to changing the financial system from the ground up: With the distributed-ledger technology, validation is performed via a peer-to-peer network that eliminates powerful intermediaries that authenticate or settle transactions. The hunt for the killer blockchain application is in full swing. The emergence of the technology saw something akin to a Cambrian explosion for blockchain startups. Now, more than 300 of them are vying to be the global economy’s “next best thing,” posing an obvious competitive threat to traditional financial institutions. Banks, payment processors and credit card companies worry that brainy entrepreneurs, who transform high IQs into billions of dollars, could cast a pall over their core business. But it is not fintechs they should be worried about. It’s the tech titans in Silicon Valley that should keep them up at night.. In most technological shifts, it is diversifying entrants that grab market share because they are experts in capabilities that suddenly become relevant to the new product or service generation. For example, a technology like blockchain, challenging one of the world’s largest industries, needs more than just programmers and algorithms. The storage, archiving, communication and file serving needed to run distributed ledgers gobble up hard-drive space at unprecedented speeds. Moreover, blockchains have an end of life. When they go out of business, they still need to be accessible. These requirements call out for the capabilities of the cloud-computing giants, such as Amazon, Microsoft and IBM. Banks must not underestimate what these companies can contribute to the blockchain; they offer more than just raw server resources.
CFTC creates new arm dedicated to fintech - American Banker — The Commodity Futures Trading Commission has launched a new arm dedicated to exploring fintech issues, the agency’s head announced Wednesday. “The world is changing. Our parents’ financial markets are gone,” J. Christopher Giancarlo, the commision's acting chairman, said in prepared remarks for a speech at the Fintech Innovation Lab in New York. “Yet, despite these 21st-century innovations, the CFTC remains stuck in a 20th-century time warp.”
Philadelphia Fed President Harker on the 'anxious optimism' of the Trump economy (podcast) Philadelphia Federal Reserve Bank President Patrick Harker sat down with American Banker to talk fintech, financial regulation and the economy.
Snowden: ‘Know your customer’ laws do ‘bupkis’ to stop terrorism - — Know-your-customer laws may be good at catching petty criminals and dumb “wannabe” terrorists, but they do little to thwart sophisticated bad actors, former National Security Agency contractor Edward Snowden said Monday. Speaking by web chat from Russia at the K(no)w Identity conference, the fugitive and whistleblower responded to an audience member’s question about the effectiveness of anti-money-laundering laws that require financial institutions and other businesses to extensively vet their customers. “They are perhaps helpful, perhaps useful in some edge cases,” Snowden said. “We do get dumb terrorists,” he said. “We get people who are wannabes who go out on Twitter on Facebook, using their real name and they say ‘death to the infidel, I’m going to go shoot up a courthouse’ and they go on Amazon and try to purchase materials that are obviously for bombing. We put all these things together and go ‘hmmm, yeah.’ ” But such cases are rare and usually involve FBI informants goading suspects into radicalization, Snowden said. Meanwhile, “we do have many instances in public evidence where these know-your-customer laws did precisely bupkis in preventing flow of resources — whether we’re talking physical, whether we’re talking monetary, whether we’re talking informational — across the world. Because people can bypass these things if they have enough sophistication.”
Banks need to stop keeping COBOL on life support -- In my blog, I regularly call for banks to change their core systems. But banks do a great job of not listening to me. Banks got into this technology mess because 94% of the C-suite team of banks are bankers with no background or experience in technology and they’ve layered tens of thousands of dollars’ worth of infrastructure on top of their rotting old core systems. How rotten are they? Well, in another amazing statistic, 43% of American banks’ core systems are written in COBOL, a computer programming language that often dates to the 1970s. The big problem for relying on COBOL is that the people who wrote that code are now dying or retiring. They’re old. The average COBOL programmer’s age is 50 and older, and the banks are asking guys riding around on the golf course in their retirement to come back for $1,000 a day. How long can one expect to continue to run a bank built upon foundations of dust? The old concrete is cracking and split, and it’s no longer good enough to keep layering technology on top to disguise this fact. That’s just putting lipstick on a pig, as so many say, and the pig is darned ugly underneath. So banks got into this mess because people who don’t understand technology have been in denial for years about the issue. C-suite executives been told their bank could crash if the bank tried to switch their core systems, likening the process to changing the engines on a flight at 40,000 feet. It just can’t be done, some say. But I claim it can.
The real story behind the C&I lending slowdown – BankThink - The sharp slowdown in commercial and industrial lending over the last six to nine months is worrisome. But there is more to this story than meets the eye. Some believe that increased bank regulation and tighter supervision is behind the lending slowdown. Yet that assessment misses some important details. Indeed, there is no “smoking gun” in the data linking the decline in the annual C&I loan growth rate to either passage of the Dodd-Frank legislation or the Federal Reserve’s progressive tightening of its stress-testing requirements. Digging deeper reveals two more nuanced takeaways. First, it appears a pullback in overall business investment by potential borrowers is a more likely reason for the decline in C&I loan growth. Secondly, evidence does point to the tighter regulatory environment having an effect on C&I lending. But that effect has more to do with the types of commercial loans banks have made, not overall loan growth. C&I loan growth has fluctuated since the crisis and recovery, and has been on a gradually downward slide since 2012. But that rate has fallen sharply since late 2016. The annual C&I loan growth rate declined from an average pace of 11% during the 2012 to 2015, to only 4.2% in the second half of 2016. (Data in this article uses seasonally adjusted annual rates.) According to the Federal Deposit Insurance Corp., quarterly C&I loan growth peaked at $72 billion at the end of the first quarter of 2016. It declined sharply in the next two quarters to $18 billion and $12 billion. In the fourth quarter, C&I loan balances were $7 billion less than the previous quarter. It may be tempting to raise alarm by blaming the regulatory environment for the lending slowdown, and in turn a slowdown in business investment. But the data tells a different story: Business investment sputtered well before C&I lending slowed, suggesting that low loan demand is the primary culprit. Companies’ investment spending has nosedived, falling far below its post-recovery (2010-12) pace in 2015 — from an average annual pace of 1.2% during 2012-15, to an average of 0.4% in the second half of 2016 — despite interest rates having declined to historically low levels.
Walmart and Banking: It's Time to Reconsider - Cecchetti & Schoenholtz Overshadowed by the media attention to the proposed repeal of Obamacare, the House Financial Services Committee recently approved substantial changes in financial regulation. The House of Representatives may soon consider the proposed bill—the Financial CHOICE Act—which would make major changes in the Dodd-Frank Act. However, when financial regulation is being discussed, there is a large elephant that isn’t in the room, but really should be: Walmart. Starting in the mid-1990s, Walmart made two separate efforts to enter banking in the United States, but was repelled both times. After its second effort was rebuffed in 2007, Walmart gave up this effort in the United States (but has since entered banking in Canada and in Mexico). One question to ask might be, “Why should Walmart be allowed to enter banking?” But a more relevant question would be, “Why shouldn’t Walmart be allowed to enter banking?” After all, the U.S. economy is generally market-oriented, and entry is generally recognized as potentially beneficial for consumers, as entrants can bring new ideas, innovations, and efficiencies to the market. Of course, incumbents usually don’t like the idea of entrants’ disrupting the status quo; and often those incumbents lobby for regulation and/or legislation that creates barriers to entry. But, for most markets, the presumption in broad U.S. economic policy is that entry should be encouraged—or at least, that policy should be neutral between incumbents and entrants—so that the benefits of entry can be enjoyed by consumers. Of course, banking is special—as the regular readers of this blog are well aware. And how the specialness of banking and the presence of Walmart in banking can be reconciled must be addressed, and will be addressed below. But first, consider what the entry of Walmart into banking might well achieve: Walmart is well known for providing reasonably priced goods to low- and moderate-income households. Its position as the largest company in the United States—as measured by sales and by employment—is a testament to that reputation.
How reg relief could help borrowers in student loan lawsuits - Maintaining a federal class action concerning consumer rights has been historically difficult when there is a pending, competing government action. The difficulty arises from the so-called “superiority” requirement, which requires federal class action litigants to demonstrate the superiority of a class action relative to other available means of adjudication. This obstacle, however, may soon be easier to overcome if courts begin taking notice of President Trump’s desire to dismantle the Consumer Financial Protection Bureau and to scale back regulations designed to protect consumers. Specifically, with regard to student loan borrowers, the president’s campaign rhetoric and post-election plans may support a decision that a class action lawsuit is a more reliable and superior way to enforce borrower rights relative to a competing action by a weakened CFPB or an inherently weak successor agency. Even before any of the Trump administration’s proposals become law, in the CFPB’s pending action against Navient, the nation’s largest student law servicer, Navient is seeking to have the case dismissed on the basis that the CFPB “is not permitted to bring an enforcement action for unfair, deceptive or abusive acts or practices . . . without first promulgating regulations defining what is unlawful.” If the court accepts Navient's position, the result could be a boon to plaintiffs seeking to maintain class actions against Navient. It appears Navient is poised to accept that consequence. However, beyond the issue of the CFPB’s current authority, if the regulatory landscape changes in ways proposed by the new administration, ironically, Navient and other defendants will likely find they need to defend against similar and possibly stronger arguments by plaintiffs seeking to maintain class actions in the wake of weakened or compromised enforcement power of the CFPB or its potential successor. President Trump certainly appears poised to follow through on his campaign promises of less regulation and reducing the CFPB’s enforcement power. In fact, the continued existence of the CFPB is not at all certain given that the House Financial Services Committee recently approved the president’s bid to replace what he called the “horrendous Dodd-Frank regulations.” In its current form, the Financial Choice Act would rename the CFPB the Consumer Law Enforcement Agency and prohibit the agency from commencing any enforcement actions against financial institutions without congressional approval. Further, the head of the agency could be removed “at will” by the president.
UBS Hints At Rampant Auto Lending Fraud; "It’s Not Just Smoke And Mirrors Anymore" For months we've written about the imminently doomed auto bubble in the U.S., spurred in no small part by an unprecedented relaxation of underwriting standards by banks that would put even the shenanigans of the 2008 mortgage crisis to shame. From stretched out lending terms to promotional interest rates, auto lenders have increasingly played every trick necessary to get those incremental new car buyers into the most expensive car their monthly budgets could possibly absorb.That said, in recent weeks there has been growing concern that consumers, auto dealers and/or banks have been going beyond simply relaxing underwriting standards and have instead been forced to commit outright fraud in order to attract that incremental auto volume growth. As UBS Strategist Matthew Mish told Bloomberg, “something is definitely going on under the hood...it’s not just smoke and mirrors anymore.”The evidence is growing. First, the explosion of technology makes gaining access to information to improve credit scores very simple. Internet searches for 'credit score' are at record levels. Second, our survey finds 21% of auto loan borrowers admitted to some form of inaccuracy in their loan applications. Third, there is growing concern reported among auto lenders around fraud, which is the extreme case of this behavior.Overall, the explosion and adoption of technology makes gaining access to "proven" methods for improving credit scores extremely simple. To this point, the popularity of internet searches for "credit score" has been rising consistently and is near peak post-crisis levels (Figure 7). Similarly, our survey finds that 21% of auto loan borrowers admitted to some inaccuracy in their application for non-mortgage related debt (auto, student or credit card loan). More concerning, this trend may be systemic as 29% of other consumer loan (i.e., student loan, credit card) borrowers acknowledged some form of inaccuracy in their applications (Figure 8).
How Tales of ‘Flippers’ Led to a Housing Bubble - Robert Shiller - There is still no consensus on why the last housing boom and bust happened. That is troubling, because that violent housing cycle helped to produce the Great Recession and financial crisis of 2007 to 2009. We need to understand it all if we are going to be able to avoid ordeals like that in the future. But the explanations for what happened in housing are not, I think, to be found in the conventional data favored by economists but rather in sociologically important narratives — like tales of getting rich through “flipping” houses and shares of initial public offerings — that constitute the shifting mentality of the era. ... By now, the notion of getting rich by flipping houses is entrenched. I searched Amazon for books on “flipping houses” and came up with 325 hits, most written in the past few years..., many of these books make extravagant pitches and seem aimed at inspiring amateurs to plunge into risky ventures. The public fascination with speculating in housing has been held in check by regulators empowered by the 2010 Dodd-Frank Act, but that restraint is tenuous with the election as president of a real estate promoter intent on reducing regulators’ power. These narratives are still potent and could easily spur further spirals in the housing market.
Steve Mnuchin’s Old Company Just Settled for $89 Million for Ripping Off the Government on Dodgy Loans - For four years during Treasury Secretary Steven Mnuchin’s tenure as Chairman of OneWest Bank, its reverse mortgage subsidiary Financial Freedom ripped off the government by receiving unlawful federal insurance payments on reverse mortgages, according to an $89 million Justice Department settlement made public today. Financial Freedom serviced thousands of government-insured reverse mortgages from 2011 to 2016. According to the settlement, the company repeatedly filed insurance claims with the Federal Housing Administration (FHA), and received interest payments, without following program guidelines. This gave Financial Freedom a critical backstop for reverse mortgages that often harmed borrowers.“This lender failed to comply with FHA servicing requirements and sought to receive financial gains that it was not legally entitled to,” said Inspector General for the Department of Housing and Urban Development, David Montoya, in a statement accompanying the settlement.Misconduct stemming from Mnuchin’s OneWest tenure has dogged the Treasury Secretary since President Trump nominated him last November. Prosecutors in the California Attorney General’s office recommended suing OneWest over widespread violations of state foreclosure practices. And numerous foreclosure victims have accused OneWest of treating them unfairly and wrongfully foreclosing on their homes.The Financial Freedom unit appears to have been a particular trouble spot. Reverse mortgages, where seniors borrow against the value of their homes, are intended to give the elderly a source of income at end of their lives to make ends meet. But they can turn harmful amid unscrupulous lenders. Seniors remain responsible for property taxes and homeowner’s insurance, and when they fail to pay, Financial Freedom often moved quickly to foreclose, without granting repayment options to the borrower. Financial Freedom also reportedly engaged in “widow foreclosures,” evicting a spouse from the home after the borrower on the title died. Data obtained by the California Reinvestment Coalition showed that Financial Freedom was responsible for 39 percent of all reverse mortgage foreclosures since April 2009, yet only 17 percent of all reverse mortgages.
Philadelphia is latest city to sue Wells Fargo for discriminatory lending -- The city of Philadelphia filed a federal lawsuit against Wells Fargo on Monday, accusing the $2 trillion-asset bank of violating the Fair Housing Act by targeting minority borrowers with high-cost and high-risk loans. The city filed the suit in the U.S. District Court for the Eastern District of Pennsylvania just two weeks after the U.S. Supreme Court ruled that cities have standing to sue lenders under the Fair Housing Act. In the complaint, the city alleged that from 2004 and on, Wells Fargo steered African-American and Latino borrowers into high-cost or high-risk loans even when their credit would have qualified them for more advantageous loans. The city based its suit in part on an analysis of available loan data that revealed 23.3% of loans to minority borrowers fell into this category, while just 7.6% of loans to white borrowers did.
FHFA, Treasury should cooperate on GSE capital buffer, housing groups say — Fannie Mae and Freddie Mac should be able to rebuild a capital buffer to avoid any potential crisis in the mortgage market, according to a coalition of affordable housing advocates, homebuilders and small mortgage lender groups. The Community Home Lenders Association, Community Mortgage Lenders of America and Leading Builders of America released a joint letter Wednesday along with other housing groups backing Federal Housing Finance Agency Director Mel Watt's possible plans to allow the two government-sponsored enterprises to build a capital buffer to prevent a possible draw from the U.S. Treasury.
Housing Vouchers Work: Funded Vouchers Are Used – CBPP -- As a recent PBS Frontline documentary showed, some families that receive Housing Choice Vouchers can’t use them, partly because landlords in most cities and states don’t have to accept vouchers. But state and local housing agencies reissue returned vouchers to other families who can use them, thereby putting nearly every dollar of voucher funds to use in helping needy families. Over the last five years, in fact, agencies have used an average of 99.9 percent of their voucher funds (excluding agencies in a federal demonstration that lets them shift voucher funds to other purposes). In addition, better policies and program management can make it easier for families to use vouchers, especially in neighborhoods with low poverty, low crime, and strong schools.Vouchers help more than 2 million low-income families keep a roof over their heads. But, due to funding limitations and rising rents, 3 in 4 families in need get no rental assistance and most parts of the country have long waiting lists for vouchers. If policymakers provide funds for more vouchers, agencies could help more struggling families. In tight housing markets with few vacancies, it’s harder for families to find units they can rent with their vouchers. But even there, effective agency policies can enable a higher share of families to use their vouchers successfully. For example, agencies can encourage owners to rent to voucher holders or provide other help to families having a hard time finding a unit. Agencies can also give families extra time to find a unit if needed and can ensure that voucher subsidies are adequate to cover rents in a wide range of neighborhoods.
25 Million Americans Could Find Mortgage Tax Break Useless Under Trump’s Plan - U.S. Treasury Secretary Steven Mnuchin has taken pains to stress that the Trump administration isn’t out to kill Americans’ beloved mortgage-interest tax deduction -- but a side effect of the plan could turn it into a perk for only the wealthy.President Donald Trump has proposed rewriting the tax code to raise the standard federal deduction to a level where about 25 million homeowners would no longer take advantage of the century-old break. A married couple would need a home-loan balance of about $608,000 -- almost triple the mortgage on a median-priced U.S. home -- before using it would make sense, according to a new analysis by property-data provider Trulia. That would be up from about $322,000 today.Without the incentives, along with a proposed end to local property-tax deductions, home sales may be hurt in cities where prices are rising quickly and buyers are stretching to afford their purchases, from Denver and Portland, Oregon, to Boston and Washington. Reduced demand would weigh on values, causing price declines nationwide, according to the National Association of Realtors, which opposes the change. The proposal “is a backdoor way of rendering the mortgage interest deduction close to worthless,” said Mark Zandi, chief economist for Moody’s Analytics Inc.
MBA: Mortgage Delinquencies Decreased in Q1, Foreclosures Decreased -- From the MBA: Delinquencies Decline in Latest MBA Mortgage Delinquency Survey The delinquency rate for mortgage loans on one- to four-unit residential properties decreased to a seasonally adjusted rate of 4.71 percent of all loans outstanding at the end of the first quarter of 2017. The delinquency rate was down nine basis points from the previous quarter, and was six basis points lower than one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The percentage of loans on which foreclosure actions were started during the first quarter was 0.30 percent, an increase of two basis points from the previous quarter, but five basis points lower than one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 1.39 percent, down 14 basis points from the fourth quarter and 35 basis points lower than one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 2.76 percent, a decrease of 37 basis points from last quarter, and a decrease of 53 basis points from last year. "Mortgage delinquencies decreased overall in the first quarter of 2017, driven by a drop in both the FHA and VA delinquency rates from the previous quarter as the conventional delinquency rate held constant. Employment growth started 2017 on strong footing, with the economy adding 216,000 jobs in January 2017 and 232,000 jobs in February. Average hourly wage growth increased 2.8 percent over the year, and has maintained a generally increasing trend since late 2015. These fundamentals have helped to support the performance of all loan types - whether FHA, VA or conventional loans. This graph shows the percent of loans delinquent by days past due. Note that the total percent delinquencies and foreclosures is below the 2002 level.The percent of loans 30 and 60 days delinquent increased in Q1, but is below the normal historical level.
MBA: "Mortgage Applications Decrease in Latest Weekly Survey" - From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 12, 2017... The Refinance Index decreased 6 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 9 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 increasing to 0.37 from 0.31 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990.Refinance activity remains low - and will not increase significantly unless rates fall sharply. The second graph shows the MBA mortgage purchase index. Even with the increase in mortgage rates late last year, purchase activity is still up 9% year-over-year.
Refinance application share hits eight-year low: MBA - Mortgage applications decreased 4.1% from one week earlier as the refinance share hit an eight-plus-year low, according to the Mortgage Bankers Association. The MBA's Weekly Mortgage Applications Survey for the week ending May 12 found that the refinance index decreased 6% from the previous week.
Cut mortgage down payments to 10%: B of A's Moynihan -- Down payment standards should be relaxed to just 10% to spur homebuying (more debt) among millennials, Bank of America CEO Brian Moynihan said during a television interview this week. "It takes just a little more time to accumulate 20% than it would for 3% or none, which is what the rules were for a short period of time," Moynihan told CNBC. "So our goal, going back to regulatory reform, is should you move the down payment requirement from 20% to 10? Wouldn't introduce that much risk but would actually help a lot of mortgages get done."
BofA opens debate on lowering mortgage down payments | Reuters: The head of Bank of America, the United State's fourth-biggest mortgage lender, said on Thursday banks would be able to supply a bigger share of funding for home purchases if the standard down payment for buyers was cut to 10 percent from 20 percent. The vast majority of mortgages are underwritten to strict standards set by the U.S. government or quasi-government entities Fannie Mae and Freddie Mac. While down payment requirements can vary, they offer fairly little latitude to lenders that do not want to take all the risk themselves. As a result, many prospective homebuyers who cannot come up with a 20 percent down payment are unable to get a loan. "Our goal - going back to regulatory reform - is should you move the down payment requirement from 20 percent to 10? It wouldn't introduce that much risk but would actually help a lot of mortgages get done," Chief Executive Officer Brian Moynihan told CNBC in an interview Thursday. Bank of America was the top U.S. mortgage lender ahead of the 2008 mortgage crisis, causing it to face greater losses, both from defaults and litigation, than any other bank. Under Moynihan, who took the helm at the start of 2010, the bank has tightened lending standards and executives regularly use the motto "responsible growth" in public speeches. Bank of America has ceded market share partly because, unlike peers Wells Fargo and JPMorgan Chase, it does not acquire mortgages from other lenders.
Mortgage Rates Decline to 4% --From Matthew Graham at Mortgage News Daily: Rates Respond to Political Scandal by Plummeting to 2017 Lows Mortgage rates surged significantly lower today, as a part of a broad-based market movement following a political scandal that began taking shape yesterday afternoon. You can choose your preferred media outlet to digest all of the details, but the issue surrounds communications between Trump, former FBI Director Comey, and the potential for the details of those communications to be demanded by House Oversight Chair Chaffetz....We're often talking about just how small the day-to-day movements are that we're tracking in these daily write-ups. Today was an exception, with most lenders moving a full eighth of a percentage point lower in rate. That's the king of improvement we only see a few times a year. This time, it brought conventional 30yr fixed rates to the best levels of 2017. Many of the best-qualified borrowers will be seeing quotes in the 3.875%-4.0% range now as opposed to 4.0-4.125% before today.Here is a table from Mortgage News Daily:Home Loan Rates View More Refinance Rates
Housing Starts decreased to 1.172 Million Annual Rate in April --From the Census Bureau: Permits, Starts and Completions -- Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,172,000. This is 2.6 percent below the revised March estimate of 1,203,000, but is 0.7 percent above the April 2016 rate of 1,164,000. Single-family housing starts in April were at a rate of 835,000; this is 0.4 percent above the revised March figure of 832,000. The April rate for units in buildings with five units or more was 328,000. Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,229,000. This is 2.5 percent below the revised March rate of 1,260,000, but is 5.7 percent above the April 2016 rate of 1,163,000. Single-family authorizations in April were at a rate of 789,000; this is 4.5 percent below the revised March figure of 826,000. Authorizations of units in buildings with five units or more were at a rate of 403,000 in April.The first graph shows single and multi-family housing starts for the last several years.Multi-family starts (red, 2+ units) decreased in April compared to March. Multi-family starts are down year-over-year. Single-family starts (blue) increased in April, and are up 8.8% year-over-year. The second graph shows total and single unit starts since 1968. The second graph shows the huge collapse following the housing bubble, and then - after moving sideways for a couple of years - housing is now recovering (but still historically low), Total housing starts in April were below expectations. This decline was due to a sharp decline in multi-family. Still a decent report.
New Residential Building Permits: Down 2.5% in April, Worse Than Forecast -- The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential building permits. The latest reading of 1.229M was a decrease from a revised 1.260M in March and below the Investing.com forecast of 1.270M. Figures going back to January 2015 were revised. Here is the opening of this morning's monthly report: Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,229,000. This is 2.5 percent (±1.1 percent) below the revised March rate of 1,260,000, but is 5.7 percent (±1.4 percent) above the April 2016 rate of 1,163,000. Single-family authorizations in April were at a rate of 789,000; this is 4.5 percent (±0.8 percent) below the revised March figure of 826,000. Authorizations of units in buildings with five units or more were at a rate of 403,000 in April. Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,172,000. This is 2.6 percent (±8.8 percent)* below the revised March estimate of 1,203,000, but is 0.7 percent (±7.0 percent)* above the April 2016 rate of 1,164,000. Single-family housing starts in April were at a rate of 835,000; this is 0.4 percent (±8.6 percent)* above the revised March figure of 832,000. The April rate for units in buildings with five units or more was 328,000. [link to report] Here is the complete historical series, which dates from 1960. Because of the extreme volatility of the monthly data points, a 6-month moving average has been included.
Comments on April Housing Starts -- Earlier: Housing Starts decreased to 1.172 Million Annual Rate in April The housing starts report released this morning showed starts were down in April compared to March, and were up 0.7% year-over-year compared to April 2016.Note that multi-family is frequently volatile month-to-month, and has seen especially wild swings over the last year. This first graph shows the month to month comparison between 2016 (blue) and 2017 (red). Starts were up 0.7% in April 2017 compared to April 2016, and starts are up 5.3% year-to-date.Note that single family starts are up 7.0% year-to-date, and the weakness (as expected) has been in multi-family starts.My guess is starts will increase around 3% to 7% in 2017.Below is an update to the graph comparing multi-family starts and completions. Since it usually takes over a year on average to complete a multi-family project, there is a lag between multi-family starts and completions. Completions are important because that is new supply added to the market, and starts are important because that is future new supply (units under construction is also important for employment).The blue line is for multifamily starts and the red line is for multifamily completions.The rolling 12 month total for starts (blue line) increased steadily over the last few years - but has been moving more sideways recently. Completions (red line) have lagged behind - but completions have been generally catching up (more deliveries). Completions lag starts by about 12 months. I think most of the growth in multi-family starts is probably behind us - in fact multi-family starts probably peaked in June 2015 (at 510 thousand SAAR) - although I expect solid multi-family starts for a few more years (based on demographics).
NAHB: Builder Confidence increased to 70 in May -- The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 70 in May, up from 68 in April. Any number above 50 indicates that more builders view sales conditions as good than poor. From NAHB: Builder Confidence Continues on Upward Trend In a further sign that the housing market continues to strengthen, builder confidence in the market for newly-built single-family homes rose two points in May to a level of 70 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the second highest HMI reading since the downturn. “This report shows that builders’ optimism in the housing market is solidifying, even as they deal with higher building material costs and shortages of lots and labor,”“Two of the three HMI components registered gains in May. The index charting sales expectations in the next six months jumped four points to 79 while the index gauging current sales conditions increased two points to 76. Meanwhile, the component measuring buyer traffic edged one point down to 51. The three-month moving averages for HMI scores posted gains in three out of the four regions. The Northeast and South each registered three-point gains to 49 and 71, respectively, while the West rose one point to 78. The Midwest was unchanged at 68. .This graph show the NAHB index since Jan 1985. This was above the consensus forecast and another solid reading.
Quelle Surprise! Pricey Housing Discourages Having Kids - naked capitalism by Yves Smith - In the US, the press has focused on student debt as a big impediment to household formation, typically a necessary but not sufficient condition for childrearing. We’ve pointed out a related obstacle, which is employment instability. Even if a young person manages to join the salaried class, as opposed to being stuck in the precariat, the average job tenure is 4.4 years. How can you make 17 plus year commitment to bringing up a child when you have no idea whether you’ll have the means to support yourself on a consistent basis, let alone your offspring? It should be no surprise that that this week, the Center for Disease Control announced that for the first time in the US, women in their 30s were having more children than women in their 20s. While older parents are arguably more mature, and hopefully on a bit more solid footing financially, there was a lot of logic in the traditional norm of starting to have children young, as in the mother’s early to mid 20s. Younger people have more energy. It was a common lament at Goldman that men in their early 30s couldn’t handle the same level of sleep deprivation that they could eight to ten years earlier. And there is also evidence that younger parents have healthier babies, although the real break in outcomes seems to start around 40 (for instance, the odds of a Downs Syndrome baby rises markedly when the mother is over 40). MacroBusiness describes a third impediment, which is particularly binding in the Australian context and relevant here: the cost of housing.
Household Debt And Credit Report: Q1 2017 Update - As a result of the housing and mortgage crisis of the Great Recession, economists have been paying more attention to the liabilities portion of household balance sheets. Among the New York Federal Reserve Board's many economic reports is the Household Debt and Credit report, which is released quarterly with data going back to 2003. Data is collected through the NY Fed's Consumer Credit Panel which is constructed from a nationally representative random sample of Equifax credit report data resulting in a sample size of over 40 million individuals quarterly. The latest household debt for Q1 2017 was up 1.2% from Q4 and currently at $12.73T, exceeding the 2008 Q3 peak of $12.68T. Here is an excerpt from the latest release:Aggregate household debt balances increased in the first quarter of 2017, for the 11th consecutive quarter, finally surpassing the 2008Q3 peak of $12.68 trillion. As of March 31, 2017, total household indebtedness was $12.73 trillion, a $149 billion (1.2%) increase from the fourth quarter of 2016. Overall household debt is now 14.1% above the 2013Q2 trough. Mortgage balances, the largest component of household debt, increased again during the first quarter. Mortgage balances shown on consumer credit reports on March 31 stood at $8.63 trillion, an increase of $147 billion from the fourth quarter of 2016. Balances on home equity lines of credit (HELOC) declined by $17 billion and now stand at $456 billion. Non-housing balances were mixed in the first quarter. Auto loans and student loan balances grew, by $10 billion and $34 billion respectively, while credit card balances declined by $15 billion. Read more The chart below shows total debt balance nation-wide by composition in trillions of dollars. The current total is $12.73T, surpassing the last peak in 2008. Notice that even though the current Total Household Debt is greater than it's 2008 high, mortgage debt is still currently lower than during the recession. The student and auto loans, however, have been on the rise.
NY Fed: "Household Debt Surpasses its Peak Reached During the Recession in 2008" - The Q1 report was released today: Household Debt and Credit Report.
From the NY Fed: Household Debt Surpasses its Peak Reached During the Recession in 2008 - The Federal Reserve Bank of New York today issued its Quarterly Report on Household Debt and Credit, which reported that total household debt reached $12.73 trillion in the first quarter of 2017 and finally surpassed its $12.68 trillion peak reached during the recession in 2008. This marked a $149 billion (1.2%) quarterly increase and nearly three years of continued growth since the long period of deleveraging following the Great Recession. “Almost nine years later, household debt has finally exceeded its 2008 peak but the debt and its borrowers look quite different today. This record debt level is neither a reason to celebrate nor a cause for alarm. But it does provide an opportune moment to consider debt performance,” said Donghoon Lee, Research Officer at the New York Fed. “While most delinquency flows have improved markedly since the Great Recession and remain low overall, there are divergent trends among debt types. Auto loan and credit card delinquency flows are now trending upwards, and those for student loans remain stubbornly high.” Mortgage balances increased again while originations declined and median credit scores of borrowers for new mortgages increased, reflecting tightening underwriting. Mortgage delinquencies worsened slightly and foreclosure notations increased but remained low by historical standards. Bankruptcy notations reached another low the 18-year history of this series. This quarter saw a notable uptick in credit card debt transitioning into delinquencies, a continued upward trend of auto loans transitioning into serious delinquencies, and student loan transitions into serious delinquencies remaining high.
US Household Debt Surpasses 2008 High, Hits Record $12.7 Trillion --Total debt held by US household reached $12.73 trillion in the first quarter of 2017, finally surpassing its $12.68 trillion peak reached during the recession in 2008 according to the NY Fed's latest quarterly report on household debt. This marked a$479 billion increase from a year ago, and up $149 billion from Q4 2016 after 11 consecutive quarters of growth since the deleveraging period immediately following the Great Recession.Immediately following the 2009-2009 crisis, Americans reduced their debts to an unusual extent: a 12% decline from the peak in the third quarter of 2008 to the trough in the second quarter of 2013. New York Fed researchers, cited by the WSJ, described the drop as “an aberration from what had been a 63-year upward trend reflecting the depth, duration and aftermath of the Great Recession.”On a relative basis, household debt remained below past levels in relation to the size of the overall U.S. economy, and in Q1 total debt was 66.9% of GDP, nearly 20% lower compared to 85.4% of GDP in Q3 of 2008Compared to 2008, balance sheets also look different now, with less housing-related debt and more, make that much, much more student and auto loans. As of the first quarter, 67.8% of total household debt was in the form of mortgages; in the third quarter of 2008, mortgages were 73.3% of total debt. Student loans rose from 4.8% to 10.6% of total indebtedness, and auto loans went from 6.4% to 9.2%.
The Other Shoe Drops: Prime Auto Loan Losses Surge As Recoveries Tumble - When we looked at subprime auto delinquencies most recently, we found some troubling trends: first, in February, we showed that 61+ day delinquencies in General Motors' subprime securitization book would support a rather bleak thesis for future auto sales, and specifically the demand side of the equation, with January 2017 delinquency rates soaring to the highest levels since late 2009/early 2010. Ironically, this hasn't stopped lenders from providing financing, and according to Morgan Stanley since 2010, the share of Subprime Auto ABS origination that has come from deep subprime deals has increased from 5.1% to 32.5%, suggesting that yield-starved buyside will put "other people's money" into anything as long as it provides a slightly higher yield. Meanwhile, the subprime shock has already impacted the broader market, observed with the latest monthly auto sales data which declined four month in a row heading into May. An even bleaker picture of the subprime market emerged a month later when looking at the latest securitization analysis from Morgan Stanley which revealed that 60+ day delinquencies at 266 subprime auto ABS deals were surging - despite low unemployment, high consumer confidence and debt-to-income ratios at 30-year lows - back to 'great recession' levels. Meanwhile, loss severities were also shooting higher just as used car prices were sliding. In part, this tied in with the overnight look at the "flood of off-lease vehicles", according to which by the end of 2019, an estimated 12 million low-mileage vehicles are coming off leases inked during a 2014-2016 spurt in new auto sales, which is set to put even more pressure on used (and new) car prices for the foreseeable future.
CPI Up 0.2% as Fresh Vegetables Soar in April -- Robert Oak - (12 graphs) The Consumer Price Index for April reversed last month's course and rose by 0.2%. Inflation increases were across the board. Food rose 0.2%, energy 1.1% and all other items together increased 0.1%. Shelter continues on it's tear with a 0.3% monthly increase. Natural gas had a huge monthly increase of 2.2%. Fresh vegetables had the largest monthly jump since February 2011, an increase of 5.1%. Yearly overall inflation was 2.2% and is shown in the below graph. This is less than March's 2.4% annual inflation rise but the average prices increase over the last 10 years has been much lower, 1.7%. Core inflation, or CPI with all food and energy items removed from the index, has increased 1.9% for the last year. and this is the same as last month. Core inflation is the figure the Federal Reserve considers for interest rate increase decisions. For the past decade annual core inflation has risen an average of 1.8%. Core CPI's monthly 0.1% percentage change is graphed below. Within core inflation, shelter increased 0.3%. Rent increased 0.3%, whereas hotels and motels increased 2.4% after last month's revised -2.8% decline and home ownership equivalent rent increased 0.2%. Shelter overall is up 3.5% for the year with rent increasing 3.8% annually. Wireless service dropped another -1.7% after last month's whooping -7.0%. Tobacco had it's biggest increase since 2009, 4.2%. That is most likely new taxes and as people quit or don't start, that tax revenue is thinning. The energy index increased 1.1% for the month and is up 9.3% from a year ago. The BLS separates out all energy costs and puts them together into one index. Fuel oil is up 22.1% for the year, while dropped by -0.3% this month. Natural gas rose by a significant 2.2% but is up 12.0% for the year. Electricity went up 0.6% for the month and has increased 2.4% for the year. Graphed below is the overall CPI energy index. Graphed below is the CPI gasoline index annual percentage change and for the month gas increased by 1.2%. For the year, gasoline has now increased 14.3%. Graphed below is the rent price index which has been soaring for some time, now up 3.8% annually, and is shown in the below graph. Food prices increased by 0.3% for the month. Food and beverages have now changed 0.5% from a year ago. Groceries, (called food at home by the BLS), increased 0.2% for the month but are still down -0.8% for the year. Fresh fruit jumped 2.2% for the month and fresh vegetables by themselves soared 5.1%. One can probably blame the never ending rains hitting the West coast as the reason for the price increases as the mud and run off won't let crops be planted or harvested. Dairy and related products increased by 0.3% for the month. Eating out, or food away from home increased 0.2% for the month and is up 2.3% for the year.
Rail Week Ending 13 May 2017: Another Relatively Good Week: Week 19 of 2017 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. The economically intuitive sectors improved. We review this data set to understand the economy. If coal and grain are removed from the analysis, rail over the last 6 months been declining around 5% - but this week it IMPROVED 0.6 % (meaning that the predicitive economic elements improved year-over-year). Also consider rail movements are below 2015 levels - even though they are above 2016 levels. The following graph compares the rail economically intuitive sectors (red line) vs. total movements (blue line):
Industrial Production increased 1.0% in April -- From the Fed: Industrial production and Capacity Utilization Industrial production advanced 1.0 percent in April for its third consecutive monthly increase and its largest gain since February 2014. Manufacturing output rose 1.0 percent as a result of widespread increases among its major industries. The indexes for mining and utilities posted gains of 1.2 percent and 0.7 percent, respectively. At 105.1 percent of its 2012 average, total industrial production in April was 2.2 percent above its year-earlier level. Capacity utilization for the industrial sector increased 0.6 percentage point in April to 76.7 percent, a rate that is 3.2 percentage points below its long-run (1972–2016) average. This graph shows Capacity Utilization. This series is up 10.0 percentage points from the record low set in June 2009 (the series starts in 1967). Capacity utilization at 76.7% is 3.2% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007. Note: y-axis doesn't start at zero to better show the change. The second graph shows industrial production since 1967. Industrial production increased in April to 105.1. This is 20.7% above the recession low, and is close to the pre-recession peak. This was above expectations.
Industrial Production Surges Most Since Feb 2014 As Auto Assembly Spikes -- Industrial Production rose 0.96% in April - the biggest MoM move since Feb 2014 - dramatically better than expected (and one of the first 'hard' data beats this month). Year-over-year, IP is up over 2% (the fastest growth since Jan 2015).The increase in durables was spearheaded by a large advance for motor vehicles and parts, while the improvement for nondurables was led by gains for food, beverage, and tobacco products, for textile and product mills, for printing and support, and for chemicals.What is most ironic is the 5.1% surge in Automotive production - we suspect that will not be sustained (given Ford's massive layoffs). Ex-Autos IP rose just 0.6%. So with "used car prices will drop for years" and amid near-record inventories, a so-called 'plateau' in car sales, and soaring auto-loan losses, Automakers decided to increase production massively in April?? Oil & Gas Drilling also rose 9.0% in April. Notably Industrial Production is still 1.4% below its peak in Nov 2014...
NY Fed: Manufacturing Activity "leveled off" in May -- From the NY Fed: Empire State Manufacturing Survey - Business activity leveled off in New York State, according to firms responding to the May 2017 Empire State Manufacturing Survey. The headline general business conditions index fell six points to -1.0. The new orders index dropped to -4.4, suggesting a small decline in orders, and the shipments index edged down to 10.6, indicating that shipments increased at a slightly slower pace than in April. ... Employment indexes remained positive, pointing to continued improvement in labor market conditions. The index for number of employees edged down to 11.9, and the average workweek index was little changed at 7.5. ... Indexes assessing the six-month outlook suggested that firms remained optimistic about future conditions. The index for future business conditions held steady at 39.3, and indexes for future new orders and shipments were somewhat higher. Employment was expected to increase in the months ahead. The slight contraction in May (-1.0) was below the consensus forecast of a reading of 7.0.
Empire State Manufacturing Survey: Index Falls Again in May, Worse Than Forecast -- This morning we got the latest Empire State Manufacturing Survey, which leveled off. The diffusion index for General Business Conditions at -1.0 was a decrease of 6.2 from the previous month's 5.2. The Investing.com forecast was for a reading of 7.0. The Empire State Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state. Here is the opening paragraph from the report. Business activity leveled off in New York State, according to firms responding to the May 2017 Empire State Manufacturing Survey. The headline general business conditions index fell six points to -1.0. The new orders index dropped to -4.4, suggesting a small decline in orders, and the shipments index edged down to 10.6, indicating that shipments increased at a slightly slower pace than in April. Labor market indicators pointed to a modest increase in both employment and hours worked, and input prices and selling prices rose at a more moderate pace. Indexes assessing the six-month outlook were close to last month’s levels, and continued to convey a high degree of optimism about future conditions. [source] Here is a chart of the current conditions and its 3-month moving average, which helps clarify the trend for this extremely volatile indicator:
Philly Fed: "Regional manufacturing activity continued to expand" in May - From the Philly Fed: Current Indicators Reflect Continued Growth Results from the May Manufacturing Business Outlook Survey suggest that regional manufacturing activity continued to expand this month. The diffusion indexes for general activity and shipments improved notably from their April readings. The indexes for new orders and employment, however, fell modestly from last month but remained at high readings. Although most of the survey’s future indicators fell this month, the readings suggest that most firms still expect growth to continue over the next six months. The index for current manufacturing activity in the region increased from a reading of 22.0 in April to 38.8 this month. The index has been positive for 10 consecutive months. This month, the index recovered some of the declines of the previous two months, but it still remains slightly below its high reading of 43.3 in February ...Firms reported an increase in manufacturing employment this month, but the current employment index fell 3 points. The index has remained positive for six consecutive months. The percentage of firms reporting an increase in employment was 23 percent, lower than the 27 percent that reported increases in April. Firms also reported an increase in work hours this month: The average workweek index remained positive for the seventh consecutive month and increased 3 points. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:
Weekly Initial Unemployment Claims decrease to 232,000 --The DOL reported: In the week ending May 13, the advance figure for seasonally adjusted initial claims was 232,000, a decrease of 4,000 from the previous week's unrevised level of 236,000. The 4-week moving average was 240,750, a decrease of 2,750 from the previous week's unrevised average of 243,500. The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971. The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 240,750.This was lower than the consensus forecast. The low level of claims suggests relatively few layoffs.
BLS: Unemployment Rates Lower in 10 states in April, Three States at New Series Lows -- From the BLS: Regional and State Employment and Unemployment Summary: Unemployment rates were lower in April in 10 states, higher in 1 state, and stable in 39 states and the District of Columbia, the U.S. Bureau of Labor Statistics reported today. Nineteen states had jobless rate decreases from a year earlier, and 31 states and the District had little or no change Colorado had the lowest unemployment rate in April, 2.3 percent, followed by Hawaii and North Dakota, 2.7 percent each. The rates in Arkansas (3.5 percent), Colorado (2.3 percent), and Oregon (3.7 percent) set new series lows. (All state series begin in 1976.) New Mexico and Alaska had the highest jobless rates, 6.7 percent and 6.6 percent, respectively.This graph shows the current unemployment rate for each state (red), and the max during the recession (blue). All states are well below the maximum unemployment rate for the recession.The size of the blue bar indicates the amount of improvement. The yellow squares are the lowest unemployment rate per state since 1976. The states are ranked by the highest current unemployment rate. New Mexico, at 6.7%, had the highest state unemployment rate. The second graph shows the number of states (and D.C.) with unemployment rates at or above certain levels since January 2006. At the worst of the employment recession, there were 11 states with an unemployment rate at or above 11% (red). Currently no state has an unemployment rate at or above 7% (light blue); Only two states are at or above 6% (dark blue). The states are New Mexico (6.7%), and Alaska (6.6%).
Signing Away the Right to Get a New Job - Keith Bollinger’s paycheck as a factory manager had shriveled after the 2008 financial crisis, but then he got a chance to pull himself out of recession’s hole. A rival textile company offered him a better job — and a big raise. When he said yes, it set off a three-year legal battle that concluded this past week but wiped out his savings along the way. Mr. Bollinger had signed a noncompete agreement, designed to prevent him from leaving his previous employer for a competitor. These contracts have long been routine among senior executives. But they are rapidly spreading to employees like Mr. Bollinger, who do the kind of blue-collar work that President Trump has promised to create more of. The growth of noncompete agreements is part of a broad shift in which companies assert ownership over work experience as well as work. A recent survey by economists including Evan Starr, a management professor at the University of Maryland, showed that about one in five employees was bound by a noncompete clause in 2014. Employment lawyers say their use has exploded. Russell Beck, a partner at the Boston law firm Beck Reed Riden who does an annual survey of noncompete litigation, said the most recent data showed that noncompete and trade-secret lawsuits had roughly tripled since 2000. “Companies of all sorts use them for people at all levels,” he said. “That’s a change.” Employment lawyers know this, but workers are often astonished to learn that they’ve signed away their right to leave for a competitor. Timothy Gonzalez, an hourly laborer who shoveled dirt for a fast-food-level wage, was sued after leaving one environmental drilling company for another. Phillip Barone, a midlevel salesman and Air Force veteran, was let go from his job after his old company sent a cease-and-desist letter saying he had signed a noncompete.
The Share of Foreign-Born Workers in the U.S. Labor Force Reaches a New High -- The share of foreign-born workers in the U.S. climbed to a record last year, as workers continue to flock to an attractive U.S. labor market and younger immigrants join the labor force. In 2016, there were 27 million foreign-born people in the U.S. labor force, accounting for 16.9% of the total. The share was 10.8% in 1996, according to Labor Department data tracking back two decades. The Labor Department report doesn’t distinguish between workers in the U.S. legally or illegally, and doesn’t track country of origin. Among workers tracked by the Labor Department, the foreign-born were more likely to work than the native-born. The labor-force participation rate was 65.2% versus 62.3% for native-born. Thursday’s report only takes into account data through 2016, so wouldn’t yet show any impact from policies of the Trump administration. The administration, which took office earlier this year, “is focused on immigration enforcement, and any impact of the policies will show up in the labor-force numbers,” said Alex Nowrasteh, an immigration policy analyst at the Cato Institute. Efforts to curtail immigration could run counter to the administration’s stated goal to ramp up economic growth. Relatively low birth rates and an aging population mean immigration is the source of nearly all of the labor force’s net increase, so its growth rate would lower if legal immigration were curbed. Other highlights from Thursday’s report include:
- • Foreign-born workers were more likely than native-born workers to be employed in service occupations and less likely to be employed in management, professional and related occupations.
• The median usual weekly earnings of foreign-born workers were $715 in 2016, compared with $860 for native-born workers.
• In 2016, nearly half of the foreign-born labor force was Hispanic, and one-quarter was Asian, compared with 10.4% and 1.9%, respectively, of the native-born labor force.
$6.40 an hour for nine years: how I got stuck in a career as a Walmart employee - When I was hired by the company at $6.40 an hour, I believed I would only be working there for a few months before I landed a cool gig at a non-profit in Denver, or had my manuscript discovered by Random House. I had dropped out of college to pursue my dream of becoming the next Stephen King. I thought I was wise beyond my years and looked down on many of my new co-workers: soon I would be living in Denver, Santa Fe, or even New York City while they would still be stuck at the local Walmart. Of course, my Gothic novel was not picked up by a fancy publisher, and soon the harsh reality set in: no one would be hiring a kid from Wyoming with only a high school degree and no work experience in the midst of the recession.Almost nine years later, I was still working at the same store. I was broke, in debt, and Walmart was one of the few employment options in town.I earned around $2,000 a month after putting in a lot of hours and snatching up overtime whenever it was offered, working 11 days in a row or taking long shifts. After paying $475 for rent, $193 a month on my car, $75 per month for car insurance, utilities, phone, basic cable, food, minimum payments on my credit card debt that were over $100, taxes (single working people making over the poverty level usually do not get any tax deductions), and $230 a month for health insurance, I had little left over.I felt like a failure with no future, no money, no assets, and lots of credit card debt. The small savings I accumulated would quickly disappear into an emergency car repair for the six-mile round trip to work (especially necessary during the cold, windy winter), or were used to pay the doctor for necessary care out of my pocket because my health insurance plan had a $7,500 deductible.Walmart did offer steady hours and, if you could afford the deductions from your paycheck, provided health, dental, and disability insurance. We received paid sick days and vacation time – although you had to work an entire year before you were granted a single precious week of vacation.
Investigation Reveals That Walmart and Lowe’s Have Direct Links to Slave Labor -- Products derived from timber extracted by workers living in conditions analogous to slave labor in Brazil are connected to a complex business network linked to the U.S. market—possibly reaching the shelves of large retailers and being used in renovation of landmarks —according to a new investigation conducted by Brazilian news outlet Repórter Brasil. After purchasing from suppliers held liable for that crime by the Brazilian government, local traders exported timber to companies like USFloors, which supplies the retail chain Lowe’s, as well as Timber Holdings, which supplied timber for construction projects at Central Park and Brooklyn Bridge in New York. The commercial network linking retailers to sawmill companies was identified by a three-month investigation and confirmed by the companies. The wood products were mixed at Brazilian intermediaries, so the investigation was unable to track the exact destination of each piece of wood. However, its findings reveal that large retail and construction groups are sourcing the product from companies whose supply chains are contaminated by the alleged use of criminal practices, with the conditions of workers rescued from sawmill sites aligning with slave labor practices as defined by Brazilian law.
More Job Guarantee Muddle --Matt Bruenig -- The Center for American Progress wrote a post today advocating for a job guarantee. As with similar posts written by others sympathetic to the idea, the CAP proposal was muddled and failed to offer any plausible jobs that could actually be offered in a JG program. When you clear out the bloat, the proposal is as follows:
- There will be a “permanent program of public employment and infrastructure investment.”
- There will also be publicly-funded training to help people get private sector jobs.
- The program would target a certain employment rate, meaning that it would hire until the employment rate is hit.
- It “would not compete with existing private-sector employment.”
To better understand how this sort of JG program should work in practice, consider the following graph: In the graph, blue represents permanent public sector jobs. This refers to things like teachers, health inspectors, police, and other similar jobs. The defining feature of these jobs is that they are permanent, meaning that they will always be filled by someone. These jobs will not come and go based on the condition of the private sector. They will always exist and always crowd out the private sector.The key to the JG is finding jobs that are nice to have, but are not strictly necessary. You need jobs that can go unfilled when the private sector picks up.Yet, here are all the jobs mentioned by CAP in its JG section: 1) home care workers for elderly people, 2) home care workers for disabled people, 3) child care workers, 4) teachers’ aides, 5) emergency medical technicians. Do these seem like jobs that can go unfilled when the private sector picks up? Should child care and assistance for the disabled disappear when the economy is booming? No. These are blue jobs not orange jobs. They should exist on a permanent basis, not as a temporary home for dislocated workers.
Worth repeating: real median lifetime income has barely budged since 1958 - The Brookings Institution studied total real earnings over workers' prime employment ages from 25 to 55. making use of the most comprehensive measure available: Social Security payments based on payroll data from 1957 to 2013. I'll cut right to the chase. Here's the conclusion: Adjusting for inflation, the median male worker born in 1958 earned just 1 percent more during his career compared with the median man born 27 years earlier, in 1932. I am reminded of a line from Billy Joel's song, "Allentown": Every child had a pretty good shot, to get at least as far as his old man got. This is the most damning evidence I've seen yet that the American Dream has been dying for over a generation now. And people wonder why the electorate is grasping at straws, hoping for somebody to deliver real economic change.Bill blocking St. Louis minimum wage hike is sent to Greitens - stltoday.com: A long-awaited $10 minimum wage in St. Louis may prove short-lived, as Missouri lawmakers on Friday sent a bill banning local minimum wages to the governor with minutes left to spare in the legislative session. But not before Senate Democrats put up a fight, with a lengthy filibuster earlier in the week and a wide-ranging series of procedural moves Friday in a futile attempt to block a vote on the bill. They managed to stall its final passage for more than two hours but couldn’t prevent final passage. “We’re not going to follow the rules if you don’t follow the rules,” Sen. Jamilah Nasheed, D-St. Louis, told Republicans on the floor. Nasheed has been a vocal opponent of the legislation, arguing that cities have the right to determine a living wage for their residents. The increase took effect in St. Louis last week, marking what low-wage workers had hoped was the end of a two-year legal fight with business groups that had challenged the city ordinance. St. Louis Mayor Lyda Krewson released a statement calling the passage “a setback for working families” and vowing to “work with others to get an increase in the (statewide) minimum wage on the ballot since our state Legislature won’t address it.” “Every city and town in our state does not have the same issues, needs or economy. A big city frequently has different problems than a very small one,” she said in the statement. Under that city ordinance, the wage was set to rise again in January 2018 to $11 an hour, then increase annually with inflation.A jarring change may be ahead for workers and businesses who may revert back to the state minimum wage of $7.70 an hour.
US immigration arrests surge 40% under Donald Trump - The number of arrests of suspected undocumented immigrants, has increased by almost 40 per cent since Donald Trump became the president. Data issued by the acting director of Immigration and Customs Enforcement (ICE), Thomas Homan, said arrests by his agency had increased to 41,318 between January 22 of this year and the end of April, up from 30,028 arrests in the same period last year. Of those arrested almost two-thirds had criminal convictions, Reuters said. But there was also a significant jump - of more than 150 per cent - in the number of immigrants not convicted of further crimes arrested by ICE. This totaled 10,800 since the beginning of the year compared to 4,200 non-criminal arrests in the same period in 2016. “Those that enter the country illegally, they do violate the law, that is a criminal act,” Mr Homan told reporters.The increase is a direct result of new guidance given by Homeland Security Secretary John Kelly to implement Mr Trump's executive orders on interior immigration enforcement and border security signed on Jan. 25, just days after the New York tycoon took office.“Those that enter the country illegally, they do violate the law, that is a criminal act,” said Mr Homan.“When a federal judge makes a decision and issues an order that order needs to mean something. If we don't take action on those orders, then we are just spinning our wheels.”
Cali Governor Jerry Brown Slams "Free-Loading" Taxpayers For Opposing Higher Taxes -- Millions of Californians are outraged by a recent bill that would increase the state’s gas tax by 12 cents per gallon, and increase vehicle license fees by $50 per year. All told, the plan amounts to a $52 billion tax hike. The proposal has since been passed in the state’s legislature, despite the fact that a majority of Californians opposed the bill. The tax is so controversial that state senator Josh Newman, who helped it pass, may face a recall election in the near future.Amid this outrage, California Governor Jerry Brown defended the senator and the gas tax in a recent speech, during which he revealed how much disdain he has for middle class voters who are tired of being taxed to death.Republicans say budget cuts should be made to fund road maintenance. A failed GOP plan proposed last year would have tapped into cap-and-trade money used to lower greenhouse gas emissions, cut Caltrans positions and eliminated other positions that have been vacant. It identifies other funding sources, but doesn’t specify what programs would be cut if that money was diverted to roads.Brown said the plan is unrealistic. “The freeloaders — I’ve had enough of them,” Brown said, adding that the approved tax and fee hikes bring those charges to the level they were 30 years ago if adjusted for inflation. “They have a president that doesn’t tell the truth and they’re following suit.”
Debt Island: How $74 Billion in Bonds Bankrupted Puerto Rico - San Juan’s gleaming commuter train seemed like a coup -- the kind of big-ticket item many U.S. cities can only dream of.More than a decade on, the Tren Urbano is a monument to the folly, bloat and abuse that finally bankrupted Puerto Rico. Despite years of planning, it sells only a third of the rides it needs to, and loses roughly $50 million a year. The cost so far: $2.25 billion, $1 billion more than planned.That, in a nutshell, is Puerto Rico’s story. With Wall Street’s help, the U.S. commonwealth borrowed tens of billions in the bond markets, only to squander much of it on grand projects, government bureaucracy, everyday expenses and worse. Debts were piled on debts, even as the economy gave way.Long before the island’s government this month sought protection from creditors in America’s largest municipal insolvency, many on the island wondered where all the money was going. Officially, no one knows for sure: Puerto Rico hasn’t filed audited financial statements since its 2014 fiscal year.Over the past decade or so, bonds were issued by no fewer than 18 government entities, run by a merry-go-round of appointees that changed every four years when a new governor was elected. Bonds helped pay for schools and hospitals, public parks and government buildings, small-town baseball fields and modern stadiums. Bonds were sold to pay salaries, plug budget deficits and fund public pensions. Since 2006, the commonwealth’s outstanding debt has almost doubled.
Puerto Rico's bankruptcy hearing marks reset of asset scramble | Reuters: Puerto Rico is due to embark on a bankruptcy process on Wednesday that could take years to resolve, as investors scramble to get the highest recovery on their bonds. The debt is still trading at elevated levels versus what the government has set aside for payment under its financial recovery plan, and creditors worry about whether they will be able to recoup at those prices. Whether they get that level of recovery is debatable, according to investors and analysts, as the U.S. territory seeks to restructure more than $70 billion in debt, from multiple agencies, and another near $45 billion in underfunded pension liabilities. "The 25 percent may be what the Commonwealth identified as a available to cover debt service but it doesn't necessarily mean that will be the ultimate recovery," said Shaun Burgess, portfolio manager and lead trader for Puerto Rico strategy at Sarasota, Florida-based Cumberland Advisors. Puerto Rico, with 3.5 million U.S. citizens, has spent the last ten years in recession with debt piling up to pay for basic services. The poverty rate is at 45 percent, unemployment is at 11 percent and the population is shrinking as islanders emigrate to the mainland United States in search of a better life. Burgess, who owns insured Puerto Rican debt, did not want to speculate on the final recovery prices, or the potential losses for major mutual funds, but said negotiations could include lowering the coupon rates, reducing principal and extending maturity dates. "There isn't enough information, especially as it relates to time frame and potential recoveries," he said.
At 3 a.m., NC Senate GOP strips education funding from Democrats’ districts -- N.C. Senate Republicans were visibly upset with Democrats for prolonging the budget debate with amendments during an after-midnight session Friday morning. As the clock approached 1 a.m., Senate Minority Leader Dan Blue was summoned to the front of the chamber to talk privately with Senate leader Phil Berger. The Senate had rejected five amendments from Democrats to fund their spending priorities, but each time one proposal was shot down, another one was filed. Senate Rules Chairman Bill Rabon abruptly called for a recess, stopping the proceedings for nearly two hours. GOP leaders headed to a conference room with legislative budget staff, while Democrats – some surprised by the lengthy delay – passed the time with an impromptu dance party in the hall.The session finally resumed around 3 a.m., and Republican Sen. Brent Jackson introduced a new budget amendment that he explained would fund more pilot programs combating the opioid epidemic. He cited “a great deal of discussion” about the need for more opioid treatment funding. Jackson didn’t mention where the additional $1 million would come from: directly from education programs in Senate Democrats’ districts and other initiatives the minority party sought.Sen. Erica Smith-Ingram’s rural district in northeastern North Carolina took the biggest hit from the amendment. It strips $316,646 from two early college high schools in Northampton and Washington counties, and it specifically bans state funding from supporting a summer science, math and technology program called Eastern North Carolina STEM.
The FBI Has a New Plan to Spy on High School Students Across the Country - Under new guidelines, the FBI is instructing high schools across the country to report students who criticize government policies and “western corruption” as potential future terrorists, warning that “anarchist extremists” are in the same category as ISIS and young people who are poor, immigrants or travel to “suspicious” countries are more likely to commit horrific violence. Based on the widely unpopular British “anti-terror” mass surveillance program, the FBI’s "Preventing Violent Extremism in Schools" guidelines, released in January, are almost certainly designed to single out and target Muslim-American communities. However, in its caution to avoid the appearance of discrimination, the agency identifies risk factors that are so broad and vague that virtually any young person could be deemed dangerous and worthy of surveillance, especially if she is socio-economically marginalized or politically outspoken. This overwhelming threat is then used to justify a massive surveillance apparatus, wherein educators and pupils function as extensions of the FBI by watching and informing on each other. The new guidelines depict high schools as hotbeds of extremism, where dangers lurk in every corner. “High school students are ideal targets for recruitment by violent extremists seeking support for their radical ideologies, foreign fighter networks, or conducting acts of violence within our borders,” the document warns, claiming that youth “possess inherent risk factors.” In light of this alleged threat, the FBI instructs teachers to “incorporate a two-hour block of violent extremism awareness training” into the core curriculum for all youth in grades 9 through 12. According to the FBI’s educational materials for teenagers, circulated as a visual aide to their new guidelines, the following offenses constitute signs that “could mean that someone plans to commit violence” and therefore should be reported: “Talking about traveling to places that sound suspicious”; “Using code words or unusual language”; “Using several different cell phones and private messaging apps”; and “Studying or taking pictures of potential targets (like a government building).” “Animal Rights Extremists and Environmental Extremists” are placed alongside “white supremacy extremists”, ISIS and Al Qaeda as terrorists out to recruit high school students. If you "see suspicious behavior that might lead to violent extremism," the resource states, consider reporting it to "someone you trust," including local law enforcement officials like police officers and FBI agents.
Details leaked about the White House's upcoming education budget include proposals to cut science programs and student aid - The White House's 2018 budget for education — expected to be released next week as part of the administration's full spending proposals — appears to double down on the eye-popping cuts to programs included in the Trump administration's "skinny budget" released in March. According to details leaked to The Washington Post this week, the forthcoming budget calls for eliminating the federal Public Service Loan Forgiveness program, letting the Perkins Loan program expire and ending the subsidy that pays the interest on some undergraduate loans while borrowers are in college. While the Department of Education's overall budget would take a huge 13.6 percent cut, the details leaked so far suggest that the administration plans to invest hundreds of millions in new school-choice initiatives across the country. The preliminary budget in March included deep cuts to the National Institutes of Health and multiple other science programs, especially those focused on environmental research. But that document said nothing about the National Science Foundation. Third Way, a centrist think tank, on Thursday released a leaked version of the entire budget plan coming out next week. That document (which could be revised prior to release and/or face objections in Congress) says that President Trump will propose an 11 percent cut to the NSF. The largest part of the NSF (research) would see its budget cut by 11.1 percent while education programs supported by the NSF in both higher education and K-12 schools would be cut by 13.6 percent.
UofA Hires "Social Justice Advocates" To Police Fellow Students For "Bias Incidents" - Administrators at the University of Arizona are now accepting applications for “social justice advocates,” whose job it is to snitch on other students accused of bias. They’re also expected to hold educational programs about “the mosaic of diversity, multiculturalism and inclusivity” and maintain “social justice bulletin boards” in student residence halls. The job, which officially calls (archived link) for the advocates to “report any bias incidents or claims to appropriate Residence Life staff,” pays the student workers $10 an hour. They’re expected to work 15 hours a week, which means they could be making as much as $600 a month to police their fellow students. Part of the job description reads:“The position also aims to increase understanding of one’s own self through critical reflection of power and privilege, identity and intersectionality, systems of socialization, cultural competency and allyship as they pertain to the acknowledgement, understanding and acceptance of differences. Finally, this position intends to increase a student staff member’s ability to openly lead conversations, discuss differences and confront diversely insensitive behavior.”The core responsibility, however, is to report bias claims. Bias incidents, which in recent years are increasingly being policed on college campuses, can range from outright acts of racism to far more subtle “microaggressions” such as referring to someone as a “guy” or wearing dreadlocks while white. The social justice advocate’s job will also be, according to the job posting, to foster dialogue “related to diversity, multiculturalism and social justice”. Furthermore, the advocates will be tasked with “increasing awareness of diverse identities” and are expected to “promote inclusive communities.”
White Students Banned From Student Lounge At D.C. University: "Nothing More Important Than A Multicultural Campus" -- As tolerance spreads across the United States, universities and their progressive student bodies are coming up with new and innovative ways to ensure a positive multi-cultural experience for everyone… unless you happen to be a Caucasian. At the American University in Washington, D.C., which is home to about 13,000 of our best and brightest, administrators and student activists have determined that the best way to ensure a a fair and equal environment is to ban all white people from their new student lounge. The meeting area, ironically named “The Bridge,” opened a couple of months ago as a place for people to gather, study and even sing on open mic nights.But shortly after its opening, the following sign, apparently with the blessing of school administrators, appeared around campus. It designates the new lounge as a safe space and sanctuary for people of color.In short: No Whites Allowed. WND reports:American University in Washington, D.C., has reportedly banned white students from using its new “student lounge” for the spring semester, according to the College Fix.…The lounge, which is called “The Bridge,” opened just six weeks ago. It is planned to be “a community space that student organizations can use however they would like,” with open mic nights, slam poetry and “other student initiated programming,” Darcy Frailey, associate director for facilities and other event services, told the Eagle, American University’s student news site. The lounge seats 80 people and features large working tables, comfortable sofas and chairs, coffee tables, a television and a large stage for events. School officials said they plan to hirestudents who qualify for the federal work-study program to work at “The Bridge.”…American University Provost Scott Bass agreed to the students’ demands. Bass said the college also signed a contract with Ibram X. Kendi, author of “Stamped from the Beginning: The Definitive History of Racist Ideas in America,” to begin an anti-racism center on the school’s campus. “There’s nothing more important, in terms of my administration, than being a multicultural campus,” Bass reportedly told the student protesters.
Harvard Endowment’s Biggest Public Holding Is a High-Yield ETF -- The Harvard University endowment’s biggest publicly traded holding is a high-yield bond exchange-traded fund, a move into a cheap, passive investment as the school replaces some of its own traders with external money managers. Harvard Management Co. disclosed in a filing that it held 9.6 million shares of iShares iBoxx High Yield Corporate Bond ETF valued at $841 million in the first quarter. The ETF gained 1.9 percent for the three months. The fund also purchased options with a face value of almost $500 million for two other ETFs and sold out of 30 positions, including real estate developer Howard Hughes Corp. N.P. “Narv” Narvekar, Harvard Management’s chief executive officer, announced plans in January to overhaul the $35.7 billion endowment to improve performance. Harvard Management is letting go about half of the 230-person staff by year end, shuttering internal hedge funds that traded in fixed-income and equities markets and seeking to rely more on outside money managers. Harvard Management declined to comment on the holdings. While Harvard seeks new outside portfolio managers, it set up a new internal team to oversee a so-called public markets beta portfolio that invests in exchange-traded funds and other similar strategies that deliver index-like returns at low cost, according to a person familiar with the matter. The team is overseen by Jake Xia, Harvard Management’s chief risk officer, who was hired from Morgan Stanley in 2013. The endowment, according to its 13F filing, bought options on two exchange-traded funds -- 4 million shares of iShares MSCI EAFE, which tracks stocks in developed countries excluding the U.S. and Canada, with a face value of $249.2 million, and 6.3 million shares of iShares MSCI Emerging Markets, with a face value of $248 million. The endowment also sold $91 million of the iShares MSCI Emerging Markets ETF in the first quarter. An option is a right to buy a security at a future date and can be profitable if prices rise.
Americans Are Paying $38 to Collect $1 of Student Debt - The federal government has, in recent years, paid debt collectors close to $1 billion annually to help distressed borrowers climb out of default and scrounge up regular monthly payments. New government figures suggest much of that money may have been wasted. Nearly half of defaulted student-loan borrowers who worked with debt collectors to return to good standing on their loans defaulted again within three years, according to an analysis by the Consumer Financial Protection Bureau. For their work, debt collectors receive up to $1,710 in payment from the U.S. Department of Education each time a borrower makes good on soured debt through a process known as rehabilitation. They keep those funds even if borrowers subsequently default again, contracts show. The department has earmarked more than $4.2 billion for payments to its debt collectors since the start of the 2013 fiscal year, federal spending data show. The findings, gleaned from the bureau’s analysis of about 600,000 borrower accounts, come as the Trump administration weighs a shakeup of the government’s student loan program. For years, defaults have mounted despite the improving U.S. economy and the money invested in collecting education debt. Education Secretary Betsy DeVos pledged earlier this year to “do a better job” than the Obama administration at managing the department’s loan contractors. Last week, DeVos suggested that the feds should “start afresh.” Officials at the CFPB say the government should reexamine whether the loan program, and the lucrative contracts it bestows on private firms, is working for the millions of Americans struggling to repay their taxpayer-backed student debt. The government often pays debt collectors nearly 40 times what they bring in, federal records show. Take the government’s rehabilitation program, which targets people who have defaulted on their debt—meaning they missed nine months of payments. If a borrower subsequently makes nine on-time monthly payments of as little as $5 during a 10-month period, their loans are returned to good standing and the default is supposed to be wiped from their credit reports 1 The delinquencies stay, however. . But the CFPB found that more than 40 percent of these borrowers defaulted again within three years.
Some Pubic Pension Funds Taking on Outsized Private Equity and Hedge Fund Fees -- Yves Smith - Gretchen Morgenson of the New York Times has a rare bit of encouraging news. Some public pension funds, which collectively are the biggest investors in private equity and are also significant hedge fund investors, are finally pushing back in a concerted manner against outsized fees and costs. Recall that Oxford professor Ludovic Phalippou has estimated total private equity fees and costs at a mind-boggling 7% per year. Reducing that by a percent or two would make a big difference in investors’ net returns. And bringing activities in house (which would admittedly take years) would cut the costs of those who did so a great deal and would also pressure independent managers to cut fees. One important development may not be obvious to readers of Morgenson’s article: How these high costs harm pensions is detailed in a new report: “The Big Squeeze: How Money Managers’ Fees Crush State Budgets and Workers’ Retirement Hopes.” The analysis, by the American Federation of Teachers, estimated the costs incurred in alternative investments at 12 large public pensions and determined how much the funds would have saved if they had paid about half the going rate. The fact that the powerful American Federation of Teachers is making a stink about fund manager fees is a big deal. Heretofore, unions have hesitated about criticizing private equity and hedge fund managers about fee levels publicly, even though quite a few top union officials and spokesmen have made clear that they know that both the fees, and in the case of private equity, the way the fund managers operate is to their detriment. But there is a big difference between griping to allies and taking a public stance. It appears that the severity of pension shortfalls, which is due in part to deliberate decisions to underfund (New Jersey is the poster child) plus funds that were reasonably healthy being whacked by years of the Fed’s negative real interest rate policies, which hurt investors of all stripes, has finally roused public pension funds to act. Key sections of Morgenson’s story:
FGM in Minnesota -- The Minnesota Star Tribute has a bizarre story entitled Minnesota bill against female genital mutilation raises opposition. It begins: Opposition from some members of Minnesota’s immigrant and refugee communities is slowing the momentum of a bill that would impose stiff penalties for parents involved in cases of female genital mutilation. Let’s call it like it is: there are people who are opposed to a law designed to reduce child abuse, and in particular, the abuse of girls. The Council for Minnesotans of African Heritage, a nonprofit called Isuroon and other groups argue that the legislation carries overly harsh punishment and unintended consequences, including the possibility that newcomers from countries where genital cutting is widespread would not seek medical care and other services for their children. They call for a less punitive approach focused on educating parents. How about just educating parents that this sort of child abuse is illegal and anyone participating will get in a lot of trouble.Now, the author of the Senate version is voicing second thoughts about approving the legislation yet this session, though Senate GOP leadership have not committed to a course of action. “We all agree this practice is absolutely horrible, and something needs to be done,” said the author, Sen. Karin Housley. “How can we empower communities to address this practice from within rather than having Big Brother come down and say, ‘This is wrong?’ ” Who says nonsense like this? Empower communities to address this practice from within? How exactly are these communities “unempowered?” What exactly is preventing the community from having the discussion? Do they get struck by lighting when they bring up certain topics and they need a Faraday Cage to avoid getting fried? Does thinking certain thoughts attract a herd of rabid wolverines? Imagine if the same statement was brought up about other forms of child abuse: “How can we empower child molesters to address this practice from within rather than having Big Brother come down and say, ‘This is wrong?’ ” Sounds insane, doesn’t it? Obviously, the issue is not figuring out how to empower the community to discuss the issue. The issue is that people who are engaging in the practice don’t see a problem with it. Some may, in fact, advocate for it publicly.
Vermont Health Insurer Asks to Increase Rates 12.7 Percent (AP) — Vermont's largest health insurance provider is asking state regulators for permission to raise its rates by 12.7 percent. Blue Cross and Blue Shield of Vermont says about half of the increase is due to a federal tax mandated by the Affordable Care Act that was not in place last year, the shift of costs from Medicare and Medicaid and because Vermonters are getting older. The approximate other half of the increase is due to increases in health care utilization and pharmacy costs. Blue Cross and Blue Shield's Don George says the rate increase request filed with the Green Mountain Care Board "is not welcome news." He says health care providers are working to control costs, but other factors are at work. The company provides health insurance to about 240,000 Vermonters.
Milliman: Typical American Family Faces $26K In Health Care Costs -- Milliman, Inc., a premier global consulting and actuarial firm, today released the 2017 Milliman Medical Index (MMI), which measures the cost of healthcare for a typical American family of four receiving coverage from an employer-sponsored preferred provider plan (PPO). In 2017, costs for this family will increase by 4.3%—which marks the lowest rate of increase in the history of this study—though the total dollar increase of $1,118 is consistent with the last decade of healthcare cost increases. "The good news is that we are seeing a record-low 4.3% cost increase in this year's MMI," said Chris Girod, co-author of the Milliman Medical Index. "The bad news: Continuing a 12-year pattern, healthcare costs for a typical family of four this year increased by more than $1,100." In recent years, the Milliman Medical Index has reported notable increases in pharmaceutical costs. Last year, drug costs increased by 9.1%. That rate of increase fell to 8% in 2017, which is still more than twice the rate of increase for all other components of healthcare spending. "We're seeing a smaller rate of increase for prescription drugs this year," said Scott Weltz, co-author of the MMI. "But the longer view reveals a different story. Since we began tracking this data in 2001, prescription drug costs for the typical American family have increased from $1,111 to $4,612."
Should women pay more than men for health insurance? -- Tyler Cowen -- That is the query motivating my latest Bloomberg column, here is one bit: Second, the higher health-care spending for women is partly because of services related to childbearing. Society may have an obligation to help out babies (and mothers), plus they will someday finance our retirement, so let’s make childbearing easy. That said, governments have numerous means of subsidizing childbearing — direct payments, tax credits, free clinical services and public education — and it’s not obvious that regulating insurance pricing is this best way to achieve this end. And: Uniform pricing also gives insurance companies less incentive to attract female policyholders. To be sure, as a matter of law the companies cannot turn women away. But if writing policies for women is less profitable, or perhaps unprofitable altogether, the insurance companies will allow or encourage their provider networks to evolve in a way that is more attractive to men than to women. Services for women, including for childbearing, might end up underprovided or stagnate in quality. That also would be a kind of differential treatment, with potentially dire consequences. There is much more at the link, controversial throughout. You’ll find plenty of overwrought reactions on Twitter, simply because I am saying there is a trade-off, and we do not yet know what is the right margin to seek.
The older the doctor, the higher the patient mortality rate, study finds - The age of your doctor may impact the quality of the care you receive—and even cut your chances of survival—researchers report in the British Medical Journal. Harvard researchers looked over data on more than 700,000 hospital admissions of elderly patients cared for by nearly 19,000 physicians between 2011 and 2014. They found that mortality rates crept up in step with physician age. Patients with doctors under the age of 40 had a 30-day mortality rate of 10.8 percent. With doctors aged 40 to 49, mortality rates inched up to 11.1 percent, then to 11.3 percent with doctors 50 to 59, and 12.1 percent with doctors aged 60 or above. The stats are adjusted for a variety of variables, such as hospital mortality rates and severity of patients’ illnesses. All the patients were aged 65 or older and on Medicare. Though the age-related mortality trend was significant overall, it broke down when researchers sorted doctors by caseloads. Older doctors who saw high volumes of patients didn’t see their patients' mortality rates increase.The study is an observational one—it’s noting a correlation and can’t determine that age is the cause of the different mortality rates. To explain the connection, authors say several factors could be at play. For instance, doctors’ skills may deteriorate over time or simply become outdated. Older doctors may be more likely to rely on anecdotal rather than evidence-based practices. The flip-side is that younger doctors are freshly trained in the most effective practices.
The FDA and Alzheimer’s Disease -- In The Failure of Solanezumab –How the FDA Saved Taxpayers Billions, an article in the NEJM, Sacks, Avorn and Kesselheim (SAK) defend the FDA by arguing that its high standards prevented the Alzheimer’s drug, Solanezumab, from being approved and thus saved the taxpayers billions in Medicare payments. It is, of course, not the job of the FDA to approve or fail to approve a drug based on its effect on taxpayers. The FDA has historically stood independent of this kind of politics and that has been all to the good. But the SAK article is a reminder that under socialized medicine every FDA decision moves money from one patient group to another and between patients and taxpayers thus FDA decisions become a tempting leverage point to control allocation through collective choice. I do not favor collective, which is to say politicized, choice and find much else objectionable in the SAK article–it attempts, for example, to evaluate a rule by examining a single decision when a system-wide, long-run analysis is called for. Rather than go into detail, however, let’s instead point to a much better article by Vradenburg, Fillit, Morgan, Sabbagh, Aisen, and Mohs, a group of leading physicians and scientists who treat Alzheimer patients and research the disease. Rather than support or criticize an isolated FDA decision, Vradenburg et al. call for a change to the rule/norm currently used to evaluate Alzheimer’s drugs: The analysis…recommends that the FDA approve new medicines that demonstrate a proven benefit on at least one therapeutic endpoint – either cognition or function. The current FDA standards require a new drug to show benefits on both proven endpoints, an unnecessarily challenging hurdle the authors say may be inhibiting investment in new Alzheimer’s treatments.
How we discovered a possible link between car exhausts and Alzheimer’s -- Iron is known to be toxic to brain cells, and tiny magnetic iron particles (magnetite) are thought to be involved in the development of neurological disorders. Now, for the first time, we have identified the abundant presence of these highly reactive particles in human brains. Previous studies have suggested that there are increased amounts of magnetite in Alzheimer’s-affected brains, and that these particles may be linked with the development of the disease. We wondered if this increased brain magnetite might come from inhaling polluted air. Very small, round particles made out of magnetite (called magnetite nanospheres) are abundant in city air pollution. Vehicles are a major source of these magnetite nanospheres. They are created by fuel combustion (especially diesel), iron wear from the engine block and frictional heating from brake pads. The presence in the brain of magnetite might trigger events leading to neurodegenerative disease. Brain damage due to these types of molecules is known to occur very early in the course of Alzheimer’s disease. A key change in the brain in this disease is the formation of “senile plaques”, which are clumps of abnormal protein found between nerve cells. Magnetite particles have been found to be directly associated with these senile plaques, and to enhance the toxicity of the protein that is found in the centre of each one. To examine if magnetite from external sources might exist in human brains, we used magnetic, electron microscopic and other techniques to examine brain samples from 37 cadavers – aged three to 92 years at time of death – who had lived in Mexico City or in Manchester, UK. Most of the magnetite particles in the brain samples were spherical and different in size and shape from the magnetite particles that naturally occur in people and animals. They ranged in diameter from 5nm to 150nm and were found together with nanoparticles containing other metals, such as platinum, nickel and cobalt, which would not occur naturally in the brain. We also extracted the magnetite particles from the brains using an enzyme. The enzyme dissolved the brain tissue and left the magnetite particles intact. These particles were then extracted using a magnet. The particles were a striking match for the magnetite nanospheres found in air pollution.
Brain damage is linked to religious extremism | New York Post: A team of scientists that studied almost 150 Vietnam War veterans has found that certain kinds of brain injuries may increase religious fundamentalism. The researchers at Northwestern University in Illinois found that combat vets who suffered trauma in the ventromedial prefrontal cortex were less willing to accept new ideas and became more extreme in their religious beliefs. The scientists studied 119 vets with penetrating traumatic brain injuries and 30 with no history of brain injury. Those who suffered injuries to the site reported higher levels of religious fundamentalism compared to those without the lesions. The finding indicates that “the variation in the nature of religious beliefs are governed by specific brain areas in the anterior parts of the human brain and those brain areas are among the most recently evolved areas of the human brain,” Jordan Grafman of Northwestern University, the study’s corresponding author, told PsyPost. “Human beliefs, and in this case religious beliefs, are one of the cognitive and social knowledge stores that distinguish us from other species and are an indication of how evolution and cognitive/social processes influenced the development of the human brain,” he said. Previous research had suggested that the ventromedial prefrontal cortex, which is located in the frontal lobe, was a “critical hub” for belief systems. Damaging the area appeared to cause an increase in religious fundamentalism by reducing cognitive flexibility – or the ability to update our beliefs in light of new evidence – along with lowering the personality trait of openness, the study found.
Some Americans spend billions to get teeth whiter. Some wait in line to get them pulled - As the distance between rich and poor grows in the United States, few consequences are so overlooked as the humiliating divide in dental care. High-end cosmetic dentistry is soaring, and better-off Americans spend well over $1 billion each year just to make their teeth a few shades whiter. Millions of others rely on charity clinics and hospital emergency rooms to treat painful and neglected teeth. Unable to afford expensive root canals and crowns, many simply have them pulled. Nearly 1 in 5 Americans older than 65 do not have a single real tooth left. Over two days at the civic center, volunteer dentists arriving from five states would pull 795 teeth. A remarkable number of patients held steady jobs — a forklift operator, a librarian, a postal worker — but said they had no dental insurance and not enough cash to pay for a dentist. Matello had both problems, adding to her frustration about being cut off from a world that many wealthier Americans take for granted. “The country is way too divided between well-off people and people struggling for everything — even to see the dentist,” she said. “And the worst part is, I don’t see a bridge to cross over to be one of those rich people.”
Where Health Care Won’t Go - It was a miserable January morning in Marion, Alabama, last year, with temperatures twenty degrees below average and freezing rain that sliced sideways. But that did not dissuade the people lining up outside the Perry County Health Department. All of them had come to collect twenty dollars in exchange for getting tested for tuberculosis. Shane Lee, Marion’s town doctor for the past quarter-century, pulled his taupe pickup truck into the parking lot. His clinic was kitty-corner to the health department, and he was having trouble finding a spot. It was Lee who had discovered the community’s first severe case of TB, a little more than a year earlier. In October 2014, a nurse practitioner tore into his office with a fresh medical mask over her mouth, frantically waving an X-ray film. The mask, a tight-fitting turquoise respirator, was unusual. And then he looked at the radiography, which showed that the patient’s lungs were nearly completely whited out. It was the worst case of tuberculosis that he had ever seen. Since then, Marion, a town of 3,500 and the seat of Perry County, has been grappling with a historic outbreak of a disease that has vanished from worry in much of the United States. Thirty-four active cases have been found; if that doesn’t seem like a lot, consider that the rate of infection — what the World Health Organization uses to determine severity — is almost a hundred times the national average, and higher than the rates in India, Kenya, and Haiti. Nearly 200 more in Marion were discovered to have latent tuberculosis, meaning that they were infected but had not developed active symptoms — which include bloody coughing, shortness of breath, night sweats, and weight loss. There is no hospital in town. The nearest one, twenty minutes away in Greensboro, has minimal resources. The road to get there is narrow, unlit at night, and littered with roadkill. Perry County has only two ambulances, one of which is on standby for the local nursing home. Life expectancy here is seven years lower than the U.S. average, and the percentage of obese adults is almost a third higher; by the latest count, more than a quarter of births take place without adequate prenatal care. Lee’s clinic is Marion’s only place for X-rays.
Americans Die When They Have to Work at Being Healthy - All over the world, people are dying from common diseases with well-known treatments. The newly created Healthcare Access and Quality Index shows how well countries use their healthcare systems to stop preventable deaths. The inaugural version of the index finds huge disparities both between countries, and within them. Access to quality healthcare, the study shows definitively, is often the difference between life or death. For Americans, the results aren’t heartening. “What we have found about health care access and quality is disturbing,” said Dr. Christopher Murray, director of the Institute for Health Metrics and Evaluation at the University of Washington and senior author of the study, published in The Lancet. “Having a strong economy does not guarantee good healthcare.” At the top of the list for countries with high socio-demographic indicators, Andorra—that tiny little principality wedged between France and Spain—scored a 95 out of 100. Nordic countries—Iceland (94), Sweden (90), and Norway (90)—also scored high on the list. Australia, a country with publicly funded and universal healthcare recently praised by U.S. President Donald Trump, also scored a 90. America, meanwhile, scored only 81, putting it behind countries such as France, Canada, and the UK, but ahead of Saudi Arabia and Russia. “America’s ranking is an embarrassment, especially considering the U.S. spends more than $9,000 per person on health care annually, more than any other country,” Murray said. “Anyone with a stake in the current health care debate, including elected officials at the federal, state, and local levels, should take a look at where the U.S. is falling short.”
Hepatitis C rates nearly double in pregnant women amid opioid epidemic, CDC says - Rates of the viral disease hepatitis C have risen sharply in recent years, nearly doubling in pregnant women, according to a new report published by the U.S. Centers for Disease Control and Prevention.Rates of maternal hepatitis C infection increased 89 percent from 1.8 to 3.4 women per 1,000 live births, according to the study published in the CDC's Morbidity and Mortality Weekly Report. Certain states reported particularly high rates of infants born to mothers who test positive for the viral disease.In West Virginia, where the ongoing opioid epidemic has hit hard, the infection rate was 22.6 women per 1,000 live births. In Tennessee, the rate was 10.1 women per 1,000 births Dr. Stephen Patrick, lead author on the study and a neonatoloigst at Vanderbilt University Medical Center, said the study findings point to an "emerging public health issue." "The worry is that with our current system [patients] don't know they're infected and our systems that follow infants are pretty poor," he said. Since hepatitis C often doesn't cause symptoms for years, Patrick said patients may not seek supportive medical care or may spread the disease without realizing it. The Hepatitis C Virus (HCV) is a blood-borne infection that can cause chronic inflammation of the liver. While the disease is more common in the baby boomer population, Patrick said the new infections have increased among women in their reproductive years revealing one new effect of the opioid epidemic. The viral disease can be easily transmitted if people share needles and via sexual contact. He pointed out that rural areas where the opioid epidemic had been centered have now been hit particularly hard by the increasing hepatitis C rates."We found that some counties -- particularly rural counties in Tennessee -- where eight percent of infants were exposed to hepatitis C," said Patrick. The infants were exposed to the virus by being born to mothers who tested positive for the disease.In one West Virginia county, one out of every 50 births involved a woman who tested positive for hepatitis C, Patrick said.
New Organisms Have Been Formed Using The First Ever 6-Letter Genetic Code -- Scientists have engineered the first ever 'semi-synthetic' organisms, by breeding E. coli bacteria with an expanded, six-letter genetic code. While every living thing on Earth is formed according to a DNA code made up of four bases (represented by the letters G, T, C and A), these modified E. coli carry an entirely new type of DNA, with two additional DNA bases, X and Y, nestled in their genetic code. The team, led by Floyd Romesberg from the Scripps Research Institute in California, engineered synthetic nucleotides - molecules that serve as the building blocks of DNA and RNA - to create an additional base pair, and they’ve successfully inserted this into the E. coli’s genetic code.Now we have the world’s first semi-synthetic organism, with a genetic code made up of two natural base pairs and an additional 'alien' base pair, and Romesberg and his team suspect that this is just the beginning for this new form of life."With the virtually unrestricted ability to maintain increased information, the optimised semi-synthetic organism now provides a suitable platform [to] ... create organisms with wholly unnatural attributes and traits not found elsewhere in nature," the researchers report."This semi-synthetic organism constitutes a stable form of semi-synthetic life, and lays the foundation for efforts to impart life with new forms and functions."Back in 2014, the team announced that they had successfully engineered a synthetic DNA base pair - made from molecules referred to as X and Y - and it could be inserted into a living organism. Since then, they’ve been working on getting their modified E. coli bacteria to not only take the synthetic base pair into their DNA code, but hold onto it for their entire lifespan. The researchers now report that the engineered E. coli are healthy, more autonomous, and able to store the increased information of the new synthetic base pair indefinitely.
Geneticists enlist engineered virus and CRISPR to battle citrus disease -- Fruit farmers in the United States have long feared the arrival of harmful citrus tristeza virus to their fields. But now, this devastating pathogen could be their best hope as they battle a much worse disease that is laying waste to citrus crops across the south of the country. The agricultural company Southern Gardens Citrus in Clewiston, Florida, applied to the US Department of Agriculture (USDA) in February for permission to use an engineered version of the citrus tristeza virus (CTV) to attack the bacterium behind citrus greening. This disease has slashed US orange production in half over the past decade, and threatens to destroy the US$3.3-billion industry entirely. Field trials of engineered CTV are already under way. If the request is approved, it would be the first time this approach has been used commercially. It could also provide an opportunity to sidestep the regulations and public stigma attached to genetically engineered crops. The engineered virus is just one option being explored to tackle citrus greening. Other projects aim to edit the genome of citrus trees using CRISPR–Cas9 to make them more resistant to the pest, or engineer trees to express defence genes or short RNA molecules that prevent disease transmission. Local growers have also helped to fund an international project that has sequenced citrus trees to hunt for more weapons against citrus greening.
Maine Approves 3 Types of GMO Potatoes -- Last week, the Maine Board of Pesticides Control unanimously approved the registration of three new types of genetically engineered ( GMO ) potatoes developed by Idaho-based J.R. Simplot Co ., according to Bangor Daily News . Maine is the last state in the country to approve the company's " Innate Generation 2 " Russet Burbank, Ranger Russet and Atlantic potatoes, which were created by adding genes from a wild potato plant and are resistant to late blight, the publication reports. The potatoes were cleared by the U.S. Food and Drug Administration after approval by the U.S. Department of Agriculture last fall. Sharie Fitzpatrick, a senior biotech regulatory manager at Simplot, said the company's potatoes are different from previous varieties, specifically Monsanto's discontinued NewLeaf transgenic potato that's spliced with the bug-repelling Bt gene that originates from a soil bacteria. Rather, Simplot potatoes are cisgenic, or only contain genes from other potatoes, and would have been possible to create via cross-pollination, Fitzpatrick said.
Genetically Engineered Disappointments -- A report by the United States National Academy of Sciences, Engineering and Medicine – picked up by the New York Times – found that US GE crop yield gains have slowed over the years, leaving no significant advantage in yield gains compared to non-GE plant varieties. Over two decades ago, Western Europe largely rejected GE crops while North America – the United States and then Canada – embraced them. More than twenty years later, US crop yield gains are not significantly higher than in Western Europe.Since the adoption of GE crops, US use of herbicides has increased. In the US, decreasing use of some herbicides has involved large increases in the use of glyphosate, a key ingredient in herbicides used for GE crop cultivation. This is in contrast to France, which bans GE crop cultivation, where overall use of herbicides has been reduced due to EU efforts.Glyphosate-resistant GE crops survive herbicide spraying while killing non-resistant weeds. However, rising weed resistance to glyphosate has led to the application of larger doses. For example, although land planted with GE soybeans has grown by less than a third over the last two decades, herbicide use has doubled. Herbicide use for maize production was declining before the introduction of GE crops, but has increased since 2002. Glyphosate was assessed as carcinogenic by the International Agency for Research on Cancer (IARC) under the World Health Organization. Some glyphosate-based herbicides also contain other more toxic herbicides – such as 2,4-D, a key ingredient in Agent Orange, the infamous Vietnam War defoliant – to increase their efficacy against resistant weeds.
Oregon Officials Threaten To Seize 2,000 Acre Organic Farm, Spray It With Roundup – Mish - Sherman County Oregon believes the 2,000 acre Azure Farms is not doing enough to control Canada Thistle, a noxious weed. In this case, not doing enough means not spraying weeds with herbicides.To remedy the alleged problem, the county proposes seizing the farm and spraying everything with Roundup and other herbicides. Azure Farms is certified organic. Of course, organic farms cannot by definition use herbicides, so the farm would be forced out of business by the county government.Adding insult to injury, the county would place a lien on the property forcing it to pay for the herbicides.Details of the proposed takeover can be found at Keep Azure Farm Organic: Azure Farms is a working, Certified Organic farm located in Moro, Central Oregon, in Sherman County. It has been Certified Organic for about 18 years. The farm produces almost all the organic wheat, field peas, barley, Einkorn, and beef for Azure Standard. Sherman County is changing the interpretation of its statutory code from controlling noxious weeds to eradicating noxious weeds. These weeds include Morning Glory, Canada Thistle, and Whitetop, all of which have been on the farm for many years, but that only toxic chemicals will eradicate. Organic farming methods – at least as far as we know today – can only control noxious weeds—it is very difficult to eradicate them.Sherman County may be issuing a Court Order on May 22, 2017, to quarantine Azure Farms and possibly to spray the whole farm with poisonous herbicides, contaminating them with Milestone, Escort and Roundup herbicides.This will destroy all the efforts Azure Farms has made for years to produce the very cleanest and healthiest food humanly possible. About 2,000 organic acres would be impacted; that is about 2.8 times the size of the City of London, England, and 1.5 times the size of the city center of Philadelphia that could be sprayed with noxious, toxic, polluting herbicides. The county would then put a lien on the farm to pay for the expense of the labor and chemicals used.
12 Farmworkers Poisoned by Toxic Pesticide Only One Month After EPA Denies Ban --More than 50 agricultural workers southwest of Bakersfield, California in Kern County were inadvertently exposed to pesticide drift from a nearby field earlier this month. According to local reports , 12 farmworkers reported symptoms of vomiting, nausea and one person fainted due to exposure to Vulcan, an organophosphate -based chemical. Notably, the active ingredient in the insecticide is chlorpyrifos , which the U.S. Environmental Protection Agency ( EPA ) under the Trump administration decided not to ban in March. "Anybody that was exposed, that was here today, we encourage them to seek medical attention immediately. Don't wait. Particularly if you're suffering from any symptoms. Whether it's nausea, vomiting, diarrhea, seek medical attention immediately," Michelle Corson, public relations officer for Kern County Public Health, said. As the Environmental Working Group detailed, research shows that even small amounts of chlorpyrifos can damage parts of the brain that control language, memory, behavior and emotion. Multiple independent studies have documented that exposure to chlorpyrifos impairs children's IQs and EPA scientists' assessments of those studies concluded that levels of the pesticide found on food and in drinking water are unsafe . But on March 29, EPA Administrator Scott Pruitt sided with the pesticide lobby over scientists in his decision to nix an Obama-era proposal to ban chlorpyrifos from use on food crops. Chlorpyrifos originates from a nerve gas developed by Nazi Germany. Chemical maker Dow Chemical sells about 5 million pounds of it in the U.S. each year.
Trump might pick a non-scientist to be USDA's 'chief scientist’ - In Trump's world, you don't have to be a scientist to land a high-level science job. President Donald Trump has reportedly picked Sam Clovis — a conservative talk show radio host and climate change denier — to be the "chief scientist" of the U.S. Department of Agriculture's research division. If appointed, he'll oversee key scientific work on everything from nutrition to the effects of rising temperatures on food supplies. The top position is supposed to be filled by "distinguished scientists with specialized or significant experience in agricultural research, education, and economics," according to the 2008 Farm Bill. Yet Clovis, who was one of Trump's earliest campaign advisers, doesn't exactly check off the required boxes, according to reports by the Washington Post, ProPublica, and other outlets. He does hold bachelor's degrees in political science and government, along with a master's in business administration and a doctoral degree in public administration, his LinkedIn page shows. He's also spoken publicly of his 25-year service in the Air Force and emphasizes his expertise in foreign policy and national security. But Clovis has never taken a graduate course in science and has published almost no academic work — two bare-minimum requirements of any fledgling scientist. Instead, the Iowa native is better known for his conservative radio show "Impact With Sam Clovis" and for passionately advocating for Trump on television. He also made an unsuccessful run for the U.S. Senate in 2014.
Trump to Pick Non-Scientist for Top USDA Scientist -- President Trump is set to nominate Sam Clovis, a former economics professor and conservative talk show radio host, to the U.S. Department of Agriculture's top scientific position, according to reports . Clovis, an early advisor to the Trump campaign, has a master's in business administration and a doctoral degree in public administration, and appears to have no published scientific or academic work to his name. In a 2014 interview, Clovis called evidence of climate change "junk science," claiming that he has "enough of a science background to know when I'm being boofed." "If the president goes forward with this nomination, it'll be yet another example of blatant dismissal of the value of scientific expertise among his administration appointees," Ricardo Salvador, director of the Food and Environment Program at the Union of Concerned Scientists, said in a statement. "Continuing to choose politics over science will give farmers and consumers little confidence that the administration has their interests at heart." Clovis may want to check in with American farmers before taking his new job: A piece in the Wall Street Journal this weekend highlights how farmers across the country are adjusting to a "new normal" of volatile weather putting crops at risk due to climate change.
23 California Salmon Species Likely to Go Extinct Within 100 Years - California's plethora of salmon and trout species are dwindling at a rapid rate . A new study found that of the 31 genetically distinct kinds of salmon and trout on the West Coast, 23 will likely go extinct within a hundred years. The study is a follow up to a 2008 report that drew the same conclusions, however, the outlook wasn't as grim almost 10 years ago. The old assessment gave a time period of 50 years for five of the species, the new one says now 14 species are likely to be lost within that timeframe. Researchers from the University of California Davis and conservation group California Trout said the main culprits are climate change , dams and agriculture. "As we began drafting the 2017 report, we realized that the new information and increasingly obvious impacts of climate change required us to rethink the metrics used in the 2008 report to evaluate status [of each species]," Peter Moyle, co-author of the new report, told NPR . Salmon and trout need cool, clean water to thrive and with increasingly warming temperatures and pollution in the ocean, California's coasts may become uninhabitable. In fact, some locations may dry up altogether, making it impossible for the fish to trace back to their nesting grounds. Agriculture is also a big driver because fertilizers and pesticides from major crops seep into the waterways, changing the chemical makeup and spawning harmful algae blooms . Irrigation for crops also takes water from rivers and other freshwater sources, furthering habitat loss. Some of the species in jeopardy are the prized Chinook populations, of which, six out of eight are in trouble. Coho salmon are also critically threatened, with as few as 5,000 fish returning to their nesting grounds to fertilize eggs.
Pests and pathogens could cost agriculture billions: report | Reuters: The spread of pests and pathogens that damage plant life could cost global agriculture $540 billion a year, according to a report published on Thursday. The report, released by the Royal Botanic Gardens (RBG) at Kew in London, said that an increase in international trade and travel had left flora facing rising threats from invasive pests and pathogens, and called for greater biosecurity measures. "Plants underpin all aspects of life on Earth from the air we breathe right through to our food, our crops, our medicines," said Professor Kathy Willis, RBG Kew's director of science. "If you take one away, what happens to the rest of that ecosystem - how does it impact?" Researchers also examined the traits that would determine which plant species would cope in a world feeling the effects of climate change. Plants with deeper roots and higher wood density are better able to withstand drought, while thicker leaves and taller grasses can cope with higher temperatures, the report found. Surprisingly, researchers also found that the traits that are likely to help species thrive appear to be transferable across different environments. "The interesting fact to emerge is that the suite of 'beneficial' traits are, on the whole, the same the world over and are as true in a temperate forest as in a desert," Professor Willis said in a statement. The report, which involved 128 scientists in 12 countries, found that 1,730 new plant species had been discovered in the past year. Nine new species of the climbing vine Mucuna, used in the treatment of Parkinson's disease, were found and named across South East Asia and South and Central America.
Armyworms: the hungry caterpillar threatening a global food crisis - They reproduce at a staggering rate, with each female laying about 1000 eggs in a 10-day lifetime. And though they may be slow crawlers, they are strong fliers. Every year spodoptera frugiperda, or the fall armyworm, travels from Mexico to Canada, a distance of at least 3000km. But if they have a dominant evolutionary superpower, it is rapacious communalism: in their larval stage, they advance in squadrons, platoons, battalions, armies – tens of millions storming the countryside, eating every crop or garden they can get their mandibles on. Most pests will consume only the good bits, but armyworms will strip even a fully-grown maize plant down to the last leaf. Since arriving in 2016, spodoptera frugiperda has spread rapidly across the continent. The countries in pink have all reported its presence. Since arriving in 2016, spodoptera frugiperda has spread rapidly across the continent. The countries in pink have all reported its presence. Spodoptera have proved to be a blight in North America, South America, the Middle East, the South Pacific islands, Australia – pretty much everywhere. There are five species of armyworms, but we’re concerned here with the aforementioned frugiperda which is headquartered in North and South America; and the exempta, usually based in Africa. Spodoptera exempta – the African armyworm – specialises in cereals, and has been causing havoc on the continent for decades now, spreading out slowly from the east and in 2009 sparking a state of emergency in Liberia. The new arrival, however, is spodoptera frugiperda, more commonly and chillingly known as ‘the fall’. This variant, which eats pretty much anything, has enjoyed a long, awful history in South America – managing it costs the Brazilian economy a staggering $600 million a year. In January 2016 it was detected for the very first time in Africa, in Nigeria. By April 2016, the pest had travelled to several other West African countries and to Central Africa. By December, it was detected in Zambia, Zimbabwe and Malawi, and was storming South Africa’s borders. Last week, Ghana’s parliament was asked by the minister of agriculture to declare a ‘state of emergency’, and take urgent action as the fall arrived en masse.
Aid agencies warn east Africa on the brink of famine -- Aid agencies have warned that years of drought and conflict have left eastern Africa on the brink of famine, with 16 million people facing the threat of starvation. World leaders gathering at a special conference in London today will hear that Somalia, Ethiopia and Kenya are on the brink of a humanitarian disaster. Aid experts are warning an entire generation could be lost. Famine has already been declared in South Sudan, where a million people are facing starvation. UN Secretary General Antonio Guterres will appeal for governments to boost funding to avert a famine taking hold across the region. British Prime Minister Theresa May is hosting the high-level conference to consider the humanitarian crisis and security situation in Somalia. Somali President Mohamed Abdullahi Mohamed Farmajo will also speak at the conference. The meeting will focus on the agreement of a security pact and the adoption of a "new partnership for Somalia" to deliver the support and reforms the country needs over the next four years. Across east Africa, 19.5 million people do not have a regular supply of safe drinking water. In South Sudan 100,000 people are suffering from famine, with nearly a million on the brink of starvation. An estimated 4.9 million - half the population - do not have enough food to eat. Three years of drought in Somalia has left 363,000 children facing severe malnutrition, and 6.2 million people, half the population, are in urgent need of humanitarian assistance.
Commodity trader Cargill expects grain glut to last long time | Reuters: Cargill Inc expects international grain markets to remain oversupplied for a long time due to bountiful harvests and a rise in storage, the head of the global commodity trader said on Friday. Bumper crops have flooded many markets, dragging on prices for grains and hitting profits at agribusiness giants including Cargill, Bunge Ltd, Archer Daniels Midland and Louis Dreyfus Co. "There's been several strong seasons of growth and almost near perfect weather conditions both in North America and South America," Cargill Chief Executive Officer David MacLennan told a media briefing in Seoul. "There are a plenty of supplies in storage, and Brazilian farmers are holding on to their products in the hopes of better prices ... but I don't see the clearing of excess supply or much volatility to up commodity and grain prices in the near future." Global corn, wheat and soybean inventories have risen for four straight years in the longest stretch of increases since the late 1990s, according to the U.S. government data. Word grain and oilseed stocks are up 48 percent since 2012/13, compared with production growth of 18 percent and consumption growth of 17 percent over the same period. Minneapolis-based Cargill has been simplifying its operations to shift its focus to higher margin-businesses such as food ingredients. In late April, it said it would exit its U.S. cattle business.
Sullied seasoning: Sea salts come with a dash of microplastics -- When plastic garbage makes its way to the sea, it eventually breaks down into tiny fragments that return to us in salty seasonings, Malaysian researchers report in Scientific Reports.In a survey of 16 sea salts from eight countries, researchers found microplastic particles lurking in all but one. In total, the researchers collected 72 particles from the salts and used micro-Raman spectroscopy to identify their components, which were mainly plastic polymers and pigments. The amount of microplastics in the salts was so low that they pose no health risk—even if the only salt you ever eat is sea salt and you eat a lot of it. However, the flavored pollution is still worth keeping an eye on, the researchers argue.We’re only increasing our use of plastics, they note, which “might lead to the gradual accumulation of [microplastics] in the oceans and lakes and, therefore, in products from the aquatic environments. This should necessitate the regular quantification and characterization of [microplastics] in various sea products.” It’s not the first time researchers have traced plastics through the food chain. Plastic garbage that drifts into waterways is known to break down and get picked up by critters. Earlier studies have found microplastics—plastic particles between 1 and 1,000 micrometers in size—in other sea-borne foods, such as fish and clams. But to date, there hadn’t been a solid look into salts.
The Scariest Legislation You've Never Heard of -- Congress is moving forward with sweeping legislation that could undercut major laws that keep our food, water, workers and children's products safe. Yet, surprisingly little attention has been paid to a bill that could drastically reshape the way we think about government, while threatening to undermine the very idea that any product at all—from pacifiers to peanuts—will remain safe going forward. It's what Steve Bannon has in mind when he says he wants to deconstruct the administrative state. And it paves the way for a shoddy government with more, and slower bureaucracy, than we can ever imagine. The Regulatory Accountability Act would fundamentally alter how Americans protect themselves from unsafe pollution, chemicals, drugs and other dangers—by undermining the Clean Air Act, the Toxic Substances Control Act , the Occupational Safety and Health Act and a slew of other laws affecting public health and safety. Rather than repealing these popular laws, the bill would simply hobble them by, in effect, preventing agencies from creating or enforcing rules under such laws. The sound-bite description of the bill makes the Regulatory Accountability Act sound reasonable: Cut red tape and reduce government regulation. In reality, it would tie federal agencies in knots. A blog post by my colleagues Rosalie Winn and Martha Roberts has a chart showing the dizzying list of requirements an agency would fact before it could issue a new rule. In essence, it takes the things Americans already hate about government—that it's slow, bureaucratic and too responsive to special interests—and makes it worse.
US forests shifting with climate change (AP) — A warmer, wetter climate is helping push dozens of Eastern U.S. trees to the north and, surprisingly, west, a new study finds. The eastern white pine is going west, more than 80 miles (130 kilometers) since the early 1980s. The eastern cottonwood has been heading 77 miles north (124 kilometers), according to the research based on about three decades of forest data. The northward shift to get to cooler weather was expected, but lead author Songlin Fei of Purdue University and several outside experts were surprised by the move to the west, which was larger and in a majority of the species. New trees tend to sprout farther north and west while the trees that are farther south and east tend to die off, shifting the geographic center of where trees live. Detailed observations of 86 different tree species showed, in general, the concentrations of eastern U.S. tree species have shifted more than 25 miles west (45 kilometers) and 20 miles (33 kilometers) north, the researchers reported in the journal Science Advances on Wednesday. One of the more striking examples is the scarlet oak, which in nearly three decades has moved more than 127 miles (205 kilometers) to the northwest from the Appalachians, he said. Now it’s reduced in the Southeast and more popular in the Midwest.
Climate change is messing with all your favorite birds - Timing is everything for migratory songbirds chirping away in North America's trees. If they arrive too late, they'll get only the scraps of spring's insect buffet. Arrive too early, and they'll face a hostile winter chill. Yet climate change is making it harder for birds to get it right. Spring is arriving earlier in the eastern states and later in the west, disrupting the timing of dozens of songbird species, a new study found. As birds struggle to settle in and lay eggs, it could create a "domino effect" that threatens the survival of many popular backyard species, U.S. and Canadian researchers said in a study published Monday in the journal Scientific Reports. "The long-term concern is that this growing mismatch can lead to population declines," Stephen Mayor, the study's first author and a postdoctoral researcher with the Florida Museum of Natural History at the University of Florida, said in an interview. Migratory birds that winter in Central and South America take their cues from seasonal changes in daylight, which stay constant from year to year. But the conditions they encounter when they arrive up north are becoming more variable and unpredictable due to rising air temperatures and shifting weather patterns, two effects of human-caused global warming. Nine species in particular are struggling most to get that timing right, the study found. They are: great crested flycatchers, indigo buntings, scarlet tanagers, rose-breasted grosbeaks, eastern wood pewees, yellow-billed cuckoos, northern parulas, blue-winged warblers, and Townsend's warblers. This year, after a mild U.S. winter, spring weather arrived more than three weeks earlier than usual in some places. The date of "first leaf," a temperature-based calculation of when dormant vegetation shows signs of life, came much earlier than the 30-year average, according to a study by World Weather Attribution.
Here is how global warming could spell an end to the clash of the ash - The hurley could become a high-profile victim of climate change. Researchers at NUI Galway have warned that ash used to produce almost 500,000 camáin a year is facing a growing threat from ash dieback, and the problem will become more pronounced as temperatures rise. First identified in Ireland in 2012, ash dieback can be fatal, particularly in young trees. It rots the tree from the inside out. In less than five years, it has spread to 21 counties, and has been found on trees in forests, gardens, commercial nurseries, hedgerows and on roadsides. Professor Charles Spillane, head of the Plant and AgriBiosciences Research Centre at NUI Galway, said that, as global temperatures rose, the disease would spread, jeopardising supply of the raw material needed to serve players of our national game. Unique "Ash dieback is a problem, it's affected by rising temperatures and the distribution will change as temperatures rise," he said. "It's spreading across Europe and it's an example of how climate change can affect sport. "Here is a game unique to Ireland and climate change could impact on that.
Amazon rainforest faces double jeopardy – The Amazon rainforest, the greatest and richest of the world’s tropical forests, is vulnerable both from without and within, according to two new studies. The forested regions in the flood plains at the heart of the Amazon could be more than usually at risk of wildfire that could spread through the rest of the canopy to higher ground. And although the loss of primary forest has slowed overall in the last 20 years, tree cover is still being lost at the forest’s periphery, as miners, ranchers, growers and loggers continue to degrade secondary forests and woodlands, according to a second study in Science Advances journal. Everyone expected some attrition at the periphery of the primary forest. But the big surprise is the potential weakness at its heart. An international team of researchers reports in the Proceedings of the National Academy of Sciences that they matched satellite and field data for the entire Amazon basin, compared forest resilience in those places that were often flooded and never flooded, and analysed the distribution of trees across the river basin. They found that fire-related savanna dominated the flooded parts when rainfall dropped below 1,500 mm a year. In the upland regions, the forest survived even when rainfall dropped to 1,000 mm a year. “Our findings suggest that if the Amazonian climate becomes drier, forests will probably collapse first in the seasonally inundated areas,” says Bernardo Flores, a Brazilian scientist now based at Wageningen University in the Netherlands, who led the study. The great rainforest is subject to cycles of drought, and during severe episodes the region is less likely to absorb carbon from the atmosphere and more likely to release it − a process that could only accelerate global warming. And this in turn could only bring further hazard to the rainforest.
Environmentalists oppose plan to link Indian rivers | Reuters: - Environmentalists on Thursday lambasted ambitious plans to bring much needed water to remote central India by linking two rivers, in the latest clash over dwindling water resources. The Ken-Betwa project was approved by the Forest Advisory Committee on Wednesday but without any of the changes sought by environmentalists, such as reducing the height of a proposed dam and relocating affected villages. Interlinking entails diverting surplus river water through a network of canals to drier areas. While the idea to link India's rivers was first mooted in the 1970s, plans to join up more than two dozen rivers have seen little action. A spokesman for the environment ministry said he did not know when the Ken-Betwa project would win final approval. The project comprises a 231-kilometre (144 miles) long canal between the two rivers in the states of Uttar Pradesh and Madhya Pradesh, as well as two dams and reservoirs. It requires felling more than 1.8 million trees and the use of 6,017 hectares (23 sq miles) of forest land, including a protected tiger reserve. It would also submerge nearly 6,000 hectares of non-forest land and more than 5,000 homes, according to a feasibility report by the National Water Development Authority (NWDA). But transferring surplus water from Ken river to the Betwa river basin will have "no major adverse impact" from an environmental or ecological perspective, the report said.
Climate Change, Meet Your Apocalyptic Twin - Here in this fishing village, on the island of Java, the surf teems with kaleidoscopic color. Each wave is littered with garish bibs and bobs.The water is speckled with synthetic hues: Coca-Cola red, day-glo green and every other color in the crayon box. There are monochromes as well: buoyant white blobs that, at a distance, look like 1,000 invading jellyfish. It’s all plastic trash, of course. Here floats the detritus of 21st-century consumption: soda bottles, Pampers and, since this is Indonesia, lots of instant noodle wrappers. Those jellyfish? Plastic shopping bags. You can go five kilometers into the sea, the village fishermen say, and never stop seeing those lousy plastic bags. “It’s infuriating,” says Alec, a 39-year-old mussel catcher. He’s hunched over his boat’s outboard motor with a wrench, face streaked with motor oil. The engine is all gunked up with plastic. “This happens almost every day,” he says. “We can barely work. No matter where you go, the sea is covered in plastic.” Like so many other coastal villages around the world, plastic junk has brought ruin to this place. Called Muara Angke, it’s a settlement in the shadow of Jakarta, a megacity generating mountains of trash each day. These shores were once among the world’s most coveted. For more than a millennium, waves of outsiders — from Hindu conquerors to rapacious Dutch colonists — lusted after the paradisiacal beauty of Java. But today, any seafarer arriving on this beach will find a saltwater garbage dump. Westerners too often regard pollution in Asia as a far-flung curiosity — a tragedy to be pitied from a safe distance. But when someone throws a dirty plastic spoon into the Java Sea, it doesn’t just float in place. Currents can carry it around the world and back in just 25 years. All the while, it’s disintegrating into toxic crumbs. The ocean and its creatures are now awash in chemicals oozed by plastic — and it’s seeping into human bodies from Bali to Boston. So ignore the floating spoon at your own peril. Its molecules, hiding in a bite of salmon, may someday swim through your bloodstream. “We’re all infected with plastic,” says Seattle-based oceanographer Curtis Ebbesmeyer. “Molecules from some kid’s plastic bottle, dropped into the ocean in Asia, are winding up in the food Americans eat.” As our disposable culture roars along, humans are transforming the ocean into a trash-strewn, cancerous stew. At this rate, by 2050, the seas will actually contain more plastic than fish.
Coral Reefs Generate Half of Earth's Oxygen ... and They Could All Die Off by 2050 -- "I now look at the reef as an ecosystem that is suffering from our actions and I feel guilty beyond belief that this is happening in my backyard, on our generation's watch," he explained. "I no longer dream of the kaleidoscope of life, color and movement that represents the world's coral reefs . Instead, I worry and fight for the actual existence of coral reefs as we know them, as the changes I see are happening all too quickly—much quicker than the reef can adapt," Miller told Truthout.This is because over the last two years, the Great Barrier Reef, which is so dear to Miller and countless others who revel in the beauty and mysteries of the oceans, has been dying off at an unprecedented rate due primarily to warming ocean waters.Coral bleaching occurs when corals become stressed by warmer-than-normal water, causing them to expel symbiotic algae that live in their tissues, from which they get their energy. Coral turns completely white when it bleaches. If it remains bleached long enough, it dies. One scientist has already gone so far as to declare the Great Barrier Reef is now in a " terminal stage ." Most of those studying the reef agree that what is happening is unprecedented. This is because, at a minimum, two-thirds of the 1,400-mile long reef bleached out last year, which led to 22 percent of it dying. Now another bleaching event has resulted in at least two-thirds of the reef bleached again. "Parts of the reef that didn't bleach last year are now under immense pressure, and this is totally different because this is back-to-back bleaching," Miller explained. "The system was already stressed, and this is a new stress event. We are seeing much mortality on reefs in our area ... What didn't die last year is dying this year." Laurie Raymundo is a coral ecologist at the University of Guam Marine Lab. "We don't even know what we are losing, and we don't understand what a loss of biodiversity fully means, for pharmaceuticals, ecologically and in so many other ways," she said. "We are losing things before we even actually know, fully, what we are losing." One crucial thing we do know we're losing: much of our air. While coral reefs only cover 0.0025 percent of the oceanic floor, they generate half of Earth's oxygen and absorb nearly one-third of the carbon dioxide generated from burning fossil fuels. A report by the UN's Food and Agriculture Organization shows that coral reefs are responsible for producing 17 percent of all globally consumed protein, with that ratio being 70 percent or greater in island and coastal countries like those of Micronesia.
Warm Arctic fuels second-warmest April on record - An unusually warm Arctic spring fueled the second-hottest April on record globally, with global warming and unusual weather conspiring to shrink sea ice and push up polar temperatures. April temperatures were 1.5°F (0.9°C) warmer worldwide than the 1950 to 1980 average, NASA data released Monday showed, extending to three a string of hot months in which temperatures were surpassed just once in history. April temperatures were higher only in 2016. The warm global average last month was heavily influenced by a continuation of unusually high temperatures in the Arctic. The Arctic warmth has been linked to record low levels of sea ice and to the variability of weather, including northward-moving storms that have brought heat with them.
El Niño again? This is why it’s hard to tell - The tropical Pacific Ocean is once again carrying on a will-it-or-won’t-it flirtation with an El Niño event, just a year after the demise of one of the strongest El Niños on record.The odds right now are about even for an El Niño to develop, frustrating forecasters stuck in the middle of what is called the spring predictability barrier. During this time, model forecasts aren’t as good as seeing into the future, in part because of the very nature of the El Niño cycle.The reason scientists try to forecast El Niño is because of the major, often damaging, shifts in weather it can cause around the world. The last one brought punishing drought to parts of Southeast Asia and Africa and torrential rains to parts of South America.An El Niño also helps boosts global temperatures, as it did in 2016, the hottest year on record, and previously in 1998. Global warming, though, means that 2016 was almost 0.5°F (0.3°C) hotter than 1998, even with comparably strong El Niño events. If another El Niño does materialize this year, it would be only the second time in the records that the Pacific went from the hot phase of an El Niño to the cold phase of a La Niña and then back to an El Niño again within three years. The relatively limited nature of those records, though, means researchers can’t be certain that such a combination is all that rare. The tropical Pacific Ocean naturally vacillates between three different states about every three to five years. In its neutral state, warm water is pooled up on the western side of the basin, which fuels thunderstorms there. During a La Niña, the east-to-west trade winds that pile up that warm water intensify, amping up the normal conditions across the basin. But during an El Niño, those trade winds relax or even reverse, allowing the warm water to spill to the eastern side of the basin, displacing storm activity toward the central Pacific.To have confidence that an El Niño is in the offing, forecasters want to see both the ocean and the atmosphere getting into gear. While the eastern Pacific has shown some signs of warming in recent weeks, the atmosphere has yet to show signs that it is following suit.
Introducing El Tio and La Tia, the climate cycles that could mean we’re about to get a lot hotter - EL NINO, and its sister La Nina, have long been one of the key drivers of Australia’s weather. But environmental scientists now suspect they could be little more than the climactic equivalents of cheeky kids at the family barbecue. Instead, a “kindly aunty” and “cranky uncle” could have a far more wide reaching effect on our climate.With El Nino being the Spanish for “the boy” and La Nina “the girl” scientists have named these overarching systems El Tio meaning, “the uncle,” and La Tia “the aunt”. And if the boy and the uncle join forces, things may be about to get hairy. At the very least, you may want to slap on some more sunscreen Dr Benjamin Henley, a climate scientist at the University of Melbourne, told news.com.au a prolonged La Tia may have “lulled us into a false sense of security” that global warming had slowed when the reality is climate change could be on the verge of accelerating. That could spell disaster for the 2015 Paris Climate Agreement which aimed to keep the world’s average annual temperatures to 1.5C below pre industrial levels. One of the big differences between the kids at the climate barbecue and the elderly relatives is the length of time they last. El Ninos and La Ninas tend to exhaust themselves and collapse in a heap every three to five years. But El Tio and La Tia have more stamina and keep going far longer.
The Planet Is on Course to Breach Warming Limit of 1.5°C Within 10 years, Scientists Warn - Australian scientists have warned that planetary average temperatures could breach the internationally agreed target barrier of a 1.5°C rise as early as 2026. Although global warming is driven by human behavior—and in particular the prodigal burning of fossil fuels at an ever-accelerating rate to dump ever-greater quantities of carbon dioxide in the atmosphere —it is also influenced by natural climate rhythms. And, said scientists from Australia's Centre of Excellence for Climate System Science, one of these is a slow-moving oceanic and atmospheric cycle called the Interdecadal Pacific Oscillation (IPO), which blows hot and cold and then hot again, every decade or so. The latest hot phase could be about to push the global thermometer beyond the ideal limit set by the UN climate conference in Paris in 2015. They wrote in Geophysical Research Letters that since 1999 the IPO has been perhaps keeping the world cooler than it might have been, as the rate of increase in global warming appeared to slow between 1998 and 2012. But the last three years have all breached successive global temperature records , and they think this could mean that the IPO is beginning to have a positive effect. "Even if the IPO remains in negative phase, our research shows we will still likely see global temperatures break through the 1.5°C guardrail by 2031," said Ben Henley of the University of Melbourne, who led the study.
Arctic stronghold of world’s seeds flooded after permafrost melts -- It was designed as an impregnable deep-freeze to protect the world’s most precious seeds from any global disaster and ensure humanity’s food supply forever. But the Global Seed Vault, buried in a mountain deep inside the Arctic circle, has been breached after global warming produced extraordinary temperatures over the winter, sending meltwater gushing into the entrance tunnel. The vault is on the Norwegian island of Spitsbergen and contains almost a million packets of seeds, each a variety of an important food crop. When it was opened in 2008, the deep permafrost through which the vault was sunk was expected to provide “failsafe” protection against “the challenge of natural or man-made disasters”. But soaring temperatures in the Arctic at the end of the world’s hottest ever recorded year led to melting and heavy rain, when light snow should have been falling. “It was not in our plans to think that the permafrost would not be there and that it would experience extreme weather like that,” said Hege Njaa Aschim, from the Norwegian government, which owns the vault. “A lot of water went into the start of the tunnel and then it froze to ice, so it was like a glacier when you went in,” she told the Guardian. Fortunately, the meltwater did not reach the vault itself, the ice has been hacked out, and the precious seeds remain safe for now at the required storage temperature of -18C. But the breach has questioned the ability of the vault to survive as a lifeline for humanity if catastrophe strikes. “It was supposed to [operate] without the help of humans, but now we are watching the seed vault 24 hours a day,” Aschim said. “We must see what we can do to minimise all the risks and make sure the seed bank can take care of itself.”
Irreversible ocean warming threatens the Filchner-Ronne Ice Shelf -- Climate researchers at the Alfred Wegener Institute Helmholtz Centre for Polar and Marine Research (AWI) recently made this prediction in a new study, which can be found in the latest issue of the Journal of Climate, released today. In the study, the researchers use an ice-ocean model created in Bremerhaven to decode the oceanographic and physical processes that could lead to an irreversible inflow of warm water under the ice shelf - a development that has already been observed in the Amundsen Sea. When it comes to the fate of the great Antarctic ice shelves, the sea ice surrounding them is of central importance. For example, in the southern Weddell Sea so much sea ice forms during the autumn and winter months that the amount of salt released in the process turns the water around and below the 450,000 km2 Filchner-Ronne Ice Shelf into a massive protective sheath. So far, this barrier of extremely salty water, with an average temperature of ca. minus 2 degrees Celsius, has protected the shelf from the inflow of water masses that are 0.8 degrees warm, which the Weddell Gyre transports along the edge of the continental shelf (see graphic). New simulations from climate researchers at the AWI now indicate that this cold-water barrier could be permanently lost in the course of the next few decades. The reason: rising air temperatures over the Weddell Sea, which could cause less sea ice to form. "We can already see the first signs of this trend today. First of all, less sea ice is forming in the region, and secondly, oceanographic recordings from the continental shelf break confirm that the warm water masses are already moving closer and closer to the ice shelf in pulses," says Dr Hartmut Hellmer, an oceanographer at the AWI and first author of the study.
The Doomsday Glacier -- Thwaites Glacier in West Antarctica is so remote that only 28 human beings have ever set foot on it. The trouble with Thwaites, which is one of the largest glaciers on the planet, is that it's also what scientists call "a threshold system." That means instead of melting slowly like an ice cube on a summer day, it is more like a house of cards: It's stable until it is pushed too far, then it collapses. When a chunk of ice the size of Pennsylvania falls apart, that's a big problem. It won't happen overnight, but if we don't slow the warming of the planet, it could happen within decades. And its loss will destabilize the rest of the West Antarctic ice, and that will go too. Seas will rise about 10 feet in many parts of the world; in New York and Boston, because of the way gravity pushes water around the planet, the waters will rise even higher, as much as 13 feet. "West Antarctica could do to the coastlines of the world what Hurricane Sandy did in a few hours to New York City," explains Richard Alley, a geologist at Penn State University and arguably the most respected ice scientist in the world. "Except when the water comes in, it doesn't go away in a few hours – it stays." With 10 to 13 feet of sea-level rise, most of South Florida is an underwater theme park, including Miami, Fort Lauderdale, Tampa and Mar-a-Lago, President Trump's winter White House in West Palm Beach. In downtown Boston, about the only thing that's not underwater are those nice old houses up on Beacon Hill. In the Bay Area, everything below Highway 101 is gone, including the Googleplex; the Oakland and San Francisco airports are submerged, as is much of downtown below Montgomery Street and the Marina District. Even places that don't seem like they would be in trouble, such as Sacramento, smack in the middle of California, will be partially flooded by the Pacific Ocean swelling up into the Sacramento River. Galveston, Texas; Norfolk, Virginia; and New Orleans will be lost. In Washington, D.C., the shoreline will be just a few hundred yards from the White House.
Chris Martenson Warns "Humans Are Heading Towards Disaster" by Chris Martenson: It’s time to be blunt: Humans are headed towards disaster. Most of us already know this. Some consciously, others unconsciously. Those operating at the unconscious level may only experience a pervasive sense of dread encroaching into their lives. Many of these people are confused because they are aware of the context and are increasingly either checking out via numbing behaviors such as drinking and opioid addiction, or they're acting out via violence and protest. No matter if it's consciously or unconsciously, everybody who ‘knows’ that something is terribly wrong is correct. The data is obvious and the logic is clear. We cannot continue as we have been. The system is simply unsustainable. Unfortunately, "continuation" is the one and only plan of the state. Let's get back on track doing what we always have been (and use increasingly blunt techniques to saturate the populace with this message). That’s the whole plan. It boils down to: More of the same. But ‘the same’ is killing the planet.Species are disappearing at horrifying rates that have few comparisons over the past 500 million years. Soil washes to the sea creating dead zones, while humans and the animals they eat are now 95% of the terrestrial animal biomass.Oceans are acidifying, causing phytoplankton to disappear. Glaciers are melting and sliding away, with those in Greenland and Antarctica contributing to sea level rise, a phenomenon that is not somewhere out in the future, but right here, right now.Via Bloomberg:The impact [of sea level rise] is already being felt in South Florida. Tidal flooding now predictably drenches inland streets, even when the sun is out, thanks to the region’s porous limestone bedrock.Saltwater is creeping into the drinking water supply. The area’s drainage canals rely on gravity; as oceans rise, the water utility has had to install giant pumps to push water out to the ocean. That’s not a future scenario, that’s right now. When utilities are installing giant pumps, they are not doing that because of what might happen, but because of that which is already happening.
Norway's $945 billion wealth fund 'emits' twice as much as Norway: CEO | Reuters: Norway's $945 billion wealth fund owns stakes in companies that are responsible for emitting 90 to 100 million tonnes of carbon dioxide equivalent, or about twice what Norway emits per year, its CEO said on Tuesday. The world's largest sovereign wealth fund has a mandate from the Norwegian parliament to address climate change, either by divesting or entering an active dialogue as an owner, with companies that produce "unacceptable" levels of greenhouse gases. Divestments are recommended by an ethics watchdog, which is expected to make its first recommendation based on this criterion to the board of the Norwegian central bank by July. The fund has been working for two years to quantify the carbon emissions from companies it invests in, and to work out what share of these emissions it 'owns', said CEO Yngve Slyngstad. "Now we think that number is between 90 and 100 million tonnes of CO2 equivalent," Slyngstad told a business conference. "This is twice what comes from the Norwegian territory."
Nature Does Not Grade On A Curve -- One of the problems with how we are educated and how we work is that almost all of it is “grading on a curve”. What matters is what our teacher thinks of us; what our boss thinks of us. Except when it comes to sickness, nothing else matters even nearly as much. It’s all “on a curve”, it’s all social bullshit. If you can convince your boss or teacher to pass you, you pass, and there’s no objective level required in most cases: the difficulty is set by a person. Nature does not grade on a curve. If a bear is chasing you and you can’t run fast enough, you’re probably dead. If your capitalist democratic system can’t handle climate change, a problem predicted decades ago, with plenty of time to fix it, billions of people will die. It doesn’t matter whether there are “reasons” why we couldn’t handle it, not to the dead. It also doesn’t matter if there are “reasons” why we can’t come up with a better way of running the world than capitalism with a side of democracy or autocracy, depending on the country. People are always nattering on about how capitalism is the bestest system ever. (Although what has really produced the changes they like is mostly industrialization, not capitalism, though that’s a different article.) It’s nice that we can’t come up with something better than capitalism (er, ok, not nice), but capitalism has failed. That it hasn’t blown up yet is irrelevant to this. If my brakes and steering fail at 90 miles an hour as I’m heading towards a mountain cliff, well, no catastrophe actually happens till I not only go off the cliff, but hit the ground, but the future is set. That’s where we are, the future is essentially set. We aren’t going to stop climate change, it’s doubtful we even can. And nature does not give a fuck if capitalism is the “bestest bestest system that we ever came up with” or if, qua Churchill “democracy is the worst form of Government except for all those other forms that have been tried from time to time.” They have failed.
Trump doesn’t believe in climate change, but it’s going to drown Mar-a-Lago -- President Donald Trump has called climate change a “hoax” and a very expensive “tax” on American businesses that make the US less competitive. He has threatened to withdraw the US from the Paris climate accord, in which countries around the world pledged to reduce their greenhouse gas emissions to keep temperatures from rising past the critical 2°C mark. And yet climate change is already imperiling Mar-a-Lago, the crown jewel of Trump’s extensive real estate portfolio and his preferred location for carrying out many of his official presidential duties. Rising sea levels are causing more frequent and more damaging tidal floods on the Florida coast, and projections suggest that the risk to lives and property from climate change-related flooding events is only going to increase dramatically in the coming years.The National and Oceanic Atmospheric Administration (NOAA) has put out a variety of different estimates of rising sea levels in Southern Florida. The more conservative finding suggests that they could jump anywhere from 3 feet by 2050 to 7 feet by 2100. But in January, the agency put out new “extreme” sea level projections — its doomsday scenario, in other words. In this scenario, we’d see a 10- to 12-foot rise in sea level in the US by 2100, which would have dramatic consequences for places like Mar-a-Lago, as you can see in the photo above. So what would a 10-foot rise in sea levels mean for Florida? Here’s a satellite image of what that would look like. Large swaths of the state are submerged. Miami is entirely flooded, along with the rest of Southern Florida:
EPA asked the public which regulations to gut — and got an earful about leaving them alone -- Last month, the Environmental Protection Agency put out a call for comments about what regulations are in need of repeal, replacement or modification. The effort stemmed from an executive order issued by President Trump earlier this year instructing agencies to reexamine regulations that “eliminate jobs, or inhibit job creation” and/or “impose costs that exceed benefits.”More than 55,100 responses rolled in by the time the comment period closed on Monday — but they were full of Americans sharing their experiences of growing up with dirty air and water, and with pleas for the agency not to undo safeguards that could return the country to more a more polluted era.“Know your history or you’ll be doomed to repeat it,” one person wrote. “Environmental regulations came about for a reason. There is scientific reasoning behind the need for it. It is not a conspiracy to harm corporations. It’s an attempt to make the people’s lives better.” “Have we failed to learn from history, and forgotten the harm done to our air, water, and wetlands?” wrote Karen Sonnessa from New York. “If anything, regulations need to be more stringent. I remember the days of smog, pollution, and rivers spontaneously combusting. EPA is for the people.”Some respondents made moral and religious arguments.“Reducing our dependency on fossil fuels and limiting the effects of climate change is one of the greatest moral challenges of our time,” the Rev. John D. Paarlberg wrote, defending the Obama-era Clean Power Plan, an effort to regulate carbon emissions from power plants that the Trump administration has vowed to roll back. “For the sake of the most vulnerable among us, for the sake of future generations, for the sake of the planet, please do not undermine the Clean Power Plan and other critical environmental protections.”
EPA to set aside $12 million for buyouts in coming months - The Environmental Protection Agency plans to set aside $12 million for buyouts and early retirements in coming months, as part of an effort to begin “reshaping” the agency’s workforce under the Trump administration. In a memo, the EPA’s acting chief financial officer, David Bloom, said the move is how the agency plans to spend part of roughly $24 million in “carry-over funds” — essentially, money that was not spent in the previous fiscal year and is rolled over to the current one. Beyond the looming buyouts, the memo details $800,000 allocated for travel expenses for EPA Administrator Scott Pruitt’s security detail, $1.4 million for cloud-computing services and other data storage, and $2 million for consolidating the agency’s physical footprint. “Senior leadership made decisions to allocate the carry-over funds set aside earlier this year to address agency’s priorities for incentive payments for workforce reshaping, support for the Office of Enforcement and Compliance (OGC), travel for the Administrator’s protective detail, rent, continued space reduction efforts, eDiscovery, agency cloud services and the OGC’s workforce support,” Bloom wrote.
Bannon is pulling one over on Trump. There is zero reason to exit the Paris climate accord. by David Roberts -The debate over whether to officially pull the US out of the Paris climate accord has been raging in the Trump White House for months. There have been widely announced meetings, then delays of meetings, and then more meetings. Apparently, however, the end of the dithering is nigh. At an April 29 rally, Trump promised a “big decision” on the matter in the next two weeks. Now, according to the administration, that decision has a firm date: Tuesday. Like perhaps no other single issue, Paris has divided Trump’s circle of advisers. Which side he comes down on will reveal a great deal about who is currently in his favor. Leading the charge to stay in are “the globalists” (as Trump’s hardcore supporters derisively refer to them): eading the charge to pull out are the nationalists, principally Steve Bannon and White House counsel Don McGahn, and the committed climate deniers, principally EPA Administrator Scott Pruitt. The new legal argument has to do with Article 4.11 of the Paris agreement, which says that a participating nation “may at any time adjust its existing nationally determined contribution with a view to enhancing its level of ambition.” “The question,” says the New York Times, “is whether the ability to ‘adjust’ is like a ratchet, allowing progress only in one direction — upward — or if it permits a country to weaken its commitment without violating the terms of the deal.” Except ... that’s not really a question. It’s an utterly fake question. No one credible thinks for a moment that 4.11 creates any kind of legally enforceable prohibition against weakening an NDC.
Energy companies urge Trump to remain in Paris climate agreement - Trump recently signed an executive order aiming to roll back President Barack Obama's Clean Power Plan but did not address the Paris agreement. European Union leaders aren't the only ones who are imploring Trump to keep the U.S. as part of the largest climate agreement in history. Ben van Beurden is the CEO of Shell, the giant energy company. Even though he's in the business of selling fossil fuels, van Beurden tells NPR's Ari Shapiro the U.S. should stay in the climate agreement. "We believe climate change is real," van Beurden says. "We believe that the world needs to go through an energy transition to prevent a very significant rise in global temperatures. And we need to be part of that solution in making it happen." Opponents of the Paris climate agreement argue that governments should not require companies to limit their oil and gas exploration projects. But van Beurden says the industry wants governments around the world to develop a consistent policy. "One of the biggest concerns that I have around climate change is the unpredictability in which governments will go about it," van Beurden says. "If we have a very clear understanding that governments, successive governments, will continue to act consistently with a certain policy set that we believe in, I have no issue with it." Exxon Mobil, Chevron and BP have also pledged their support for the Paris climate pact. Exxon CEO Darren Woods wrote in a blog post the Paris accord creates "an effective framework for all countries to address rising emissions."
US works on climate interests relevant if Trump stays in UN pact | Reuters: A pared-down U.S. delegation has quietly worked to promote long-standing U.S. climate interests at global talks in Germany even though President Donald Trump is threatening to pull out of an agreement largely designed by Washington. U.S. delegates at the May 8-18 talks in Bonn, seeking detailed rules for the 2015 Paris Agreement to shift the world economy from fossil fuels, have stopped short of stressing Trump's doubts that climate change has a human cause. "I think the main headline at this point is that 'there are many, many measures under review," delegation leader Trigg Talley told the conference in a speech about trends in man-made U.S. greenhouse gas emissions on May 13. The 15-strong U.S. delegation, against more than 40 at similar talks a year ago, has underlined climate priorities that have long had bipartisan support in Washington, such as a need for clear rules to track national pledges to curb greenhouse gas emissions. For now, Washington is still part of the agreement among almost 200 nations and Talley has to walk a fine line to avoid offending either the White House or backers led by China, the European Union and India. Talley "is very open in repeating 'our position is under review'. He is actively engaged, participating in the discussions. I think this attitude has been appreciated," said Patricia Espinosa, the U.N.'s climate chief. Talley declined to comment to Reuters on the U.S. role.
The left is probably going to lose on climate change -- Freddie deBoer has written a post taking aim at leftists who are "contemptuous of the essential work of persuasion but totally unable to articulate an alternative." To be fair, he specifically calls out Angus Johnston amid a debate over the Milo Yiannopoulos protests, and I'm not sure how far beyond that context his point extends. Still, this seems fairly sweeping: Here’s the idea: we build a mass left-wing movement for change by persuading those who are able to be persuaded through appeals to their enlightened self-interest and their desire to build a better world. Then, we will have enough people on our side to take power through democratic governance and show the rest that our way is better for everyone. And we do all this through the slow, unsexy work of politics, which means going to meetings, walking picket lines, writing pamphlets, doing local radio, shaking hands, and yes, having a dialogue to convince others to join our cause. That’s it, that’s the only possible way to win. On most political fronts, I think this is good advice - but there's at least one where I think it's dead wrong. And I think the left needs to understand that it's wrong, because as long as we keep thinking of the climate change challenge as one of mass persuasion, we're going to lose. Derrick Jensen: It is our prediction that there will be no mass movement, not in time to save this planet, our home...If we had a thousand years, even a hundred years, building a movement to transform the dominant institutions around the globe would be the task before us. But...the usual approach of long, slow institutional change has been foreclosed, and many of us know that. This is not the perspective of dilettantes who are averse to the hard work of persuasion; Jensen is writing on behalf of a group of seasoned and prolific environmentalists. And their conclusion is pretty defensible.
Two EPA science board members resign in protest | TheHill: Two members of an Environmental Protection Agency (EPA) science panel resigned Friday in protest after the agency dismissed other scientists from the board earlier this month. Carlos Martin and Peter Meyer said in a Friday letter that they would leave the Board of Scientific Counselors’ (BOSC) Sustainable and Healthy Communities subcommittee. In a letter Martin posted on Twitter, the scientists said their resignation stems from the EPA’s decision not to renew two other scientists’ positions within BOSC. Just resigned from EPA subcommittee to protest removal of @ecotrope & Courtney Flint. Painful professional decision. #standupforscience pic.twitter.com/Zz09bD0vnj — Carlos Martín (@carlosonhousing) May 12, 2017 “The effective removal of our subcommittee’s co-chairs suggests that our collective knowledge is not valued by the current EPA administrators,” Martin and Meyer wrote. “Like so many of our colleagues and the broader research community, we have deep concerns about the leadership at EPA and its continued obfuscation of scientific evidence and the research enterprise.”
Science Committee Dems to Trump: Stop depending on fake news | TheHill: Democratic members of the House Committee on Science, Space, and Technology urged President Trump to stop relying on “misinformation and fake news" in a Thursday letter. The letter, first reported by Popular Science, claims that the president has left himself vulnerable to misinformation by not appointing a director to the White House Office of Science and Technology Policy (OSTP) and not fully staffing the department. “You have a tool at your disposal in this regard, should you make use of it, in this Office of Science and Technology Policy,” the letter reads. “If you appoint a qualified OSTP director, you will have a reliable source of policy advice for matters related to science and technology.” The Trump administration has earned criticism for its stances on energy and the environment. The Environmental Protection Agency dismissed various scientists from its advisory board earlier this month, prompting two other board members to resign in protest. Trump's Interior Department froze the work of over 200 members of its advisory boards, committees and subcommittees, a third of which cover science-related issues. Trump claimed in 2012 that climate change is a “Chinese hoax.”
Connecticut AG sues EPA over ozone from Pennsylvania power plant | Reuters: Connecticut's attorney general has sued the Environmental Protection Agency, accusing it of failing to act on the state's complaint that its air is being polluted by a coal-fired power plant in southeastern Pennsylvania. Filed on Tuesday in New Haven federal court, the lawsuit said the EPA violated the U.S. Clean Air Act by not taking timely action to regulate the Brunner Island Steam Electric Station, a plant about 175 miles from Connecticut's border.
Trump EPA appointee was a coal utility lobbyist this year, senators say - Lawmakers are calling on Environmental Protection Agency Administrator Scott Pruitt to hand over information about a key agency appointee, citing her record as an energy industry lobbyist as recently as the first quarter of this year.Sens. Sheldon Whitehouse (D-R.I.) and Jeff Merkley (D-Ore.) sent a letterto Pruitt on Tuesday, challenging his appointment of Elizabeth "Tate" Bennett as deputy associate administrator of EPA's Office of Congressional and Intergovernmental Relations. In that role, Bennett is the agency's primary point person and liaison with Congress and state governments.The senators cited President Donald Trump's executive order on ethics, writing: "Because of her activities as a registered federal lobbyist she cannot work on legislation, communicate with Congress, or coordinate and monitor regional, state and local responses to a wide-range of major issues faced by EPA."Bennett worked for two years as a lobbyist for the National Rural Electric Cooperative Association, which represents more than 900 customer-owned rural utilities. The association, whose members have been historically reliant on coal, has pushed heavily against emissions-cutting regulations, including the Clean Power Plan.The senators say that Bennett's appointment violates Trump's executive order on ethics, which says appointees can't "participate in the specific issue area" for which they lobbied in the two years prior to their appointment. Trump issued the order during his second week in office, following up on his oft-repeated campaign pledge to "drain the swamp." Previous presidents had similar ethics orders.The EPA and Bennett's office did not immediately respond to a request for comment.
Trump’s Unconstitutional Executive Order on Regulations - Regulatory Review --Soon after taking office, President Donald Trump issued an unconstitutional executive order requiring administrative agencies to repeal at least two regulations for each new regulation they create. The Natural Resources Defense Council, Public Citizen, and the Communications Workers of America, working with Earthjustice, have sued to block this illegal action. This executive order has provoked less of a public outcry than many of President Trump’s others, but it may be the most far-reaching and damaging of any he has issued. It affects every area of government policy and hamstrings most federal agencies. It also amounts to a potentially devastating anti-environmental policy—hampering the government’s ability to ensure we have clean air, drinkable water, and safe food, among other vital protections.The order will make it difficult, if not impossible, for agencies to promulgate new regulations as new environmental problems emerge, or as science makes it clear that our existing protections are inadequate.Like other Trump Administration policies, his executive order on regulations is not a narrowly tailored reform designed to address specific problems or restore balance. It is a blunderbuss that shoots down the entire regulatory system—a system that has long and effectively protected Americans. The President issued this order with little regard to law, science, or practical policy. In terms of law, the order is unconstitutional, as we allege in our complaint. The President is directing agencies to violate the Administrative Procedure Act and a wide range of other laws that govern the way government agencies develop and put forth regulations. Those laws do not contemplate—or permit—the kind of tradeoff between existing and new regulations called for by President Trump’s order. Instead, legislation directs agencies to confront specific concerns, such as air pollution.
Trump Plans to Slash Renewable Energy Budget by 70% -- The Trump administration is planning to put the U.S. Department of Energy's budget for its renewable energy and energy efficiency program on the chopping block with a proposal to slash it by 70 percent. That's according to a draft 2018 budget proposal obtained by Axios . It shows $613 million for sustainable transportation in 2017, but just $184 million for 2018—a nearly 70-percent drop. There was $451 million for renewable power in the budget for 2017 but $134 million proposed for 2018—a 70-percent drop. There was $762 million for energy efficiency in 2017 and $160 proposed for 2018. That's a 79-percent drop. In total, the data obtained by Axios show that U.S. Department of Energy's office of Energy Efficiency & Renewable Energy budget went from $2,073 million in 2017 to a proposed $636 million for 2018, which marks a nearly 70-percent decrease. The news outlet's Amy Harder writes that the plan is unlikely to get congressional approval but is important nonetheless, as "[i]t puts a low marker down to negotiate with Congress. The lower the starting point, the lower the ultimate numbers could well end up." Rep. Keith Ellison reacted to the news on Twitter, writing : "Cutting renewable energy by 70% will not only cost us jobs, it will worsen public health & hurt our environment!" A recent analysis of U.S. Department of Energy data by the Sierra Club backs up the Congressional Progressive Caucus co-chair's claim about the job costs. "Clean energy jobs, including those from solar , wind , energy efficiency, smart grid technology and battery storage, vastly outnumber all fossil fuel jobs nationwide from the coal, oil and gas sectors. That includes jobs in power generation, mining and other forms of fossil fuel extraction," the conservation group found .
GOP senators push Trump for DOE research funding | TheHill: Senate Republicans sent President Trump a letter Thursday to advocate for strong funding for the Department of Energy’s research programs, which the president has threatened to cut. The senators, led by Sen. Lamar Alexander(R-Tenn.), didn’t specify a funding level they want Trump to seek in fiscal year 2018, but they attempted to outline the importance of DOE research for the future. “Government-sponsored research is one of the most important investments our country can make to encourage innovation, unleash our free enterprise system to create good-paying jobs and ensure American competitiveness in a global economy,” the senators wrote. “We cannot lose the technological advantages we have gained through our country’s investment in research and development,” they continued. “Governing is about setting priorities, and the federal debt is not the result of Congress overspending on science and energy research each year. We urge you to continue to invest in the Department of Energy’s research and development programs in fiscal year 2018.” Alexander is one of the senate’s top advocates for DOE research funding, owing in part to the presence of DOE’s Oak Ridge National Laboratory in Tennessee. He is also the chairman of the Appropriations Committee’s subpanel that oversees DOE’s budget.
Renewable groups push back on Energy Department electric grid study | TheHill: Four renewable energy groups on Tuesday pushed back against a Department of Energy power sector review that they say threatens wind, solar and other industries. In a letter to Energy Secretary Rick Perry, the groups said the agency’s study on the electric grid is “based on a faulty premise” that the growing renewable energy sector is to blame for the retirement of coal and nuclear plants that, in turn, puts grid reliability at risk. The groups, which have worried that the study is aimed at undercutting wind and solar generation in favor of coal and nuclear sectors, also said the grid review should go through a public comment process with more input from the energy industry. “We express our disappointment that the Department has apparently chosen not to make this review — which as outlined in your memo has the potential to upend energy markets around the country — public and open to input from industry, grid operators, state regulators and other key stakeholders,” the groups wrote in their letter. Signers of the letter include the American Council on Renewable Energy, American Wind Energy Association, Solar Energy Industries Association and Advanced Energy Economy. The letter comes as the Energy Department reviews the reliability of the electric grid. Officials are also probing the impact federal regulations and support for renewable energy have on "baseload" power — the reliable electricity supply generated by large-scale plants that are generally fueled by fossil or nuclear sources.Critics of renewable power say increased reliance on renewable sources puts the reliability of the electric grid at risk, an assertion wind and solar generators and their allies have disputed.
Iowa senator slams energy chief for grid study undermining wind energy | Reuters: Iowa's Republican senator on Wednesday raised concerns that U.S. Energy Secretary Rick Perry has commissioned a "hastily developed" study of the reliability of the electric grid that appears "geared to undermine" the wind energy industry. In a letter sent to Perry, Senator Chuck Grassley asked a series of questions about the 60-day study he commissioned. Grassley also said the results were pre-determined and would show that intermittent energy sources like wind make the grid unstable. Last month, Perry ordered the grid study and said Obama-era policies offering incentives for the deployment of renewable energy had come at the expense of energy sources like coal and nuclear. "I'm concerned that a hastily developed study, which appears to pre-determine that variable, renewable resources such as wind have undermined grid reliability, will not be viewed as credible, relevant or worthy of valuable taxpayer resources," wrote Grassley, whose state is home to a booming wind energy industry. He pointed to a previous study conducted a few years ago by the Energy Department's National Renewable Energy Laboratory, which took two years to complete, not two months. Grassley said Iowa gets 36 percent of its electricity from wind and that its largest utility, MidAmerican Energy Co, is on track to generate 90 percent of its electricity from wind in a few years. Grassley said MidAmerican has the ninth lowest electricity rates in the country. In the letter, Grassley also asked Perry which grid-reliability organizations and experts were involved in the study, how much it would cost taxpayers and whether the report would be open for public comment.
China's Xi positions himself as free trade and climate champion - Chinese President Xi Jinping has called for the world to reject protectionism and promote free trade in the latest attempt by Beijing to take up the mantle of globalization since the election of US President Donald Trump.Speaking to world leaders on the last day of a forum in Beijing to promote its One Belt, One Road (OBOR) trade and infrastructure initiative, Xi said "economic globalization has encountered some setbacks.""Many countries are pondering the way forwards," he added. "(But) in a world of growing interdependence and challenges ... no country can tackle all the challenges or solve the world's problems on its own."A communiqué released by China and signed by 30 world leaders in attendance at the forum emphasized the importance of working to "build an open economy, ensure free and inclusive trade, (and) oppose all forms of protectionism." Debate over protectionism exposes a growing rift between Washington and other major economies, particularly China. In March, US officials pushed to drop a long-standing public endorsement of free trade and condemnation of protectionism from a statement released by the G-20 group of leading economies.
Solar panels could protect US military from attacks on the energy grid -- Power production from multiple sources increases the difficulty of triggering cascading blackouts, and following an attack or natural disaster, microgrids can provide localised energy security. In a new paper published in Renewable and Sustainable Energy Reviews, an interdisciplinary team of engineering and energy policy experts from Michigan Technological University says the first step is to outfit military infrastructure with solar photovoltaic (PV)-powered microgrid systems. Their results found that the military needs 17 gigawatts of PV to fortify bases in the US and the systems are technically feasible, within current contractors’ skill sets and economically favourable. The US military already has a renewable energy plan in place: 25 per cent of energy production from renewable sources by 2025, but only 27 of the more than 400 domestic military sites either have fortified PV microgrids running now or have plans to do so, which makes the majority vulnerable to long-term power disruptions.
The Elephant in the Room That Smells Like Natural Gas -- A curious thing happened in the aftermath of President Trump attempting to sign away the past eight years of work on climate and clean energy: The public face of progress didn't flinch. From north to south and east to west, utilities and businesses and states and cities swore their decarbonization compasses were unswerving; yes, they said, we're still closing coal plants, and yes, yes!, we're still building ever more wind and solar —it just makes sense. But here's why all the subsequent commentary reiterating the inevitability of coal's decline and cheering the unsinkable strength of renewables' rise was right in facts, but incomplete in message: Coal is closing. Renewables are rising. But right now , we need to be talking about natural gas. Last year, carbon dioxide emissions from coal-fired power plants fell 8.6 percent . But take a look at the right-hand panel in the graph below. See what's not going down? Emissions from natural gas. In fact, carbon dioxide emissions from natural gas overtook coal emissions last year, even omitting the additional climate impacts from methane released during natural gas production and distribution. Bridge fuel? Not so much. There's no sign of the trend stopping, either. Natural gas plants have been popping up all across the country, and new plants keep getting proposed—natural gas generators now comprise more than 40 percent of all electric generating capacity in the U.S. And all those natural gas plants mean even more gas pipelines. According to project tracking by S&P Global Market Intelligence, an additional 70 million Dth/d of gas pipeline capacity has been proposed to come online by the early 2020s (subscription). That is a lot of gas, and would require the commitment of a lot of investment dollars. When plants are built, pipelines are laid, and dollars are committed, it becomes incredibly hard to convince regulators to force utilities to let it all go. Still, that's what the markets—and the climate—will demand. The thing is, we know today the external costs of these investments , and the tremendous risks of our growing overreliance on natural gas. So why do these assets keep getting built? Because many of our regulators, utilities and investors are working without a map.
All fossil-fuel vehicles will vanish in 8 years in twin ‘death spiral’ for big oil and big autos, says study that’s shocking the industries - No more petrol or diesel cars, buses, or trucks will be sold anywhere in the world within eight years. The entire market for land transport will switch to electrification, leading to a collapse of oil prices and the demise of the petroleum industry as we have known it for a century. This is the futuristic forecast by Stanford University economist Tony Seba. His report, with the deceptively bland title Rethinking Transportation 2020-2030, has gone viral in green circles and is causing spasms of anxiety in the established industries. Seba’s premise is that people will stop driving altogether. They will switch en masse to self-drive electric vehicles (EVs) that are ten times cheaper to run than fossil-based cars, with a near-zero marginal cost of fuel and an expected lifespan of 1 million miles. Only nostalgics will cling to the old habit of car ownership. The rest will adapt to vehicles on demand. It will become harder to find a petrol station, spares, or anybody to fix the 2,000 moving parts that bedevil the internal combustion engine. Dealers will disappear by 2024. Cities will ban human drivers once the data confirms how dangerous they can be behind a wheel. This will spread to suburbs, and then beyond. There will be a “mass stranding of existing vehicles”. The value of second-hard cars will plunge. You will have to pay to dispose of your old vehicle. It is a twin “death spiral” for big oil and big autos, with ugly implications for some big companies on the London Stock Exchange unless they adapt in time.
South Australia energy security target may exclude battery storage -- The South Australian government has outlined further details of its proposed energy security target and, contrary to expectations, it looks like it will exclude battery storage and make solar and wind farms paired with the technology ineligible to receive credits. The move could have serious implications for wind and solar farm developers and owners in the state, given the restrictions it is likely to impose on output as the state seeks to limit the amount of “non dispatchable” generation. It may also result in higher electricity prices, given that storage is considered by many to be cheaper than gas.The EST is designed to ensure that 36 per cent of South Australia’s electricity demand is met through local “clean” but dispatchable generation, rising to 50 per cent by 2050. That equates to 4,500 gigawatt hours in 2017/18 and 6,000GWh from 2025. It was thought that battery storage – which could be added to many of these new projects, and many existing wind farms – would be allowed under the new legislation, which will assign credits – worth up to $50/MWh – for technology meeting that target. But the draft legislation defines the “accredited generators” as being only those that can provide “real inertia” and “fault current”. Battery storage can provide both inertia and fault current, but in the terminology used in the industry it is known as “synthetic inertia.”
Thinktank calls for European energy union -A leading security thinktank has called for the creation of a new pan-European body to ensure continued co-operation on energy matters between the UK and the EU. The Royal Institute of International Affairs, otherwise known as Chatham House, has proposed the establishment of an ‘Enlarged European Energy Union’ (EEEU) incorporating both the EU and non-member states, including Norway and Switzerland alongside the UK. The report says that the UK should seek to maintain its membership of the EU’s internal energy market (IEM) if a trade deal between the EU and UK is not finalized within the two-year period specified by the Article 50 process. The report says that the new body could facilitate integration of neighbouring countries’ energy markets into the IEM and agree to common environmental protection and product standards. It could also replace the European Court of Justice as a mechanism for policing energy disputes. The report also proposes that the new union would support the EU’s objectives of creating a Europe-wide competitive energy market and provide a forum for neighbouring countries like Norway and the UK to be involved in EU energy policymaking.
’Unfair’ energy companies raise prices by 37pc before Theresa May can bring in price cap -- Energy companies have been accused of behaving in an unfair and unreasonable way after raising prices before a proposed government price cap is introduced.Centrica, the owner of British Gas, warned that Theresa May’s flagship policy would drive up prices even higher by reducing competition. However, the Conservatives will on Tuesday confirm that the energy price cap forms a key pledge in their forthcoming election manifesto. The Conservatives said families are now paying £1.4 billion more for their energy than they should be, and promised to “put it right” by capping prices if they are re-elected. But Centrica, owner of British Gas, hit back by saying a price cap would end up pushing up average prices as it warned the Prime Minister her policy would lead to “unintended consequences”. Iain Conn, the company’s chief executive, said the policy was anti-competitive and pointed out that a similar policy in Spain led to a £20 billion deficit in spending on infrastructure. The Tories believe a price cap –which would be set by the regulator Ofgem and re-set every six months – will knock up to £100 off annual bills for around 18 million households.
Pakistan to Build Massive Dams for Abundant Water and Power -- China and Pakistan have agreed to finance and build two mega dams in Gilgit-Baltistan region of Pakistan. A memorandum of understanding (MoU) for this development was signed by the leaders of the two countries on the sidelines of the Belt and Road Initiative (BRI) summit in Beijing.The two dams, called Bunji and Diamer-Bhasha projects, will have the capacity to generate 7,100MW and 4,500MW of electricity respectively. China will provide $27 billion to fund the construction of the two dams, according to media reports. Pakistan has the potential to generate 59,000MW of hydropower, according to studies conducted by the nation's Water and Power Development Authority (WAPDA). Currently, it's generating only 6,600MW of hydroelectric power, about 11% of the estimated potential. Media reports indicate that China is prepared to finance and build another 40,000MW capacity as part of the development of the Northern Indus Cascade region which begins in Skardu in Gilgit-Baltistan and runs through to Tarbela, the site of Pakistan’s biggest dam, in Khyber-Pakhtunkhwa province. Diamer-Bhasha project is located on Indus River, about 200 miles upstream from the existing Tarbela Dam, 100 miles downstream from the Northern Area capital Gilgit in Gilgit-Baltistan region. It will generate 4,500 MW of electricity and its reservoir will hold so much water that it could have averted recent devastating floods that affected large parts of Pakistan. It would also provide enough electricity to end Pakistan's crippling shortages, according to a report in the Guardian newspaper. The Diamer-Bhasha reservoir would be 50 miles long, holding 8.5 MAF (million acre feet) of water.
China Suspends Coal Development in 29 Provinces -- China plans to suspend approvals for new coal-fired power plants in 29 provinces, Reuters reported. The move comes as the country’s National Energy Administration put as many as 25 provinces on “red alert,” meaning new projects would create severe overcapacity or environmental problems. Another four regions were put on “orange alert.” The NEA said utilization rates at existing coal-fired plants are falling as the result of slowing growth in electricity demand. Last year the average utilization rates at China’s coal plants fell 4.6 percent to 4,165 hours last year. Overall thermal capacity, including oil and gas-fired plants, rose 5.3 percent to 1,054 GW. China had already moved in March to close down, cancel or slow construction of more than 50 GW of thermal capacity. And in January, China’s NEA moved to cancel plans to build at least 85 coal plants. China’s total coal-fired power generation is likely to reach 1,300 GW by the end of 2020, even though the government’s five-year plan calls for a cap of 1,100 GW. Total coal capacity reached 940 GW at the end of 2016.
Indonesia coal output seen growing up to 5 pct this year and next -industry association | Reuters: Indonesia, the world's top thermal coal exporter, could increase production of the fuel used in power stations by 5 percent in 2017 and 2018, the country's leading coal industry association said on Sunday. Indonesia's coal industry has benefited from higher prices this year after a downturn in 2015 and 2016 put many small producers out of business, though recent price declines could signal more difficulties ahead. "For production, I would say flat to up 5 percent," Indonesian Coal Mining Association Chairman Pandu Sjahrir said on the sidelines of the Coaltrans Asia conference in Bali, referring to 2017 and 2018 output without detailing numbers. In October Sjahrir said Indonesia's coal production could reach 460 million tonnes in 2017, up from an estimated 440 million tonnes last year, because of improving prices. However, output from Indonesia is likely be limited as many of the country's largest producers divert capital towards power station projects rather than expansions, Sjahrir added. "I don't see much growth in coal output for the next three to four years," he said
Coal to be India's energy mainstay for next 30 years: policy paper | Reuters: Coal will remain India's main energy source for the next three decades although its share will gradually fall as the country pushes renewable power generation, according to a government report seen by Reuters. The country is the world's third-largest coal producer and the third-biggest greenhouse gas emitter. It depends on coal for about three-fifths of its energy needs and aims to double its output to 1.5 billion tonnes by 2020. By 2047, however, coal's share of India's energy mix would shrink to 42-48 percent, from about 58 percent in 2015, the report, which has yet to be made public, showed. "India would like to use its abundant coal reserves as it provides a cheap source of energy and ensures energy security as well," the report said. It was written by Indian think tank NITI Aayog, which advises the government on policy issues and is chaired by Prime Minister Narendra Modi, and the Institute for Energy Economics Japan (IEEJ). India is also the world's second-largest coal importer and environmentalists worry that despite its commitment to renewable energy, the country's rising use of coal at a time when many Western nations are rejecting the dirty fossil fuel will hamper the global fight against climate change. India aims to cut thermal coal imports to zero by the end of this fiscal year and use its abundant domestic stockpiles to address its electricity needs. However, it will have to start importing again after its coal production peaks in 2037, according to the report.
Closure of Indian Point Nuclear Plant Faces Hurdle -- A troubled nuclear plant near New York City could remain open beyond its scheduled closure date of April 2021 if a Republican politician’s new lawsuit forces further environmental review. If successful, Westchester County Executive Rob Astorino’s legal challenge would sink plans to shutter Indian Point Energy Center and force its owner Entergy to pay $15 million for environmental and community funding. New York’s Democratic Governor Andrew Cuomo and Attorney General Eric Schneiderman said the deal would steer New York toward clean energy and enhanced safety for millions. But Astorino claims in his May 9 lawsuit in Westchester County Supreme Court that New York’s State Environmental Quality Review Act findings looked into only the impact of the plant’s continued operation, not the secondary effects its closure would have on jobs, costs, spent fuel and greenhouse gases. “If ever there was a case for the State Environmental Quality Review Act to be enforced, it’s over Indian Point,” Astorino tweeted Wednesday.
Contractor bankruptcy looms at Georgia nuclear plant hearing (AP) — Georgia Power executives said Thursday that they're considering all options for the fate of a planned nuclear plant after its main contractor filed for bankruptcy, repeatedly telling state regulators and opposition groups that the project's completion date and total cost are in flux. The sometimes testy hearing opened the latest biannual review by the Georgia Public Service Commission of project costs, focusing on $222 million spent at the site south of Augusta between July and December. The review opened one day before a contract to keep construction going was set to expire, and the contractor's bankruptcy filing loomed large despite admonitions to various questioners of company witnesses to stay focused on the recent expenses. "I understand we all want to know these things but it's still speculative," Commission Chair Stan Wise said. The March 29 filing by Westinghouse Electric Co., the U.S. nuclear unit of Japan's Toshiba Corp., raised questions about the future of four nuclear reactors under construction in Georgia and South Carolina. Consumer groups that have long opposed the project pressed Georgia Power executives on Thursday about what's likely to happen at Plant Vogtle. Their reply: We're not sure yet. Vice President of Nuclear Development David McKinney said the company is considering "all options," including completion of both reactors, cancellation of both or cancellation of one reactor. McKinney and other officials said they will bring a recommendation back to the commission after studying new information made available through the bankruptcy process to figure out what it will cost and how long it could take to finish the project.
TVA awards $450 million contract to Westinghouse despite its bankruptcy - Despite its bankruptcy, Westinghouse Electric Co. won a $450 million contract from the Tennessee Valley Authority on Thursday to fabricate nuclear fuel through 2030.TVA directors agreed to use Westinghouse for the fuel fabrication after TVA Executive Vice President Joe Grimes told the board that TVA will obtain appropriate credit assurances before any contract with Westinghouse is signed. Westinghouse was the low bidder for the contract, which has a proposed term of 14 years. Grimes said Westinghouse has a proven technology for the two Westinghouse-designed plants TVA operates in Tennessee — the Sequoyah Nuclear Power Plant near Soddy-Daisy and the Watts Bar Nuclear Plant near Spring City, Tenn. Grimes said TVA will obtain adequate protections to ensure that it will get ongoing fuel supplies at contract prices from either Westinghouse or its successors.
Residents Sue to Block 3.6 Million Pounds of Highly Radioactive Nuclear Waste From Being Stored Near California Beach - Environmental activists in California are fighting plans to store 3.6 million pounds of highly radioactive nuclear waste on a popular beach in San Diego County. In 2012, a radioactive leak at the San Onofre nuclear power plant forced an emergency shutdown. The plant was fully closed by June 2013. Now residents are fighting the permit issued by the California Coastal Commission to store the millions of pounds of nuclear waste in thin, stainless steel canisters, within 100 feet of the ocean. We speak to Ray Lutz, founder of Citizens' Oversight , which has filed a lawsuit challenging the expansion of the nuclear waste storage facility. Watch the interview below: (via Democracy Now! )
Hanford nuclear site accident puts focus on aging U.S. facilities | Reuters: The collapse of a tunnel used to store radioactive waste at one of the most contaminated U.S. nuclear sites has raised concerns among watchdog groups and others who study the country's nuclear facilities because many are aging and fraught with problems. "They're fighting a losing battle to keep these plants from falling apart," said Robert Alvarez, a former policy adviser at the U.S. Department of Energy who was charged with making an inventory of nuclear sites under President Bill Clinton. "The longer you wait to deal with this problem, the more dangerous it becomes," said Alvarez, a senior scholar at the Institute for Policy Studies, where he focuses on nuclear energy and disarmament. The Energy Department did not respond to requests for comment. No radiation was released during Tuesday's incident at a plutonium-handling facility in the Hanford Nuclear Reservation in Washington state, but thousands of workers were ordered to take cover and some were evacuated as a precaution. The state of facilities in the U.S. nuclear network has been detailed by the Department of Energy, Government Accountability Office and Defense Nuclear Facilities Safety Board. They have noted eroding walls, leaking roofs, and risks of electrical fires and groundwater contamination. In 2016, Frank Klotz, head of the National Nuclear Security Administration, an Energy Department agency overseeing maintenance of nuclear warheads, warned Congress about risks posed by aging facilities. Decontaminating and demolishing the Energy Department's shuttered facilities will cost $32 billion, it said in a 2016 report. It also noted a $6 billion maintenance backlog.
Nuclear Power Is Booming in Asia as US Industry Struggles - The lights may be dimming on nuclear energy in the United States, but the sun is still rising in the East. The business is booming in Asia, where more than half of the world’s new nuclear capacity is under construction. The bulk of that is in China, which is building nuclear power plants at a rapid clip, using a combination of US, European, and domestically designed reactors. It has 20 reactors currently under construction, compared to a half-dozen in Western Europe and four in the United States. Meanwhile, South Korea has 25 reactors that provide about a third of its power, with five more under construction. Its Korea Electric Power Company is also building a four-unit nuclear plant in the United Arab Emirates, having won the bid over competitors from the United States, Russia, and France. Of the 10 new reactors that came online in 2015, five were in China; Pakistan, India, Russia, the United States and South Korea each added one. Of the three completed in 2016, two were in China and one — built by a Chinese company — was in Pakistan.
Dismantling nuclear: German power firms sell new skills | Reuters: Energy groups E.ON and EnBW are tearing down their nuclear plants at massive cost following Germany's decision to abandon nuclear power by 2022, but they are seeking to turn a burden into business by exporting their newfound dismantling skills. Germany is the only country in the world to dump the technology as a direct consequence of Japan's Fukushima disaster in 2011, a decision that came as a major blow to the two energy firms which owned most of Germany's 17 operational nuclear stations. E.ON and EnBW have already shut down five plants between them and must close another five by 2022. Not only are they losing a major profit driver - a station could earn 1 million euros ($1.1 million) a day - but are also facing combined decommissioning costs of around 17 billion euros. This tough new reality has nonetheless forced them to rapidly acquire expertise in the lengthy and complex process of dismantling nuclear plants - presenting an unlikely but potentially lucrative business opportunity in a world where dozens of reactors are set to be closed over the next 25 years. They say their skills are attracting the interest of international customers. "We are increasingly getting requests from countries where the decommissioning of nuclear plants is an issue or will become one," said a spokeswoman for E.ON's PreussenElektra division, which was formed last year to wind down the company's nuclear business and operate the plants in the interim period. The unit, which employs about 650 decommissioning staff, said it was seeing particularly strong demand for its know-how in Japan, where 12 reactors are set to be closed down, adding that Mitsubishi Heavy Industries (MHI) was among its clients.
Is The US Prepared For A Nuclear EMP To Shut-Down New York City? -- Whereas the U.S. nuclear deterrent is kept low-profile, almost invisible, and its utility and legitimacy much debated, Russia and China run TV documentaries describing how they would win a nuclear war with the United States. The "international taboo" on nuclear warfare is one-sided and far more likely to have a psychologically paralyzing effect on the U.S. and its allies than on Russia, China, North Korea, or Iran. An electromagnetic pulse (EMP) attack would be perfect for implementing Russia's strategy of "de-escalation," where a conflict with the U.S. and its allies would be won by limited nuclear use. It's their version of "shock and awe" to cow the U.S. into submission. The same kind of attack is viewed as an acceptable option by China and North Korea as well. An EMP attack would be the most militarily effective use of one or a few nuclear weapons, while also being the most acceptable nuclear option in world opinion, the option most likely to be construed in the U.S. and internationally as "restrained" and a "warning shot." Because EMP destroys electronics instead of blasting cities, even some analysts in Germany and Japan, among the most anti-nuclear nations, regard EMP attacks as an acceptable use of nuclear weapons. High-altitude EMP attack entails detonating a nuclear weapon at 30-400 kilometers altitude — above the atmosphere, in outer space, so high that no nuclear effects, not even the sound of the explosion, would be experienced on the ground, except EMP. An EMP attack will kill far more people than nuclear blasting a city through indirect effects - by blacking out electric grids and destroying life-sustaining critical infrastructures like communications, transportation, food and water - in the long run. But the millions of fatalities likely to eventually result from EMP will take months to develop, as slow as starvation. Thus, a nation hit with an EMP attack will have powerful incentives to cease hostilities, focus on repairing their critical infrastructures while there is still time and opportunity to recover, and avert national extinction.
Ohio Drillers Setting Utica Shale Production Records - Wheeling Intelligencer — Eclipse Resources officials left a “Purple Hayes” with their 3.5-mile-long horizontal well last year, but their “Great Scott” operation now stretches almost 1,000 feet farther into the Utica Shale beneath in Guernsey County in eastern Ohio. As Eclipse drills deeper and farther into the shale, fellow operators Gulfport Energy and Rice Energy continue increasing production and adding new acreage for future fracking.“In the Utica condensate area, I am extremely happy to announce that we successfully drilled what we believe is the world’s longest onshore lateral ever drilled with a total measured depth of 27,400 feet and completable lateral extension of 19,300 feet, almost 1,000 feet longer than the previous record held by our ‘Purple Hayes’ well,” Eclipse Chairman, President and CEO Benjamin W. Hulburt said.According to the Ohio Department of Natural Resources, the Great Scott well is located in Guernsey County, west of Barnesville and south of Cambridge. Industry leaders consider condensate as light form of crude oil. Eclipse, which also has operations in Belmont and Monroe counties, is benefiting from the recovery in the industry. The company posted net income of $26.8 million for the first three months of this year, which compares to a net loss of $45.5 million during the same time period in 2016. “This was another tremendous quarter for us as we continued our track record of exceeding production expectations, while expanding our operating margin by keeping our per unit operating expenses and our general and administrative expenses low,” Hulburt added.
118 Groups Demand FERC Halt Construction of Rover Pipeline -- Community activists and organizations sent a letter to the Federal Energy Regulatory Commission (FERC) Wednesday, signed by 118 groups, demanding the agency halt all construction of the Rover gas pipeline and embark upon an extensive review of its approval policies. The letter, signed by groups along the Rover pipeline route in West Virginia, Pennsylvania, Ohio and Michigan as well as across the country, comes on the heels of massive construction accidents and spills by Energy Transfer Partners as it began construction of the fracked gas pipeline in recent weeks. Already, Energy Transfer Partners has been fined by the state of Ohio and FERC has taken action to pause a portion of their construction activities. "In just the first few weeks of building the Rover pipeline, Energy Transfer Partners has shown themselves to be simply reckless in their construction practices. But just as importantly, they've exposed glaring flaws in FERC's approval processes for pipelines like Rover," said David Turnbull, campaigns director with Oil Change International . "FERC needs to take immediate action not only to protect people and ecosystems along the Rover pipeline route from Energy Transfer Partners' reckless ways, but to improve their own processes to ensure this never happens again." The letter has been endorsed by community-based groups in the states impacted by Rover, like the Ohio River Citizens' Alliance , FreshWater Accountability Project , Buckeye Environmental Network , and Sierra Club Ohio Chapter , along with national groups like Oil Change International, Earthworks , Greenpeace USA , and the Sierra Club . It calls upon FERC to take two discrete actions: First, the groups demand that FERC halt all construction of the Rover pipeline, with the only exception being any activity necessary to ensure the structural integrity of construction to date. This construction should be halted so that the environmental impact statement can be re-opened to reassess the risks the pipeline construction imposes. Second, the groups demand that FERC initiate an immediate review of horizontal directional drilling plans and procedures on all open pipeline dockets under their jurisdiction, halting all new approvals of projects while the review takes place.
FERC quorum concerns increase uncertainty for gas pipeline projects, rates - The White House late Monday announced its intent to nominate two commissioners to the US Federal Energy Regulatory Commission, but the timing and politics of confirmation are still uncertain. Meanwhile, FERC is without the quorum needed to conduct its full range of business. Maya Weber examines how many backlogged orders could await newcomers and what impact FERC's current state is having on gas pipeline projects. A major trade group andSenate energy panel leaders are concerned about delays; will the commission be back at full speed soon?
Pipeline Route Lands This Virginia Town on List of State's 'Most Endangered' Historic Places - Opponents of the Mountain Valley Pipeline were dealt a blow after the West Virginia Department of Environmental Protection (WVDEP) denied a hearing request to appeal the state's water quality certification for the controversial project. The Charleston Gazette-Mail reports that WVDEP secretary Austin Caperton signed a letter addressed to the environmental law firm Appalachian Mountain Advocates denying its request for the hearing. The brief letter did not state a reason for denial. Appalachian Mountain Advocates senior attorney Derek Teaney said individuals and groups he represents will likely appeal Caperton's decision in the 4th U.S. Circuit Court of Appeals. The proposed Mountain Valley Pipeline will carry fracked gas 300 miles from northwest West Virginia to southern Virginia, crossing streams and wetlands in the 195-mile project area in West Virginia. Appalachian Mountain Advocates contends that the WVDEP acted prematurely in issuing the permit. As the Roanoke Times detailed, the Lewisburg, West Virginia-based nonprofit has a slew of concerns over the department's approval of the natural gas pipeline, including:
- • The department had not established current water quality baseline data for streams that the pipeline would cross.
- • The department had failed to adequately consider impacts to water quality from land disturbance and subsequent erosion and sediment unrelated to stream crossings.
- • Because the pipeline's route is not yet final and property surveys are incomplete, the "locations and effects of discharges associated with the construction and operation of the Mountain Valley Pipeline [are] ill-defined and impossible to fully evaluate."
- • The department had not adequately evaluated the effects on public drinking water supplies of the pipeline's construction and operation.
The project has sparked further outcry in Virginia. For instance, Preservation Virginia has put the village of Newport in Giles County on its 2017 list of the state's most endangered historic places : "One specific example is in Giles County, where two existing historic districts are threatened by the [Mountain Valley Pipeline] ... The covered bridges and historic structures that lend the district integrity and the continued agricultural pattern of land use in this area would be permanently and irrevocably impacted by the pipeline."
6 Banks Behind the Mountain Valley Pipeline -- Residents of Virginia and West Virginia opened up a new front Thursday in their fight to stop the 301-mile Mountain Valley Pipeline : targeting the major U.S. "main street" banks on tap to finance the fracked-gas project's $3.5 billion price tag. Landowners along the pipeline route are calling on customers to move their money out of the top six U.S. banks behind the pipeline—led by Bank of America and Wells Fargo. The banks are identified in a new analysis released today by Oil Change International that examines how the pipeline will be financed. The landowner and citizens' groups Bold Appalachia and Protect Our Water, Heritage, Rights (POWHR) launched Thursday's call to action and are planning an upcoming "Defund MVP" week of action in Virginia and West Virginia from June 19 to June 23. "Now is the time to pull out our pocketbooks, put our money where our mouth is and divest from the banks financing this pipeline," said Carolyn Reilly, a regional pipeline fighter with Bold Alliance whose farm is in the path of the proposed pipeline in Rocky Mount, Virginia. "The Mountain Valley Pipeline is focused solely on making money, setting private financial interest as the top priority. As farmers and landowners, we say 'no' to a greedy system that supports eminent domain for private gain while threatening our clean water and land." The "Defund MVP" campaign joins a growing movement of communities, tribes and cities across North America that are targeting the financing behind dirty pipeline projects, from Dakota Access to Keystone XL , and putting increasing pressure on major banks to move money flows away from risky fossil fuel projects that threaten the climate and communities. The Oil Change analysis draws a direct link between the banks providing corporate-level financing to pipeline company EQT Midstream Partners (EQM) and the money that will fuel the Mountain Valley Pipeline. EQM, the main driver of the project and the largest investor in it, plans to rely on corporate-level financing, rather than direct loans, to fund the pipeline.
New Northeast US gas pipelines will be hard to fill: Platts Analytics – Platts snapshot video - A wave of new gas pipeline capacity is set to come online in the Northeast US before the end of 2017, but current drilling and output in the area suggests that producers are unlikely to meet transportation obligations. Luke Jackson evaluates the Rover, TCO Leach Xpress and TETCO Adair/Southwest/Lebanon projects and the chances that they will fill with new supply — before even more pipeline capacity is expected in the area in 2018 and 2019.
US Northeast states are devouring natural gas for electricity, and that's a problem for coal - The Northeast U.S. states — a vast market that generates and consumes much of America's annual electricity — is gradually using less coal to fire up its electricity plants. In part of what the Energy Information Administration called a dramatic 10-year shift, the nine states that comprise the Northeastern U.S.'s energy grid have collectively doubled the share of natural gas used to generate electricity—even as the region churned out slightly less power from 2006-2016. Simultaneously, coal-fired power tumbled from 31 percent to 11 percent, the EIA said in a report. "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," the EIA said in a study last week. Analysts note that the cheaper and more plentiful natural gas becomes, the more incentive there is for producers to abandon coal. "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," the agency added.On a global scale, coal is still king, but its reign has become increasingly tenuous. The fuel source accounts for 41 percent of electricity generation worldwide, according to the World Coal Association, and in some countries that share is even higher. Massive demand from China — the world's largest energy consumer — has kept coal prices propped up higher.Yet the Northeast's gradual migration to abundant natural gas — whose prices surged by more than 4 percent last week — is a reflection of its relative cheapness and comparatively beneficial environmental impact. Gas prices ended just shy of $3.50 last week.The shift away from coal and oil to natural gas has been credited with helping to reduce carbon emissions."Northeast states have been at the vanguard of the changes that are transforming how electricity is produced and delivered in the U.S.," noted a 2016 report by M.J. Bradley and Associates, an environmental consulting firm. "The region has already experienced a major shift in the mix of resources used to produce electricity, with natural gas and renewables displacing older coal- and oil-fired power plants."The EIA report left little doubt about coal's inexorable downward trend: Pennsylvania remains a key hub of coal-fired power, but its capacity has tumbled by 31 percent over the last decade.
U.S. Military Is World’s Biggest Polluter -- Last week, mainstream media outlets gave minimal attention to the news that the U.S. Naval station in Virginia Beach had spilled an estimated 94,000 gallons of jet fuel into a nearby waterway, less than a mile from the Atlantic Ocean. While the incident was by no means as catastrophic as some other pipeline spills , it underscores an important yet little-known fact—that the U.S. Department of Defense is both the nation's and the world's, largest polluter. Producing more hazardous waste than the five largest U.S. chemical companies combined, the U.S. Department of Defense has left its toxic legacy throughout the world in the form of depleted uranium, oil, jet fuel, pesticides , defoliants like Agent Orange and lead, among others. In 2014, the former head of the Pentagon's environmental program told Newsweek that her office has to contend with 39,000 contaminated areas spread across 19 million acres just in the U.S. alone. U.S. military bases, both domestic and foreign, consistently rank among some of the most polluted places in the world, as perchlorate and other components of jet and rocket fuel contaminate sources of drinking water , aquifers and soil. Hundreds of military bases can be found on the U.S. Environmental Protection Agency's (EPA) list of Superfund sites , which qualify for clean-up grants from the government. Almost 900 of the nearly 1,200 Superfund sites in the U.S. are abandoned military facilities or sites that otherwise support military needs, not counting the military bases themselves.
Shale Play 'Left for Dead' Gets Some Love as US Gas Rises -- A natural gas basin that helped kickstart the shale boom a decade ago is getting a new lease on life as the market recovers. Production in the Haynesville reservoir will climb for the seventh straight month in June, reaching the highest since October 2014, government data show. Output in the play, located in Louisiana and east Texas, fell to a six-year low last March, pressured by tumbling gas prices and competition from gushier, more profitable wells in Pennsylvania and West Virginia. As pipeline bottlenecks strand gas supplies in the eastern U.S., the vast network linking the Haynesville to the rest of the country -- along with a new export terminal shipping American gas overseas -- has made production in the play more valuable. Drillers from Exco Resources Inc. to Chesapeake Energy Corp. have refocused resources there to slash production costs, while private-equity backed companies bought assets to do the same. “Once left for dead, the Haynesville Shale in Louisiana and East Texas is in the midst of a resurgence as new well designs bring natural gas gushers to life,” William Foiles, a New York-based analyst for Bloomberg Intelligence said in a May 12 report. “Redesigned wells have since expanded the Haynesville’s untapped potential, with output expected to rise as capital and rigs return.” Chesapeake has boosted well productivity by using “massive amounts” of sand to extract gas from deeply-buried shale, according to Foiles. Exco has drilled longer horizontal well sections and is fracturing the rock in more places. The gas market’s rebound has created strong economics to drill in the Haynesville, Hal Hickey, Exco’s chief executive officer, said on a call May 10. Gas futures on the New York Mercantile Exchange have jumped 61 percent over the past year. While Pennsylvania and West Virginia have “some really good reserves,” the need for more pipelines and processing plants is “really restricting us at this point relative to our opportunities down in the South,” Hickey said.
Sand industry back in business in western Wisconsin - Like the ghost towns left behind after the California gold rush fizzled, many of the frack sand mines dotting western Wisconsin sat dormant a year ago. Piles of golden sand sat untouched next to stationary rail cars, with skeleton crews stopping by only occasionally to check on the idle facilities, the Leader-Telegram (http://bit.ly/2qwk0yG ) reported. It was a far cry from the boom times of a few years ago, when sand mines and processing facilities popped up constantly across the landscape. Through the slump, company officials insisted the frack sand industry would bounce back. "The big question is when," industry consultant Kent Syverson, chairman of UW-Eau Claire's geology department, said last May. He now has the answer: 2017. "The industry was fairly dormant for a while, but now it has reawakened," Syverson said last week. "These mines are going full out again." Representatives of several companies with regional frack sand mining operations confirmed Syverson's assessment. "We are running pretty much full time, back to 24 hours a day," said Sharon Masek, manager of mine planning and industrial relations for Superior Silica Sands in Wisconsin. "We're pretty much back to our peak levels of employment." That means employment at Superior Silica's five mines in Barron and Chippewa counties has reached close to 200, up from about 70 last year when two of the facilities operated part time and two were completely shut down, Masek said.
U.S. companies push hard for lower tax rate on offshore profits | Reuters: Major U.S. multinationals are pushing the Trump administration to deepen the tax break it has already tentatively proposed on $2.6 trillion in corporate profits being held offshore, a key piece in Washington's intricate tax reform puzzle. As President Donald Trump tries to deliver on his campaign promise to overhaul the tax code, lobbyists for technology, drug and other manufacturers are working with officials behind closed doors, six lobbyists working with various industries told Reuters. In line with tax cuts already embraced by Republicans in the House of Representatives, the lobbyists said they are telling the White House and Treasury Department that if companies are forced to bring home, or repatriate, foreign earnings, they want a sharply reduced tax rate. The lobbyists are making an aggressive case that cutting the tax rate on offshore profits to 10 percent from 35 percent, as the administration has indicated it may favor, is not enough. Rather, the lobbyists said they want a lower, bifurcated rate of 3.5 percent on earnings already invested abroad in illiquid assets, such as factories, and 8.75 percent on cash and liquid assets. During the 2016 presidential campaign, Trump proposed setting the rate at 10 percent, and argued it could be used to raise tax revenue to pay for tax cuts or infrastructure. Discussion of hard numbers in the long-running repatriation debate may indicate tax reform is advancing on Trump's slow-moving domestic policy agenda. Or it may just be lobbyists trying to set the early framework for a long slog ahead, which could be adjusted if they get concessions elsewhere.
Lawmakers push back against Trump offshore drilling review | TheHill: More than 100 members of Congress are urging the Trump administration not to open up the Atlantic or Pacific oceans for oil and gas drilling as part of the Interior Department’s review of federal offshore policies. In a letter released on Monday, the members said drilling in the Atlantic or the Pacific would imperil local economies based on fishing and tourism, which they said would both be threatened by the effects of a potential oil spill. “We do not believe that new oil and gas exploration or production activity in the Atlantic and Pacific Outer Continental Shelf (OCS) is compatible with the sustainable coastal economies on which so many of our constituents and communities depend,” the members wrote. “As you conduct a review of our nation's existing oil and gas leases, we again strongly urge you to reject proposals to open the Atlantic and Pacific OCS Regions to new offshore drilling and exploration." Democrats make up the bulk of the members signing the letter, though a handful of Republicans joined as well, including co-lead authors Reps. Frank LoBiondo (R-N.J.), Dave Reichert (R-Wash.) and Mark Sanford (R-S.C.).
Assessment of Undiscovered Oil and Gas Resources in the Spraberry Formation of the Midland Basin, Permian Basin Province, Texas, 2017 – USGS pdf - Using a geology-based assessment methodology, the U.S. Geological Survey estimated mean resources of 4.2 billion barrels of oil - and 3.1 trillion cubic feet of gas in the Spraberry Formation of the Midland Basin, Permian Basin Province, Texas.
In America's largest oilfield, whir of activity confounds OPEC | Reuters: Lilis Energy aims to expand production sevenfold this year in America's most active oilfield. The whir of activity is all the more impressive after the small firm nearly collapsed in late 2015 - amid unrestrained production from the Organization of the Petroleum Exporting Countries (OPEC). As per-barrel prices plummeted, Lilis piled on debt and struggled to pay workers. Now - with prices higher after a November OPEC decision to cut output - Lilis can't grow fast enough. Such resurrections are common these days in the Permian, which stretches across West Texas and eastern New Mexico. They tell the story of the U.S. shale resurgence and the quandary it poses for OPEC as it struggles to tame a global glut. Surging U.S. production has stalled OPEC's effort to cut supply. Inventories in industrialized nations totaled 3.05 billion barrels in February - about 330 million barrels above the five-year average, according to the International Energy Agency. The Permian boom will be high on the agenda as OPEC oil ministers begin gathering in Vienna ahead of a May 25 policy meeting to decide whether to extend output cuts. In the long term, too much U.S. output could spur OPEC to open the spigots again - setting off another price war - but for now its member nations' need for revenue makes that unlikely. On Monday, the world's top two oil producers - OPEC heavyweight Saudi Arabia and Russia, a non-OPEC nation - said they had agreed in principle on the need to continue output cuts for an additional nine months, through March 2018.That would extend the initial agreement, which took effect in January and reduced production by 1.2 barrels per day (bpd) from OPEC nations and another 600,000 bpd from non-OPEC producers, including Russia.
Permian growth to test capacity of Corpus Christi's crude oil infrastructure - Rising crude oil production in the Permian and the desire of many producers to get that oil to refineries and marine terminals in Corpus Christi has spurred interest in developing more than 1 million barrels/day (MMb/d) of new Permian-to-Corpus pipeline capacity by 2019. That raises the question of whether the Sparkling City by the Sea is prepared to receive and store all that crude — plus oil from the rebounding Eagle Ford play — and either refine it or load it onto ships. Today we begin a blog series on the potential flood of crude oil from the Permian’s Delaware and Midland basins into South Texas’s largest port and refining center, and how refiners and midstream companies are planning to deal with it.
Halliburton's incoming CEO sees significant price hike | Reuters: Halliburton, the No. 2 oilfield service provider, expects to raise prices at least 10 percent and in some cases 20 percent or more this year, higher increases than many customers expect but ones that company executives said were crucial to fuel the oil industry's nascent growth. The rising business activity comes as Jeff Miller prepares to become the 98-year-old company's chief executive officer next month, taking over from Dave Lesar, CEO since 2000. "We will continue to implement our strategy," Miller said in an interview at the company's Houston headquarters just outside George Bush Intercontinental Airport. "North America is absolutely our growth story today." Miller, Lesar and other executives have been in talks with customers for months about raising rates for Halliburton's myriad services, highlighting not only the company's scale but its experience. Halliburton was the first company to hydraulically fracture, or frack, a well, pioneering the process in 1949. Many customers had locked in service rates during the two-year price downturn when Halliburton laid off more than 35,000 employees. Today, with the American shale oil industry whirring again, Halliburton is at max capacity for many services and itching to charge more. Like peers, Halliburton has said it will not refurbish old equipment for field use until prices rise and has no North American fracking crews available until at least the fall. That limits the ability of customers to bring new wells online.
Fracking crew shortage may push oil's biggest bubble to 2018: Shale explorers pushing to expand oil production are struggling to find enough fracking crews after thousands of workers were dismissed during the crude rout. Independent U.S. drillers underspent their first-quarter budgets by as much as $2.5 billion collectively, largely because they couldn’t find enough fracking crews to handle all the planned work. If the scarcity holds, output increases planned for this summer may get pushed into 2018, creating an unanticipated production bulge with “scary” implications for oil prices, In some cases, active crews are walking away from jobs they signed up for months ago -- and paying early-termination penalties -- to take higher-paying assignments with other explorers. Workers earn anywhere from $29,000 to $72,000 a year before overtime, depending on the company and the region. The tight fracking market “means U.S. oil production growth this year will be back-half weighted, and we may not understand the full extent of U.S. production growth until early 2018,” “This point is particularly scary if you are rooting for higher oil prices.”Oilfield-service companies contributed the largest chunk of more than 441,000 jobs slashed globally as prices plunged from more than $100 a barrel over the last three years, Now, with the price of oil settling at around $50 a barrel, shale drillers are once again gearing up in areas such as the Permian Basin, where break-even costs are as low as $30 a barrel. The result: rising competition for workers and equipment, which means higher costs. Fracking companies are now charging 60 percent to 70 percent more than a year ago as explorers engage in bidding wars to lock up crews, according to Infill data. In response, servicers are scrambling to re-hire hands and retrieve gear from storage. A crew typically consists of 25 to 30 workers who operate a huge array of powerful truck-mounted pumps, storage tanks for fluids and sand, hoses, gauges and safety gear. Fracking, which involves pumping tons of water, sand and chemicals into a well to smash open the surrounding oil- and gas-soaked rock, is the most expensive part of drilling a well, usually accounting for about 70 percent of the total cost.
Natural Gas Projects Vie to Provide SCOOP/STACK Takeaway Capacity -- Rising crude oil production in the SCOOP and STACK oil and NGLs shale plays is driving the development of processing and natural gas pipeline capacity for associated natural gas volumes from the region. Earlier this month (Wednesday, May 3), Enable Midstream announced Project Wildcat, a 400-MMcf/d rich gas takeaway project. On the same day, SemGroup Corp. announced the Canton Pipeline to provide an initial 200 MMcf/d (and up to 400 MMcf/d) of capacity between the STACK play and its processing facility in northern Oklahoma. Enable last month also announced a firm shipper commitment on another of its takeaway projects — the Cana and STACK Expansion (CaSE). At the same time, late last month (on April 27), NextEra withdrew plans for its 1.2-Bcf/d Sooner Trails Pipeline. Today, we provide an update of the various projects vying to move associated gas from the SCOOP/STACK to downstream demand markets. The South Central Oklahoma Oil Province and Sooner Trend Anadarko Canadian Kingfisher shale plays in central Oklahoma –– better known as SCOOP and STACK –– are attracting increasing amounts of investment dollars from producers and midstreamers. The plays sit in an 11-county geographic area in central Oklahoma where drilling is targeting the oil-rich Woodford and Meramec shale formations of the Anadarko Basin (see Scoop-y Doo and All Come to Look for a Meramec). The SCOOP play is a 3,300-square-mile area in the southern extension of the Woodford Shale’s Cana field in south-central Oklahoma across six counties: Grady, Stephens, and Garvin Caddo, McClain and Murray. The STACK play sits just north of there (northwest of Oklahoma City), with activity centered around Kingfisher, Blaine, Dewey and Custer counties, plus some activity in portions of Canadian county (see Stardust Part 1 for a map).
Warning: Oil and gas development may be hazardous to your health - Boulder Weekly: Every medical student learns this much Latin: primum non nocere: “First, do no harm.” It appears to some scientists, politicians and residents that Colorado’s top medical officials, tasked with protecting residents’ health, never received the memo. Many residents on the Front Range fear that the Colorado Department of Public Health and Environment (CDPHE), especially Dr. Larry Wolk, the department’s executive director and chief medical officer, are violating this fundamental pillar of the medical profession when it comes to protecting the public from the known and potential health impacts of oil and gas development. Some scientists who study air emissions and health impacts associated with living near unconventional oil and gas operations also question whether the health department is following basic principles of scientific integrity.A recent case in point highlights both concerns. In February, the CDPHE released a controversial report, which concluded that the risk of harmful health effects is low for people living at least 500 feet from oil and gas activities. It said that concentrations of some substances, including benzene, a well-known carcinogen, were four to five times higher than standard health limits set for short- and long-distance exposure. In its report, which combined a health-risk assessment and a review of 12 previous epidemiological studies, the health department did not recommend immediate public health measures. Rather, it called for more research. Industry advocates and their political allies quickly seized on the study and trumpeted that it proved that oil and gas development was safe to Colorado residents.
Methane rule survives Congress but its future is dim | TheHill: The Senate’s recent failure to reject a regulation targeting emissions from natural gas drilling sites under the Congressional Review Act signals the likely end of the CRA to overturn Obama-era rules. But for the venting and flaring rule, as it is known, the future is certainly fleeting. The Bureau of Land Management (BLM) rule focused on reducing waste of natural gas from flaring, venting and leaks from oil and gas production on federal lands. Though part of the Obama administration’s plan to reduce levels of the potent greenhouse gas methane, the rule also focused on curbing waste of a valuable resource and ensuring a fair return to the public. An initial compliance phase began in 2017, with stricter phases scheduled in 2018 and 2019.The oil and gas industry alleged that compliance costs went far beyond BLM’s annual upper estimate of $279 million and that the agency went far beyond its authority to regulate air emissions, a province for the states and the Environmental Protection Agency. Not surprisingly, these groups, joined by several states, filed a challenge to the rule that is now pending in Wyoming federal court. Because the rule was finalized within the required 60-legislative-day “look-back” window, it was subject to the CRA’s expedited procedure for congressional disapproval. The House passed its resolution in February 2017, but the Senate failed to pass its resolution at the very end of its statutory review period. Had it passed, President Trump would have signed quickly, immediately killing the rule. The Senate resolution failed by a handful of votes, likely because using the CRA procedure would have prevented BLM, under Trump or future presidents, from promulgating a “substantially similar” rule. The rule replaced 30-year-old regulatory and royalty provisions, and freezing those in place could have had significant financial impacts. While the rule contained a major climate component — making it a target — it also allowed BLM to raise royalties and ensure more gas was put to productive use to ensure taxpayer return.
Signs of oil boomlet in North Dakota after pipeline finished - ABC News: There are hundreds more jobs than takers in the heart of North Dakota's oil patch. Finding a hotel room, parking space or table at a restaurant is no longer easy. More than two years after the state's unprecedented oil bonanza fizzled to a lull, North Dakota — the nation's No. 2 oil producer behind Texas — is experiencing a sort of boomlet that has pushed daily production back above 1 million barrels daily. "There is a long-term optimism that was not here just a year ago," said Williston Republican Sen. Brad Bekkedahl, whose western North Dakota district is in the epicenter of the state's oil-producing region. Industry officials and others say the uptick comes from a bump in crude prices, regulatory certainty with the more drill-friendly Trump administration, better technology, and the prospect of nearly half of the state's crude coursing through the disputed Dakota Access Pipeline, which could open markets abroad where top prices are typically fetched. Though the pipeline still faces opposition from American Indian tribes and environmentalists who fear it threatens cultural sites and drinking water, Ron Ness, president of the North Dakota Petroleum Council, calls it a "game-changer that opens up everything." The $3.8 billion pipeline — expected to be fully operating next month — opens up the possibility for North Dakota oil to be sold on the world market, where industry officials say it could earn several dollars more per barrel. Shippers also can save about $3 per barrel moving the oil by pipeline rather than using the mile-long trains that have carried North Dakota crude to the Gulf Coast since 2008, industry officials say.
Moving Bakken and Other U.S. Crude on VLCCs from the Gulf to Asia -- For the first time ever, a Very Large Crude Carrier (VLCC) carrying Bakken crude has sailed from the Gulf of Mexico to Asia, and more may follow. With the startup of the Dakota Access Pipeline set for June 1, Bakken producers are only days away from gaining easier, cheaper pipeline access to the Gulf Coast, and are looking for new markets. Asian refineries are willing to pay a premium for Bakken-type crudes, and want other types of U.S. crude as well. And every 18 hours or so, a VLCC arrives at the Louisiana Offshore Oil Port—the only U.S. port capable of handling the mammoth vessels—offloads crude and leaves LOOP empty because the port is currently an import-only facility. Today we consider the potential for transporting more light, sweet crude to Asian refineries on VLCCs, either via ship-to-ship transfers or by reworking LOOP to enable exports.
US Government Is Trying To Imprison These Six Water Protectors - In February, a federal grand jury issued indictments of four Standing Rock water protectors on charges of Federal Civil Disorder and Use of Fire to Commit a Federal Crime. The federal investigators accused the four men—James White, Brennan Nastacio, Dion Ortiz, and Brandon Miller-Castillo—of involvement in setting three highway barricades on fire, which obstructed police during a highly-militarized October 27 raid of the “Front Line Camp” just north of the Standing Rock Sioux reservation. Another water protector, Michael Markus, was indicted on identical charges on January 24, and his case has been combined with those of the other four men. Prosecutors are also pursuing three federal felonies against a 38-year-old Oglala Sioux woman named Red Fawn Fallis. They accuse her of firing a gun during her arrest, even as multiple police officers had her pinned face-down on the ground. Fallis’ arrest also occurred on October 27. These cases likely mark the first time that United States authorities have pursued felonies against individuals involved in demonstrations against fossil fuel infrastructure. All six people facing the charges are indigenous. Under sentencing guidelines, Red Fawn Fallis faces 25 years or more in prison. The other federal defendants—Markus, White, Nastacio, Ortiz, and Miller-Castillo—face up to fifteen years.
US, Canada tribes to declare Keystone opposition | TheHill: Indigenous tribes on either side of the United States-Canada border are planning to sign a declaration opposition the controversial Keystone XL oil pipeline. Leaders of Canada’s Blackfoot Confederacy the Great Sioux Nation and Ponca tribe in the United States will gather in Calgary, Alberta, Wednesday to sign the 16-page declaration, the Associated Press reports. The tribes are calling the declaration historic, representing long-standing bonds among the groups, with together represent tens of thousands of indigenous people. “There is a historic union between first Americans in Canada and Native Americans in the United States,” Casey Camp-Horinek, Ponca councilwoman, told AP. “Long before a border ever existed on a map, a fictitious line on a map, we were a united peoples in our approach to care of Mother Earth,” she said. “Greed knows no limits, and those in the way are simply collateral damage to corporate profits," said Brandon Sazue, chairman of the South Dakota-based Crow Creek Sioux, said in a statement. The declaration will reinforce the longstanding beliefs of some tribes that Keystone would violate their treaty rights. The pipeline would not cross any reservation land, but much of its route would be in areas that the tribes had historically claimed.
Pipeline Protesters Call Out Trudeau Outside Meeting With Washington Governor: Prime Minister Justin Trudeau continued his efforts to promote Canada's technology sector to officials in Washington state on Thursday, meeting with Gov. Jay Inslee a day after attending the secretive Microsoft CEO Summit. Trudeau and Inslee discussed, among other issues, the development of the Cascadia Innovation Corridor, an initiative that aims to strengthen technology industry ties between British Columbia and Washington. The pair also spoke about trade and investment opportunities and innovation in the energy sector, said Trudeau's office. In brief remarks before the meeting, the prime minister said Washington and Canada share a lot in common."We're both strongly engaged on issues of climate change, on issues of openness to trade, on leadership on refugees as well and an understanding that diversity can be a real source of strength," he said. Inslee said the state and country share an "incredible commitment" to defeating climate change and a recognition that they can grow their economies at the same time. But protesters clad in yellow hazardous material suits that read "Keystone XL Toxic Cleanup Crew" gathered outside the hotel to criticize Trudeau's environmental record, arguing his support of pipelines is at odds with any global warming promises he has made. Chanting "Tar sands or clean lands, Trudeau you have a choice," the group of about a dozen people demanded that the prime minister rescind his support of Keystone XL and the Trans Mountain expansion, two pipelines that have generated considerable debate in the U.S.
Large-Scale Fracking Comes to the Arctic in a New Alaska Oil Boom --Arctic lands and waters hold irresistible allure for global oil companies. Despite opposition from environmental groups and President Obama’s 2016 ban on drilling in federal Arctic waters, exploration in Alaska has revealed massive new volumes of oil. This comes at a time of low oil prices, when many observers felt the Arctic would remain off limits. Alaska has proved precisely the opposite. Although it has gone largely unnoticed outside the industry, foreign firms are partnering with American companies to pursue these new possibilities. I expect this new wave of Arctic development will help increase U.S. oil production and influence in world oil markets for at least the next several decades. Over the past year oil companies have discovered volumes on Alaska’s North Slope totaling as much as five billion barrels or more of recoverable oil. This is a 14 percent increase in U.S. proven reserves, based on recent estimates, which is no small thing.One discovery, “Horseshoe,” made this year by the Spanish company Repsol in partnership with Denver-based Armstrong Oil and Gas, is the largest new U.S. find in more than 30 years. It is estimated at 1.2 billion barrels, and comes just after a find by ConocoPhillips in January, called “Willow,” evaluated at 300 million barrels.Both of these are dwarfed by “Tulimaniq,” a spectacular discovery drilled by Dallas-based Caelus Energy in the shallow state waters of Smith Bay, about 120 miles northwest of Prudhoe Bay, in October 2016. Caelus has confirmed a total accumulation of as much as 10 billion barrels of light, mobile oil, with 3-4 billion barrels possibly recoverable at current prices of about US$50 per barrel.
Canada's Permian of the North Roused by Cheap Gas Drilling | Rigzone-- Drilling rigs and roughnecks are hot commodities once again across the Montney shale formation in northern British Columbia and Alberta, and companies like Grimes Well Servicing Ltd. are having a hard time keeping up with demand. That’s because the Montney, unlike many parts of Canada’s oil and gas region, is seeing a surge of investment three years after the worst energy slump in decades. During the first four months of 2017, the number of wells drilled jumped 80 percent from a year earlier to 277, according to Calgary-based Grobes Media Inc.’s BOE Report. It’s the most for the period since 2014, when oil prices were twice what they are now and natural gas was 50 percent higher. Grimes started noticing a pickup in orders back in November and December -- the start of the winter drilling season -- as more customers put in urgent orders for equipment. Demand hasn’t let up. “By January, it was getting pretty crazy,” Derek Mackey, the company’s accountant, said by telephone from Edmonton. “Some people called saying: Can we get a rig in a couple days?” Exploration is roaring back because energy prices stabilized, halting the slide at levels that remain profitable. The slump also left idle equipment, making it cheaper to drill. A new well now costs about C$5 million ($3.7 million), down from C$8 million in 2014, according to Wood Mackenzie Ltd. The deposit straddles the northern border of Alberta and British Columbia. It was dubbed the “ Permian of the North” by Vancouver-based Blackbird Energy Inc. because the Montney has the same layered, stratified geology as the Texas shale formation that has led a resurgence in U.S. oil production. But unlike the Permian, which yields mostly crude, the Montney is rich in gas and associated liquids such as condensate.
BlackRock switch helps pass 'historic' climate measure at Occidental | Reuters -- BlackRock Inc said on Friday that it voted in favor of a successful shareholder proposal calling for more climate change reporting by Occidental Petroleum Corp, in the first sign the world's largest asset manager was backing up its tough new talk on environmental matters. Backers of the resolution called its passage a major victory, the first time such a measure succeeded at a major U.S. oil and gas company. Proponents said they were pleased by BlackRock's support, which they had sought. "Today’s historic vote puts the oil and gas industry on notice – the climate is changing and so are investor expectations of how companies should respond," said Laura Campos, a director at the Nathan Cummings Foundation, one of the resolution's proponents. BlackRock (BLK.N), which has $5.4 trillion under management, traditionally has given few details of its reasoning behind specific proxy votes. On Friday, however, it said it was concerned about Occidental’s pace of disclosure to date. It also gave details about its talks with other companies such as Chevron Corp, which BlackRock said has provided more detail on climate risks it faces such as a recent report it published. A Chevron representative said the company would continue speaking with investors, and that it had held “extensive dialogue with proponents and other stockholders." BlackRock spokesman Ed Sweeney said BlackRock would not explain every vote it casts in such detail but wanted to underscore how it promotes its corporate governance priorities in talks with companies. "We want to highlight our engagement and articulate our voting decisions," he said.
Bad news for Opec as US shale drillers gear up for $84bn spree - US 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. 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.
Saudis Panic As Fracking Soars For Sixth Month In A Row - American oil production from hydraulic fracturing, or fracking, will rise for the sixth consecutive month, government data revealed Monday. U.S oil production will rise to 5.4 million barrels per day by June and result in the highest levels of domestic oil production since May 2015, according to the U.S. Energy Information Administration’s drilling productivity report. Soaring U.S. oil production is due to a new agreement between the Organization of the Petroleum Exporting Countries (OPEC) and Russia to reduce their oil production with the goal of increasing global prices. With the deal in place, OPEC and Russia have effectively surrendered control of the lucrative U.S. oil market to fracking.OPEC began flooding the global marketplace with oil in 2014 in an attempt to depress prices and counter new competition from U.S. fracking, causing oil prices to fall from $108 per barrel in June 2014 to only $29.04 per barrel in January 2016. The price of oil then went too low, however, forcing OPEC to slash oil production to boost prices. OPEC member nations require the price of oil to average $75 a barrel to balance their national budgets. Industry experts believe that most new American fracking will be profitable at around $40 a barrel. Such a setup means that the price of oil will be permanently locked in at prices favorable to American fracking.The Energy Information Association (EIA) estimates that in 2016, OPEC earned $76 billion less than the cartel earned in 2015, resulting in the lowest earnings posted by OPEC since 2004.OPEC’s strategy was not able to kill fracking and only forced the process to become less costly and more efficient. U.S. oil production levels remained relatively constant despite low oil prices and declining investment. Companies, such as ExxonMobil and Royal Dutch Shell, were already investing $20 billion into fracking technology in August.
Flotilla of U.S. crude heads to Asia as OPEC weighs extending cuts | Reuters: Oil tankers carrying around 10 million barrels of U.S. crude are en route to Asia, according to shipping data and trade sources, as U.S. producers take advantage of favorable prices to ship to the region while OPEC ponders further supply cuts next week. At least eight tankers are in transit, sources said and the shipping data in Thomson Reuters Eikon showed, with one of them carrying the first ever cargo of Southern Green Canyon crude purchased by Japanese refiner Cosmo Energy. Another contains the first Alaskan North Slope cargo to arrive in Asia in eight months. OPEC members meet next week to discuss extending a global supply cut, but the possibility of U.S. supply eating into their market share will be a challenge. While member countries have largely restrained their supply, they have remained intensely focused on keeping market share with Asian refiners. But relatively cheap U.S. crude has buoyed exports to Asia. Traders expect that May U.S. crude exports could reach around 1 million barrels per day, with a sizable portion of that going to Asia. Last week, U.S. crude exports touched 1.09 million bpd, the third highest on record, according to U.S. government data. If numbers remain elevated, they could surpass the record 1.2 million bpd seen in February. "We expect that momentum to continue when (Dakota Access Pipeline) opens and as more Permian production hits Corpus Christi docks," said Sandy Fielden, director of oil and products research at Morningstar, of the exports. U.S. oil production has risen by 10 percent to 9.3 million bpd since mid-2016, according to the Energy Information Administration.
In 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 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," From the beginning, Saudi Arabia saw a quick one-off intervention: reduce production for a few months and speed up the recovery. . 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. 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."
Trump strikes deal to export more natural gas to China - President Trump struck a deal with China last month to begin importing more natural gas from the United States, according to a joint statement issued late last night by the Commerce Department and the Asian power. "The United States welcomes China, as well as any of our trading partners, to receive imports of [liquefied natural gas] from the United States," according to the agreement, which is being called the "100 day plan." The plan said the US "treats China no less favorably" than any of its other partners in authorizing natural gas shipments from the US to Chinese ports. "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 said. The plan noted that as of April 25, the Department of Energy had authorized 19.2 billion cubic feet per day of natural gas exports to non-free trade agreement countries. The natural gas industry wants to create new markets in the wake of the nation's shale gas and oil boom as a result of fracking. The increased production has made the US a global oil and gas leader. Analysts came out Friday praising the deal as merging the largest energy consumer, China, with largest new energy supplier, the United States. It also helps Trump address trade imbalances with China to create a more equitable arrangement for both countries.
Trump-Xi Deal Could Fuel A U.S. LNG Boom -- When President Trump came into office, he openly resented the major trade deficit with Asia’s number-two economy and vowed to remedy the situation. While his words smacked of economic protectionism to many, the latest news about China-U.S. economic relations reveal a different picture. While back in February the U.S. president talked about trade wars, last week he and Xi Jinping struck a deal that would see China receive more U.S. natural gas, as well as additional beef and poultry.This week, the chairman of the China National Petroleum Corp., the largest state energy company, told Bloomberg in an interview that CNPC would gladly boost its U.S. oil and LNG imports. “The U.S. has very rich oil and gas resources, and as China pursues a diversification of its crude supply the U.S. will of course be one of the sources. We will consider exploring cooperation in areas such as jointly developing liquefied natural gas facilities and gas transport,” Wang Yilin said. China can certainly do with the diversification, as its energy needs are growing inexorably. It is already the biggest buyer of U.S. crude, ahead of Canada, importing a total of 8.08 million barrels of oil in February. China imports this much oil on a daily basis, so in the scheme of things, US oil imports are a relatively small portion of the overall, based on China’saverage daily import rate for the same month, but this figure will certainly grow with Beijing’s diversification drive. The news is even better for U.S. gas. When the Trump-Xi deal was announced, shares in Cheniere Energy, currently the only LNG exporter in the country, jumped by 3.3 percent. The trade deal will likely provide a major boost for other LNG export hopefuls, too. However, not all will be easy. First, China’s diversification is not necessarily focused only on the U.S. On the contrary, Beijing is unlikely to succumb to overreliance on one single source of energy. What’s more, U.S. LNG may find it tough to compete with supply from Australia and Qatar. All that without even mentioning the Power of Siberia gas pipeline that will see China import 38 billion cu m of gas annually, starting in 2025, strengthening ties between Beijing and Moscow. In a recent report, the CNBC quoted analysts as suggesting the competition may prove too stiff. “China is much nearer and much cheaper to ship from Australia, for example, or Qatar,” said S&P Platts’ regional director for energy pricing, Alan Banniser. According to him, Europe is the most logical market for U.S. gas.
Caribbean Dream - Successes and Setbacks in Shifting the Islands from Oil to Gas -- For several years now, power generators and other major energy users in the Caribbean have been working to shift from diesel or fuel oil to alternative fuels — mostly natural gas delivered by ship as liquefied natural gas (LNG), but also propane. A few significant projects have advanced, and new infrastructure to receive LNG and propane has been put in place to support additional fuel imports into the region. But other projects have been delayed or even scrapped because of financial or regulatory troubles. Today we update the laid-back region’s efforts to wean itself off diesel- and fuel-oil-fired power. The islands and Central American countries whose shores are lapped by the waves of the Caribbean Sea are known best for their white-sand beaches, aqua-colored water and umbrella drinks, but they also have a surprising amount of energy infrastructure — and significant energy needs. As we said in A Pirate Looks at Storage, the Caribbean has nine operating crude oil storage facilities that represent a working alternative to onshore storage in the U.S. In Down to Kokomo, we considered the growing interest in selling U.S.-sourced compressed natural gas (CNG) to the region, and in Feeling Hot, Hot, Hot, we looked at existing and planned use of LNG to run Caribbean power plants.
South Korea LNG demand set to rise on new leader moving against coal -- South Korea's new President Moon Jae-in Monday ordered a temporary shutdown of aged coal-fired power plants in an urgent move to address worsening air pollution, which will likely boost LNG demand for power production. Under the order, eight coal-fired power plants aged 30 years or older will be closed for 30 days starting June 1, the presidential office said in a statement. The plants include Yeongdong 1 with a capacity of 125 MW, Yeongdong 2 with 200 MW, Seocheon 1 and 2 each with 200 MW, Samcheonpo 1 and 2 each with 560 MW, and Boryeong 1 and 2 each with 450 MW. They are all owned by the country's state-run electricity monopoly, Korea Electric Power Corporation, or KEPCO. The one-month shutdown of the aged power plants will have little impact on the country's overall power supplies because they could easily be replaced by more costly but less polluting LNG power plants largely run by private companies, the presidential office said. "Furthermore, the capacity of the coal-fired power plants is small and June is off-peak season, so we think there would be little impact on the country's power supplies," a presidential official said. The combined capacity of the eight coal-fired power plants is 2.75 GW, accounting for 8.4% of the country's total coal-fired power production capacity of 32.7 GW, and 2.5% of the country's total power generation capacity of 109.5 GW which includes nuclear reactors and natural gas-fired power plants, according to KEPCO. The eight coal-fired power plants will be closed again for four months during off-peak spring season from March to June each year from 2018, the presidential office said. South Korea currently runs 10 coal-fired power plants aged 30 years or older, but two of them -- Homan 1, 2 each with 250 MW -- have been excluded from the temporary shutdown this year due to a possible shortage of power supplies to an industrial zone in which they are located, the presidential office said. However, all of the 10 aged coal-fired power plants will be permanently shut by early May 2022 when Moon leaves office, the presidential office said.
NYMEX June gas continues slide, settling 3.8 cents lower - The NYMEX June natural gas futures contract settled 3.8 cents lower Wednesday at $3.192/MMBtu, notching its third straight decline as the market continued to pull back following a surge in prices last week. Prices jumped late last week after the US Energy Information Administration estimated a storage build that was smaller than expected, but the market has since pulled back from that increase. On Friday, the June contract settled at $3.424/MMBtu, having risen 13.2 cents over two trading sessions to end the week. This week has been a different story, with prices currently down 23 cents over the last three trading sessions. Storage injection numbers will be released Thursday and market sentiment is for larger builds, but Alan Levine, chairman and CEO of brokerage PowerHouse, said he did not expect large stock builds soon. "With prices the way they are, it is not very attractive for a driller to go directly after gas," Levine said, noting that given low prices, producers have little incentive to actively search for more gas.
China claims breakthrough in mining ‘flammable ice’ -- China has for the first time extracted gas from an ice-like substance under the South China Sea considered key to future global energy supply. Chinese authorities have described the success as a major breakthrough. Methane hydrates, also called "flammable ice", hold vast reserves of natural gas. Many countries including the US and Japan are working on how to tap those reserves, but mining and extracting are extremely difficult. What is 'flammable ice'? The catchy phrase describes a frozen mixture of water and gas. "It looks like ice crystals but if you zoom in to a molecular level, you see that the methane molecules are caged in by the water molecules," Associate Professor Praveen Linga from the Department of Chemical and Biomolecular Engineering at the National University of Singapore told the BBC. Officially known as methane clathrates or hydrates, they are formed at very low temperatures and under high pressure. They can be found in sediments under the ocean floor as well as underneath permafrost on land. Despite the low temperature, these hydrates are flammable. If you hold a lighter to them, the gas encapsulated in the ice will catch fire. Hence, they are also known as "fire ice" or "flammable ice". By lowering the pressure or raising the temperature, the hydrates break down into water and methane - a lot of methane. One cubic metre of the compound releases about 160 cubic metres of gas, making it a highly energy-intensive fuel.
China, Japan extract combustible ice from seafloor (AP) -- Commercial development of the globe's huge reserves of a frozen fossil fuel known as "combustible ice" has moved closer to reality after Japan and China successfully extracted the material from the seafloor off their coastlines. But experts said Friday that large-scale production remains many years away - and if not done properly could flood the atmosphere with climate-changing greenhouse gases. Combustible ice is a frozen mixture of water and concentrated natural gas. Technically known as methane hydrate, it can be lit on fire in its frozen state and is believed to comprise one of the world's most abundant fossil fuels. The official Chinese news agency Xinhua reported that the fuel was successfully mined by a drilling rig operating in the South China Sea on Thursday. Chinese Minister of Land and Resources Jiang Daming declared the event a breakthrough moment heralding a potential "global energy revolution." A drilling crew in Japan reported a similar successful operation two weeks earlier, on May 4 offshore the Shima Peninsula. For Japan, methane hydrate offers the chance to reduce its heavy reliance of imported fuels if it can tap into reserves off its coastline. In China, it could serve as a cleaner substitute for coal-burning power plants and steel factories that have polluted much of the country with lung-damaging smog. The South China Sea has become a focal point of regional political tensions as China has claimed huge swaths of disputed territory as its own. Previous sea oil exploration efforts by China met resistance, especially from Vietnam, but its methane hydrate operation was described as being outside the most hotly contested areas. Methane hydrate has been found beneath seafloors and buried inside Arctic permafrost and beneath Antarctic ice. The United States and India also have research programs pursuing technologies to capture the fuel.
Offshore Oil Well Leaked for Months, Public Kept in Dark for a Year - Australia's oil regulator is refusing to disclose the location and the company behind a 10,500 liter leak of petroleum into the ocean last year. An Australian offshore oil and gas well leaked continuously into surrounding waters for two months in 2016 but information about the discharge was only released this week in the National Offshore Petroleum Safety and Environmental Management Authority's (NOPSEMA) annual offshore performance report. According to The Guardian , the report provided scant details about the spill, which was only found after a routine inspection. After the publication asked about the spill, NOPSEMA divulged that the leak went on for two months at a rate of about 175 liters a day. A NOPSEMA spokesman explained that the leak was caused by seal degradation but refused to reveal the exact location of the spill, just that it happened in the North West Shelf—an extensive oil and gas region off the coast of Western Australia. Greenpeace Australia Pacific criticized the agency for keeping the public in the dark and noted that no fines or other form of punishment were given to whoever the operator might be. "Australians, and especially those who rely on the ocean for their livelihood, should be deeply concerned by reports that the national oil regulator has withheld information from the public about a 10,500 liter oil leak for over twelve months," senior Greenpeace campaigner Nathaniel Pelle said . "There's absolutely no justification for continuing to keep the company involved or the location of the oil spill a secret. NOPSEMA must immediately make the identity of the company involved and the location of the spill available to the public”
Woodside says it was behind oil spill that regulator kept secret -- Woodside Petroleum has confirmed it was behind an oil spill off the coast of Western Australia that was kept secret by the regulator for more than a year.The company said on Friday that it reported a leak from a well in the Cossack field on the North West Shelf to the National Offshore Petroleum Safety and Environmental Management Authority (Nopsema) in April 2016.The revelation of Woodside’s spill came two days after it won an “environment excellence award” from the peak oil and gas lobby for the second year running.The first public mention was a reference to a 10,500-litre spill in the regulator’s annual offshore performance report this week, Guardian Australia reported on Thursday. But the report did not say when the spill took place or who was responsible. The company has not referred to the spill in any of its Australian Stock Exchange announcements since its discovery.Woodside said that because the leak from the CK4 well was “80% water” and 80m below the sea surface, it had “no lasting impact to the environment”. The secrecy around Woodside’s spill contrasted with the federal regulator’s public alert around a smaller oil spill in February at an ExxonMobil platform in the Bass Strait.A Nopsema spokesman had said the regulator had “an implied duty of confidence” not to disclose companies that reported leaks. But an offshore oil safety expert and a Greenpeace campaigner had said the secrecy was concerning and not justified.
Europe's refiners must stay nimble to avoid margin squeeze | Reuters: Europe's oil refiners will have to carefully manage production, possibly even turning to diesel, to sustain margins as high oil product inventories and uncertain gasoline demand growth threaten a model that has been lucrative over the past three years. European energy companies, including Royal Dutch Shell, Repsol and Statoil, reported big rises in first-quarter margins as refinery outages worldwide counterbalanced high oil product stocks. The summer, and the U.S. drivers it typically woos to the road, are often a surefire bet for Europe's units, which churn out much of the gasoline that ends up in American auto engines. But U.S. gasoline demand in January and February fell year-on-year, suggesting the market may have trouble repeating last year's record volumes, according to Energy Information Administration data, while meteoric gasoline demand growth in India has begun to flatten. In Europe, April refinery runs are already 640,000 barrels per day (bpd) higher than last year. U.S. and Asian units are also increasing runs - and looking to export. Analysts JBC expect a potentially substantial downward correction in refining margins in the second half of the year, meaning refiners will have to be nimble to sustain profits.
How This Oil Giant Influences Curriculum at Top Dutch University - Shell has a contractual agreement with a major Dutch university , which allows the oil giant to influence its curriculum, according to documents seen by Energydesk . Shell also paid Erasmus University hundreds of thousands of euros for conducting research into the business climate for multinationals in the Netherlands, invoices paid in 2008 and 2009 show. The university, which ranked 69th in the 2017 world university rankings , said it "has nothing to hide." It said that Shell has played "no formal part" in the development of its curriculum and would create a publicly available register of its corporate ties, in response to the findings. The contract was signed in 2012 between Shell and the Rotterdam School of Management (RSM), an international business school which is based at Erasmus University in the Netherlands, where Shell is headquartered. It states that RSM will provide tailored business advice to Shell, in return for cash. The findings are published after Energydesk revealed Shell was strategically targeting young people, academics and business leaders, as part of a PR push designed to position itself as a low carbon leader—despite spending more than $7 billion on efforts to drill in the Arctic . Universities across the world have pledged to move their own money out of oil, gas and coal, but many continue to take funding from fossil fuel giants. In 2015, top UK universities admitted to having taken millions , prompting concerns about conflicts of interest.
Fracking go-ahead in Karoo basin ‘possible within months -- The government may award its first shale gas exploration licences by the end of September, after environmental objections delayed the process, a senior government official said on Monday. The five licence applications under review are for exploration in the semi-arid Karoo basin. Environmentalists criticised plans to work in the sparsely populated region, known for its rugged scenery and home to rare species such as the mountain zebra and riverine rabbit. Royal Dutch Shell, Falcon Oil and Gas and Bundu Gas & Oil are among five firms whose applications were being reviewed by the regulator, acting Petroleum Agency SA (PASA) CE Lindiwe Mekwe said. PASA would make recommendations to Mineral Resources Minister Mosebenzi Zwane to decide on the licence awards. "We anticipate that the minister will be in a position to make a determination during the second or third quarter," Mekwe said. "If the decision is made this year the exploration rights will be valid for a period of three years, exploration activities should commence within three years," she said. SA is seeking to replace its dwindling offshore gas reserves and reduce reliance on coal to fuel power plants. Shell said last year its Karoo project could compete in its global shale gas and oil portfolio provided commercial terms were attractive. It had previously pulled back from the plans due to low energy prices and licence delays. SA’s recoverable gas reserves from onshore shale and offshore gas fields was estimated in 2015 at about 19.5-trillion cubic feet (TCF). Officials say it would take about a decade to significantly develop these gas resources.
Indian liquid fuels consumption declined in the first quarter of 2017 but is beginning to recover India is a major contributor to the growth in global liquid fuels consumption. Total liquid fuels consumption in India grew 8% in 2016, the largest increase since 2009, to an estimated 4.35 million barrels per day (b/d). EIA estimates that in 2015 and 2016, Indian liquid fuels consumption growth constituted 19% and 20%, respectively, of the net global growth in liquid fuels consumption. However, according to preliminary estimates from India’s Ministry of Petroleum and Natural Gas, Indian liquid fuels consumption fell 3% in the first quarter of 2017 compared with the same quarter in 2016, the first year-over-year quarterly decline since 2013. The reported decline in consumption occurred in many petroleum products including diesel and gasoline (Figure 1), which accounted for, on average, 39% and 12%, respectively, of total Indian liquid fuels consumption since the beginning of 2016. The slowdown in liquid fuels consumption is likely related at least in part to India’s recent efforts to reduce the size of its informal economy, where transactions are done mainly in cash and may be either illegal or untaxed. The impacts of this effort on oil consumption may be gradually subsiding, as liquid fuels consumption rose at the start of the second quarter of 2017.
Floating oil storage off China's Shandong rises as tanks full - sources, data | Reuters: More than 20 tankers carrying crude and fuel oil are anchored off the ports of China's eastern Shandong province, as onshore storage tanks are full, according to trade sources and shipping data on Thomson Reuters Eikon. Frenzied buying by independent refiners, most of whom are located in Shandong, and trading companies seeking to re-sell crude to these refineries have filled up tanks, they said. "Oil inventories at storage tanks are very high," a China-based trader said. Most of the tankers that are carrying crude have been floating off Shandong for less than a week although tanker Seaways Portland, which has Russian ESPO crude onboard, has been in the area for two months, the data showed. The ESPO cargo has already been sold to a Chinese trader, a Singapore-based trader who tracks the oil flows said. Crude grades onboard ships include Australia's Pyrenees and Vincent, Russian Urals, Brazilian Saphinoa and West African crude, according to the data. Most of the crude are aimed at meeting demand from Chinese independent refiners as they are expected to receive a second batch of import quotas from Beijing in end-May or early June, traders said. At least three of the six fuel oil tankers are carrying bitumen mixture, the second trader said, as traders prepare to sell more of the residue oil into China before a proposed consumption tax kicks in.
Floating oil storage has dropped by one-third in 2017: OPEC source | Reuters: Global oil inventories in floating storage have declined by one-third since the start of the year, a source from the Organization of the Petroleum Exporting Countries told Reuters on Monday. The drop in stockpiles is the latest sign that output cuts by major producers have helped deplete a global glut.
Libya adds to Opec woes as output at highest since ’14 -- The North African country’s production has reached 796,000 bpd, Mustafa Sanalla, the chairman of state producer National Oil Corp, said on Monday in a statement. Libya was producing about 700,000 bpd at the end of April, Jadalla Alaokali, an NOC board member, said at the time. A revival in Libyan output adds to the challenge that the Organisation of Petroleum Exporting Countries and other major producers face after agreeing last year to pump less crude to stem a glut and shore up prices. In separate statements just hours apart on Monday, Saudi Arabia and Russia said publicly for the first time they would consider prolonging their output reductions for longer than the six-month extension Opec is widely expected to agree to when the group meets on May 25. Libya was exempted from Opec’s cuts because of its internal strife. Political divisions, clashes between armed groups and closures of fields have disrupted output in Libya as the country with Africa’s largest crude reserves struggles to revive its most vital industry. Libya’s feuding administrations agreed last week to unite state institutions and build a national army under civilian leadership after two days of talks in Abu Dhabi.
Cautious progress in Libya’s oil output --Rising Libyan oil production is primarily the result of the military success of General Khalifa Haftar, whose so-called Libyan National Army forces are wresting unitary control of the oil supply chain from a patchwork of local militias.These advances have forced the UN-backed Government of National Accord to the negotiating table, raising the prospect of a political settlement that would reinforce the gradual and fragile movement towards normalization in the country.Libyan oil production rose above 800,000 b/d in May for the first time in three years.The trend is gradually upward, but in fits and starts; April production averaged 550,000 b/d, 70,000 b/d lower than in March, according to an S&P Global Platts survey.While rising Libyan oil production is problematic for OPEC as it seeks to reduce output to rebalance the market, on a national level it raises hopes that Libya is slowly recovering from years of war and infighting.The National Oil Corporation (NOC) believes that production of 1.2 million b/d is possible by August, although this would still be some way short of the 1.6 million b/d recorded before the 2011 uprising against Muammar Qadhafi.Whether this can be achieved depends on continued improvement in the political situation. There are currently two main centers of power: the House of Representatives in Tobruk in the east, which Haftar is affiliated with, and the Tripoli-based GNA. Both lay claim to be the legitimate government, although only the GNA is recognized by the UN.More importantly, as far as the oil industry is concerned, dozens of localized militias control different parts of the country. Separate factions have controlled various parts of the same oil supply chain, with fields, pipelines and export terminals all held by different groups. It is this partition, even more so than damage to the physical infrastructure of the industry, that has held back production.
Libyan Oil Output Creeps Higher Ahead of OPEC Decision on Cuts -- Libya is ratcheting up oil output with less than two weeks to go before the world’s biggest exporters decide whether to extend production cuts to clear a supply glut. The OPEC member with Africa’s largest crude reserves is pumping more than 814,000 barrels a day, thanks partly to rising output from two fields that re-started last month, Jadalla Alaokali, a board member at the National Oil Corp., said Sunday by phone. Libya was producing about 700,000 barrels a day at the end of April, he said at that time. Output from the politically divided country is at its highest since October 2014 when it pumped 850,000 barrels a day, data compiled by Bloomberg show. The revival in Libyan production coincides with efforts by the Organization of Petroleum Exporting Countries and allied suppliers to curtail output. OPEC ministers plan to meet on May 25 to decide whether to extend cuts in their production beyond June. The recent increase in Libyan output, together with a surge in North American shale production and signs of recovery in Nigeria, may undercut OPEC’s strategy to re-balance the market and prop up prices. Libya pumped as much as 1.6 million barrels a day before an uprising in 2011, and it was exempted from OPEC’s cuts due to internal strife. It’s targeting production of 1.32 million barrels a day by the end of this year, the NOC said last week in a statement. Crude from Sharara, Libya’s biggest field, started flowing in late April to the Zawiya refinery following a three-week closure. El Feel, a field also known as Elephant, re-started last month as well, after having been halted since April 2015.
OPEC’s Staring Down a Double-Barrel Cut - OPEC is going to have to do much more than simply extend its current production deal when it meets next week if it's serious about addressing surplus inventory. In fact, its own figures show it needs to double the cut it made in January. That means finding another 1.2 million barrels a day to take out of production.In its latest forecast, published last week, the producer group trimmed its estimate of the need for OPEC crude this year by 300,000 barrels a day. At that level of production -- 31.92 million barrels a day -- inventories will remain static, assuming demand and non-OPEC supply forecasts are correct. OPEC produced 31.74 million barrels a day in April, according to secondary-source estimates published by the group. Simply rolling that level forward for another six months will exhaust the excess at an average rate of 722,000 barrels a day in the second half and will see about 120 million barrels removed from inventories in the nine months begun at the end of March. That may seem like a lot, but OPEC puts the excess at the end of the first quarter at 276 million barrels -- and that's just in the developed countries of the OECD. Merely extending the cuts won't bring oil inventories anywhere close to their five-year average level by the end of December. And let's set aside the fact that the five-year average has been inflated by two years of surplus, which means stockpiles will have to come down significantly below that to return to normal levels. Implementation of the agreement so far has been better than expected, but that does more to highlight the deal's weakness than anything else.Ensuring compliance in the second half will probably prove much harder. Several key producers have achieved their targets by simply bringing forward maintenance at oil fields and refineries. Extending the cuts will require real sacrifices, like shuttering production and reducing exports. There's a risk even that won't be sufficient.
OPEC and hedge funds are trapped in Groundhog Day: Kemp (Reuters) - Hedge funds had become increasingly bearish towards crude oil by the middle of last week, leaving them vulnerable to a short squeeze with OPEC's next meeting coming up on May 25.In fact, hedge fund positioning in crude is nearly identical to before the last OPEC meeting held on Nov. 29, which was followed by a fierce short-covering rally (http://tmsnrt.rs/2ribYrB). Even the level of oil prices is similar (http://tmsnrt.rs/2qJ0n86). By May 9, hedge funds and other money managers held a net long position in the three main Brent and WTI futures and options contracts amounting to just 475 million barrels (http://tmsnrt.rs/2qIOcYS).Fund managers had cut their net long position by a cumulative 308 million barrels since April 18, according to an analysis of position data published by regulators and exchanges (http://tmsnrt.rs/2qIN4V1). Bullish long positions had been trimmed by 135 million barrels over the three week period while bearish short ones had been increased by 173 million barrels.Fund managers had raised their short positions in Brent and WTI to 334 million barrels, the highest level of short sales since before OPEC announced its production cuts on Nov. 29. The ratio of hedge fund long to short positions fallen to just 2.4:1 from a recent high of 5.8 on April 18 (http://tmsnrt.rs/2qIVDiQ). Bearishness had spread well beyond crude to key refined products such as U.S. gasoline and distillate fuel oil as fund managers began to worry that the surplus of crude was being turned into a glut of products. By May 9, hedge funds were running a net short position of 21 million barrels in U.S. gasoline and 9 million barrels in heating oil. But the large build up in short positions across both crude and fuels left the oil market looking stretched on the downside and poised for a short-covering rally.
Is the global oil market chasing an 'almost-mythical' state? (podcast) Capitol Crude talks to some top players in the energy economics game to consider whether oil's perpetual quest for balance is possible and how it affects production and prices. John Kemp, senior market analyst, commodities and energy at Thomson Reuters, and Ross McCracken, managing editor at Platts Energy Economist, talk to senior oil editor Brian Scheid in London. They ponder whether the global oil market will ever be in balance and how US production — from both shale, conventional and offshore sources — plays into that equation. How will production costs, crude prices and policy decisions impact future supply, and why don't we hear about outlandish price forecasts anymore?
Saudi Arabia, Russia push to extend oil output cut until March 2018 | Reuters: Saudi Arabia and Russia, the world's top two oil producers, agreed on Monday on the need to extend output cuts for a further nine months until March 2018 to rein in a global crude glut, pushing up prices. Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak said in a statement they would "do whatever it takes" to reduce the inventory overhang, using a phrase coined by European Central Bank President Mario Draghi five years ago in his successful bid to defend the euro. The Organization of the Petroleum Exporting Countries meets in Vienna on May 25 to consider whether to extend output cuts agreed in December last year between OPEC and 11 non-member countries, including Russia. Benchmark Brent oil prices LCOc1 rose, trading up $1.39 at $52.23 per barrel by 1407 GMT as the market had previously expected the cuts to be extended by as little as six months. With a nine-month extension now the minimum expectation for the OPEC meeting, the group has a lot of work to do to persuade its members and some non-OPEC producers to back the move. OPEC member Iraq, whose production is growing fast, has said it would support renewing the deal only for six months. Non-OPEC member Kazakhstan said on Monday it would struggle to join any new deal on the old terms, as its own output was set to jump. Oman said it fully supported the idea of a nine-month extension.
Saudi Arabia, Russia agree that 9-month extension to output cut deal needed --Saudi Arabia and Russia jointly said Monday that they agreed that the oil output cut agreement needed to be extended by nine months until the end of March 2018 to achieve the desired balancing effect on oil markets, sending prices higher by almost 2% in less than an hour. In a joint statement, the energy ministers of Russia and Saudi Arabia, Alexander Novak and Khalid al-Falih, agreed to do "whatever it takes to achieve the desired goal of stabilizing the market and reducing commercial oil inventories to their five-year average level." Both ministers have hinted recently that they saw the need to extend the output cut into 2018, but this was the first time that they assigned a definitive time frame to the deal. The oil output deal reached last December had so far "stabilized the markets, reduced volatilities and facilitated the return of investment flows into the oil industry," Falih said at the press conference broadcast by Bloomberg TV."There has been a marked reduction in inventories, but we are not where we want to be in terms of reaching the five-year average," he added. The ministers noted the acceleration of OECD inventory draws in April and May, compared to seasonal norms, as well as a substantial year-to-date decline of oil in floating storage, the statement said.OPEC estimated last week however, that commercial inventories in OECD countries were still 276 million barrels above the benchmark.Russia and Saudi Arabia also agreed that the deal extension would have the same volume allocations that were included in the December agreement, Falih said. This would mean Libya and Nigeria would remain exempt from the cut deal. The two OPEC nations have been dealing with militant attacks that have hobbled their oil sectors, but output has been on the rise in the last month. Libyan crude production has climbed to more than 800,000 b/d, up from 550,000 b/d a month ago, while Nigeria, which produced 1.65 million b/d in April, is also set to resume loading its key Forcados crude.
Oil Surges After Saudis, Russians Agree To 9 Month OPEC Output Cut Extension; US Futures Flat -- In an otherwise quiet session in which European shares dropped, Asian equities rose and S&P500 futures were little changed, crude oil surged above $49 on high volume, after the Saudi and Russian energy ministers said in Beijing they favor extending the OPEC production cut for 9 months, though the end of Q1 2018. WTI rose more than 3%, rising above the 50DMA, climbing to the highest intraday price in almost two weeks after the comments, with subsequent comments by Putin pushing crude to session highs, and Brent above both its 200 and 50 DMA. While output curbs that started Jan. 1 are supposedly working according to the Saudi and Russian energy ministers - clearly debatable considering there has barely been any reduction in the record global inventory glut during the first 4 months of the OPEC production cut - global inventories aren’t yet at the level targeted by OPEC and its allies, Saudi Energy Minister Khalid Al-Falih said in Beijing alongside his Russian counterpart, Alexander Novak.“The agreement needs to be extended as we will not reach the desired inventory level by end of June,” Saudi Arabian minister Khalid Al-Falih said at event with Russian counterpart Alexander Novak. “Therefore we came to the conclusion that ending will probably be better by the end of first quarter 2018” The ministers agreed the deal should be extended through the first quarter of 2018 at the same volume of reductions, which however according to many analysts won't be enough to decidedly lower inventories considering the recent rebound in Libya and Nigeria production as well as a the near-record production out of the US. For now, however, it was enough to send oil surging wiping out more than 2 weeks of losses.
Oil Jumps Over Output Deal - Oil rallied after Saudi Arabia and Russia stoked expectations that production cuts might be extended for nine months. Futures closed at their highest in more than two weeks. While output curbs that started Jan. 1 are working, global inventories aren’t yet at the level targeted by OPEC and its allies, Saudi Energy Minister Khalid Al-Falih said Monday in Beijing alongside his Russian counterpart, Alexander Novak. The ministers agreed the deal should be extended through the first quarter of 2018 at the same volume of reductions, they said. "When Saudi Arabia and Russia come out together it sends a very strong signal to the market," Mike Wittner, head of commodities research at Societe Generale SA in New York, said by telephone. "With these two countries behind the extension of the accord, chances are very high that they will get all of OPEC behind it." The largest of the 24 producers that agreed to cut supply for six months are reaffirming their commitment to the deal amid growing doubts about its effectiveness so far. An increase in Libyan output, together with a surge in U.S. production and signs of recovery in Nigeria, may undercut OPEC’s strategy to re-balance the market and boost prices. West Texas Intermediate for June delivery climbed $1.01, or 2.1 percent, to $48.85 a barrel on the New York Mercantile Exchange. It was the highest close since April 28. Total volume traded was about 38 percent of the 100-day average. Brent for July settlement rose 98 cents, or 1.9 percent, to $51.82 a barrel on the London-based ICE Futures Europe exchange. It was also the highest close since April 28. The global benchmark crude ended the session at a $2.66 premium to July WTI.
Goldman Lists Two Conditions For The OPEC Production Cut Extension To Work -- Goldman, which has been pushing for higher oil prices with seemingly daily bullish research reports for the past month, and which underwrote the last Saudi Arabian bond issue and is expected to also manage the Aramco IPO (explaining the bank's conflict of interest), released a note commeting on the latest development in the oil market, which sent the price of crude higher by 3% after Saudi and Russia oil minister agreed to extend the OPEC production cuts by another 9 months through the end of Q1 2018. Specifically, Goldman writes that "today’s announcement will likely further extend the oil price rebound started last week on decent stock draws and low positioning, although the rally so far today has remained modest compared to the move that occurred last year when the OPEC cuts were first announced." Even so, Goldman's oil analyst Damien Courvalin had some caveats. Specifically, he said that for the strategy to work, however, two things have to take place:
- compliance needs to remain high and
- long-term oil prices need to remain low to prevent shale producers from ramping up investment significantly more. In fact, an extension of the cuts should go hand in hand with guidance of future production increases by low cost producers, in our view, with an already notable emphasis by Saudi and others that oil prices will likely remain in a $45-55/bbl long-term range, in line with our forecasts. This leaves us reiterating our 3Q17 $57/bbl Brent price forecast and, with an increasingly likely extension of the cuts, raises our confidence that the oil market will shift into backwardation in 3Q17.
His full note below:
The Math Behind OPEC's Revised Production Cut Still Does Not Work -- "Whatever it takes." That's what Saudi Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novaksaid in a statement overnight in Beijing they would to reduce the global oil inventory overhang, using the immortal phrase coined by ECB President Mario Draghi five years ago in his successful bid to defend the euro. For OPEC, however, "whatever it takes" may not be enough. First there is the problem of excess supply, and not just resurgent US shale production, which is set to surpass an all time high 10 million barrels per day in the near future.Over the weekend, Libya - the OPEC member with Africa’s largest crude reserves - announced it was pumping more than 814,000 barrels a day, thanks mostly to rising output from two fields that re-started last month, Jadalla Alaokali, a board member at the National Oil Corp., told Bloomberg on Sunday. At the end of April, Libya was producing about 700,000 barrels a day.While output from the politically divided country is at its highest since October 2014 when it pumped 850,000 barrels a day, in an ideal world its output could grow substantially from here. Prior to the Arab Spring uprising, Libya pumped as much as 1.6 million barrels a day; together with Iran and Nigeria, Libya was exempted from OPEC’s cuts due to internal strife. It’s targeting production of 1.32 million barrels a day by the end of this year, the NOC said last week in a statement.Then there is Nigeria, where the Forcados pipeline came back online last week and the Qua Iboe pipeline is being tested currently, with both together allowing output to reach its pre-disruption level of 1.8 mb/d. The oil ministry said that Nigerian oil output averaged 1.45mb/d suggesting an increase of 300kb/s in the near future is all too possible absent another set of production disruptions. Of course, in the interim, North American output is booming.The U.S. DOE recently published a new forecast that revised the country's oil output up yet again. And yes, it was revised higher. Crude-oil production is now expected to rise by 960,000 barrels a day between December 2016 and December 2017. That compares with a 210,00 barrel a day increase it foresaw just before OPEC's November gathering. Add in a 470,000 barrel a day ramp up in the production of natural gas liquids, and OPEC's entire cut is more than offset. Then there is OPEC's own forecast, according to which the cartel trimmed its estimate of the need for OPEC crude this year by 300,000 barrels a day. At that level of production - 31.92 million barrels a day - inventories will remain static, assuming demand and non-OPEC supply forecasts are correct.
Oil Prices Set To Rise On Back Of OPEC Deal Extension - The big news of the week is obviously the joint announcement between Saudi Arabia and Russia in support of extending the existing production cuts through the first quarter of 2018. Not only was such a definitive statement not expected before the official May 25 meeting, but neither was the nine-month extension (as opposed to just six months). The news caused oil prices to jump and significantly reduced the chances of another pricing downturn in the weeks and months ahead.. A series of investment banks see further price gains coming soon. BNP Paribas expects prices to rise back to levels seen earlier this year – mid- to upper-$50s for Brent. Goldman Sachs reiterated its call for Brent to rise to $57 per barrel in the third quarter. After hedge funds and other money managers liquidated their bullish positions over the past month, there is room for oil on the upside. Moreover, with OPEC nearly locked in for 9 more months of restrained output, the downside risk has been substantially reduced. The IEA reiterated its assessment that the oil market is on its way towards balance. In its latest Oil Market Report, the agency said that global stocks were building at a surprisingly low rate of 0.1 million barrels per day even though stocks rose by much more in OECD countries. But stocks are already drawing down, reflecting a supply deficit. The IEA estimates that the world is seeing a deficit in the second quarter by about 0.7 mb/d. Still, that might not be enough to bring inventories back within the five-year average by the end of 2017, the IEA says, implying that more work will be needed. The big question is how the OPEC extension affects the trajectory of U.S. shale production. Output was already surging, but another round of price gains could lead to a stronger response from shale drillers, particularly if prices rise sufficiently for drillers to lock in hedges for future production, clearing the way for more drilling. It is too early to say with any certainty how much additional U.S. production will result from the OPEC deal, but surely some executives are celebrating this week’s news.
Latest oil deal should boost price above $50, but not much more | TheHill: Nervous markets this week welcomed reports that OPEC and other major oil suppliers, including Russia, plan to hold back production for an additional nine months to stabilize prices. The alternative was to abandon the pact, pump more oil and see prices tank for all producers. This was the “lose-lose” option. However, let’s not get too excited and think prices could reach and sustain $60 a barrel anytime soon. It can never be exactly clear what combination of motives is driving forward this cut in production. We do know that many of the producing countries are excessively dependent on oil to balance their national budgets. They know that, as difficult as current conditions may be, the alternative is worse. Saudi Arabia has the added incentive of bringing a Saudi Aramco initial public offering to market in several months. A collapse in prices would make that very difficult. Meanwhile the drilling rig count and oil production in the Permian Basin in West Texas continues to grow, making the U.S. the world’s largest oil producer. Companies that have been able to avoid or reschedule excess levels of debt have survived the crash. They found more efficient ways to operate — focusing on so-called “sweet spots” and reducing the time it takes to drill a well. With the “shale play” increasingly a manufacturing operation, these operational improvements become embedded. Abundant private equity is also available for startups, led by industry veterans with a strong track record. The reason OPEC and “NOPEC” (the oil-exporting nations not in OPEC) have had to take these steps is because world demand was sluggish just as U.S. production surged. In “normal times,” global demand could be counted on to grow each year by about one million barrels per day. With slow recoveries in the U.S. and Europe and slower growth in China, that isn’t happening. On the supply side, companies invest to replace reserves they deplete each year. For several years this combination of supply constraint and market growth held the market in balance.
Most OPEC/non-OPEC deal countries support 9-month extension: Algerian minister - Algerian energy minister Noureddine Boutarfa said Thursday he believes there is a consensus among countries participating in the OPEC/non-OPEC oil production cut deal regarding the necessity to extend the agreement by nine months through March 2018. "I think we have a consensus and the majority of countries support the proposal of Russia and Saudi Arabia," Boutarfa told reporters after talks with his Russian counterpart Alexander Novak in Moscow. On Monday, Novak and his counterpart from OPEC kingpin Saudi Arabia, Khalid al-Falih, said they agreed on the need for a nine-month extension of the agreement, which expires at the end of June. Boutarfa, who visited Russia after traveling to Iraq last week to discuss the issue with Iraqi oil minister Jabber al-Luaibi, also reiterated that he supports the proposal. The countries participating in the agreement, including OPEC member Algeria and non-OPEC Russia, are to meet in Vienna on May 24 and 25 to discuss the possible extension of the agreement between OPEC and non-OPEC oil producers to reduce oil production by some 1.8 million b/d from October 2016 levels. Several African countries have expressed their interest in joining the agreement of OPEC and non-OPEC countries, Boutarfa reportedly said, while speaking in Moscow.
Will A 9-Month Crude Production Cut Extension Be Enough? Oil prices surged on Monday after Russia and Saudi Arabia said they support an extension of the OPEC/non-OPEC production cuts. Oil prices have clawed back a lot of the losses exhibited over the past month, with Brent now safely in the low-$50s and WTI on its way toward those levels. The joint announcement from Saudi Arabia and Russia, the two most important negotiators, effectively extends the cuts, although the official move won’t come until the May 25 meeting. While it is possible that other OPEC or non-OPEC members might balk at the move, it remains highly unlikely given that most are anxious for higher oil prices. And in any event, Saudi Arabia has always been the one to take on the lion’s share of the burden.The extension was widely anticipated and the announcement merely squashed some of the uncertainty ahead of the Vienna meeting later this month.However, what really took the markets by surprise on Monday was the support for a nine-month extension rather than just an extension through the end of the year. “The agreement needs to be extended, as we will not reach the desired inventory level by end of June,” Saudi energy minister Khalid al-Falih said in a statement. “Therefore we came to the conclusion that ending will probably be better by the end of first quarter 2018.”And in an effort to bolster the production cuts, the OPEC/non-OPEC coalition is working on bringing new countries into the fold, including Egypt and Turkmenistan, although it is unclear if they will be successful. To be sure, some contributions from Egypt and Turkmenistan – with a combined total output of 700,000 bpd – would not significantly alter the pace of adjustment, but their participation would add a psychological jolt to the market.
IEA expects speedier oil market rebalancing in H2 but 'much work remains' -- The International Energy Agency expects the global oil market's rebalancing to accelerate in the short term, having "almost balanced" in the first quarter as OECD commercial stocks fell for a second consecutive month in March, it said Tuesday in its monthly Oil Market Report. But the agency also cautioned that "much work remains to be done" in the second half of 2017 to drain inventories further as the diversity and dynamism of the US shale sector continues to surprise. OPEC compliance with its output restraint agreement "loosened a touch" in April however, with production rising by 65,000 b/d in April to 31.78 million b/d as increased flows from Nigeria and Saudi Arabia offset lower production from Libya and Iran. The IEA said OPEC's year-to-date compliance with the production cuts remained robust at 96% but stressed the "need to keep a close eye on Libya and Nigeria where there are signs that production might be rising sustainably." OPEC and non-OPEC participants will meet on May 25 to review its production agreements, and signs suggest the deal is likely to be extended. This report was published a day after Saudi Arabia and Russia agreed on the need for a rollover of their output cuts by nine months to March 2018, as the world's top two crude producers step up their commitments to pare back the global oil stock glut. Overall though, the IEA said that if OPEC's April crude oil production levels of 31.78 million b/d are maintained, and nothing changes elsewhere in the balance that would imply a stock draw of 700,000 b/d.
Oil inventories become more visible: Kemp | Reuters: Reported oil stocks have fallen much more slowly than OPEC anticipated at the beginning of the year, leading to scepticism about the effectiveness of the organization's production cuts. But the sluggish response may reflect the repositioning of formerly uncounted stocks to more visible locations rather than a failure to adjust the supply-demand balance. In general, crude oil and refined products move down the supply chain from areas of net production to areas of net consumption. Despite significant trading activity around particular cargoes, the movement of crude and products essentially occurs in only one direction. For commercial reasons, it makes no sense to move crude and products back up the supply chain, away from consumers and back toward refiners and producers. Crude and products stocks are positioned as close to refiners and final consumers as possible, subject to the availability and cost of storage. OPEC ministers and officials have stated that the objective of production cuts is to eliminate the overhang of excess oil stocks and reduce inventories to the five-year average level. Ministers and officials most often reference commercial crude and product stocks held in OECD member countries when talking about the overhang and market rebalancing. OECD stocks are the most accurately and frequently reported so in some ways it makes sense to use them as the benchmark for assessing whether the production cuts are working. The problem is that they are not necessarily representative of stockpiles held in producing and consuming countries outside the OECD. According to the International Energy Agency, total OECD commercial stocks rose during the first quarter of 2017, but this was largely offset by a reduction in floating storage and stocks held outside the OECD.
WTI/RBOB Extend Losses After Unexpected Crude Build - After last week's API (and subsequent DOE) inventory data sparked the latest hopeful pump higher in the energy complex, this week's API data disappointed. WTI and RBOB porices slipped lower after an unexpected crude build (+882k vs -2.67mm exp). API
- Crude +882k (-2.67mm exp)
- Cushing -539k
- Gasoline -1.7mm (-1mm exp)
- Distillates +1.787mm
After last week's across the board inventory draws, Crude's build is a big surprise (the biggest since March). And after bouncing on last week's inventory data and the weekend's Saudi/Russia jawboning, WTI fell for the first time in 5 days today ahead of API data and kneejerked lower on the print...
Crude futures fall despite Kuwait voicing support for output-cut extension -- Crude futures dipped Tuesday as prices were unable to build upon the increases from a day earlier even though another major producer expressed support for an extension of the OPEC-led supply cut agreement into 2018. NYMEX June crude settled 19 cents lower at $48.66/b. ICE July Brent settled 17 cents lower at $51.65/b. Kuwait's oil minister, Essam al-Marzouq, said Tuesday that his country would support a nine-month extension of the OPEC-led supply cut agreement as proposed a day earlier by Saudi Arabia and Russia. A growing consensus that oil ministers meeting May 25 in Vienna will extend the supply cut agreement, which includes major producers outside OPEC, has helped lift crude futures off five-month lows set earlier this month.But a major question facing the oil market is whether traders have already priced in an extension of the deal. Reaching a formal extension agreement would remove any doubts and could provide an immediate price response, but attention will quickly pivot to the terms of the deal and whether the supply cuts are deepened. Some traders may believe that deeper cuts are necessary to offset rising US crude production and achieve the goal of lowering global oil inventories close to the five-year average.
WTI/RBOB Pop After 6th Weekly Crude Inventory Draw In A Row, Production Slows -- After last night's surprise API-reported crude build, oil prices dipped and ripped on a tumbling dollar heading into this morning's DOE data and then jumped higher as DOE negated API's build by reporting a 1.75mm draw (less than the expected 2.67mm though). This is the 6th weekly crude draw in a row. Gasoline and Distillates also saw draws. After 14 weeks of production rises, US crude output dropped last week. DOE
- Crude -1.75mm (-2.67mm exp)
- Cushing +35k
- Gasoline -413k (-1mm exp)
- Distillates -1.94mm (-1.45mm exp)
Unlike API, DOE repored a crude draw - the 6th weekly draw in a row...
Oil ends near 3-week high as EIA reports 6th straight weekly inventory drop -- Oil prices settled at their highest level in nearly three weeks Wednesday after the EIA reported a sixth straight weekly decline in U.S. crude inventories. Data from the U.S. Energy Information Administration Wednesday showed that domestic crude supplies fell by 1.8 million barrels for the week ended May 12. That was the sixth weekly drop in a row reported by the EIA. The American Petroleum Institute late Tuesday, however, reported an 882,000-barrel climb, while analysts polled by S&P Global Platts forecast a fall of 2.2 million barrels. June West Texas Intermediate crude added 41 cents, or 0.8%, to settle at $49.07 a barrel on the New York Mercantile Exchange, for their highest finish since April 28, according to FactSet data. July Brent crude on London’s ICE Futures exchange rose 56 cents, or 1.1%, to a three-week settlement high of $52.21 a barrel. Troy Vincent, oil analyst at ClipperData, attributed the decline in crude stocks to the 400,000 barrel-a-day increase in exports and a more than 300,000 barrel-a-day rise in refinery runs of crude. “This report put crude-oil inputs at refiners just shy of their record high,” he said. The EIA also reported that gasoline stockpiles declined by 400,000 barrels, while distillate stockpiles were down 1.9 million barrels last week. Analysts surveyed by S&P Global Platts expected a fall of 500,000 barrels for gasoline stocks and a drawdown of 1.3 million barrels for distillates, which include heating oil.
Has Global Oil Demand Really Surpassed Supply? - Oil inventories are falling around the world, a sign that the global oil market has already moved from supply glut into a deficit, according to the IEA’s latest Oil Market Report.The Paris-based energy agency estimates that global oil stocks only climbed by a meager 0.1 million barrels per day in the first quarter, a rather bullish figure given the massive increase in inventories in the U.S. But the problem is that the U.S. has the most “visible” inventory data, so even if stocks are falling elsewhere around the world, the gains in the U.S. tend to overshadow global trends. So, while the OECD (which includes the U.S.) saw stocks rise by 0.3 mb/d in the first quarter, the world as a whole only saw a modest 0.1 mb/d increase.Moreover, by March, even the OECD saw stocks start to drawdown. That means “that rebalancing is essentially here and, in the short term at least, is accelerating,” the IEA wrote in its latest report. Assuming the extension of the OPEC cuts, the IEA forecasts that the second quarter will see stock drawdowns widen to 0.7 mb/d. In other words, despite ongoing concerns about oversupply, the oil market is already in a supply deficit. As the gap between demand and supply grows, the stock drawdowns will grow even more in the third and fourth quarters. However, the IEA cautioned oil bulls not to get ahead of themselves. Even if these projections prove to be accurate, global inventories still might not fall back within the five-year average, “suggesting that much work remains to be done in the second half of 2017 to drain them further.” Then the IEA laid out a series of caveats that put a damper on the headline-grabbing conclusion that the market is already in a supply deficit. First, complicating the forecast is the pace of growth from U.S. shale. Using more accurate retrospective data, the IEA cites the fact that U.S. oil production rose to 9.03 mb/d in February, or 465,000 bpd higher than the low point reached in September. But more up-to-date but less rock-solid weekly data from the EIA suggests that production is already up to 9.31 mb/d, which is an increase of more than 700,000 bpd in eight months. Second, other OPEC countries could undermine the effectiveness of the production cut extension. “We need to keep a close eye on Libya and Nigeria where there are signs that production might be rising sustainably,” the IEA cautioned. Indeed, Libya says its production is at roughly a three-year high at over 800,000 bpd.
OilPrice Intelligence Report: OPEC Extension Comments Drive Oil Prices Past $50: The rally stemming from the announcement of Saudi Arabia and Russia on a nine-month extension seemed to have run its course by mid-week, but oil moved higher again on Friday. WTI rose above $50 for the first time in nearly a month. Political crisis in the U.S. and Brazil took their toll on equity and commodity markets this week, as uncertainty spread throughout the financial system. As a result of the growing scandal in Washington, Wall Street has lost confidence in the prospect of large-scale tax cuts that the Trump administration promised, leading to a sharp drop in equities. Stocks posted their worst trading day of the year so far on Wednesday, which dragged down oil prices a bit. OPEC’s official meeting will take place in a week, and most analysts expect an extension of at least six months, and more likely nine months due to the support from Saudi Arabia and Russia. However, there is quite a bit of dispute over whether or not the extension will be sufficient. Some see the extension as enough to drain inventories back to average levels, while others expect rising U.S. shale output to swamp the deal. In any event, to a large degree the OPEC extension is already priced into the market, and any “pop” in prices will probably be modest. As the end of the initial phase of the OPEC cuts draws near, that data suggests that OPEC members achieved a high level of compliance but the non-OPEC members that promised to reduce their output lagged in their commitments. Reuters reports that some less “visible” storage areas are starting to see an uptick in inventory levels, a worrying sign that suggests the oil market is still oversupplied. For example, the more expensive region of Amsterdam-Rotterdam-Antwerp (ARA) is seeing a rise in crude storage because refiners are “clogged” with oil, an industry source said. And because it is a more expensive region, it should be one of the last places to see rising levels of storage and the first to see drawdowns. South Africa and Singapore have also seen increases lately.
Baker Hughes Rig Count Climbs for 18th Straight Week - U.S. producers brought 16 more rigs online in the past week, Baker Hughes reported Friday, bringing the Houston-based oilfield services provider's overall count up to 901 units.Eight oil rigs were brought online over the course of the week, while eight natural gas rigs were added and miscellaneous rigs remained level, Baker Hughes said. Meanwhile, the company's U.S. offshore count climbed by two rigs for the third consecutive week. The offshore count, now at 23 overall, is down one rig year over year.In total, the U.S. land rig count is now up 497 rigs from a year ago when it stood at 404, Baker Hughes data indicates. Oil rigs are up 402 in the past year, while natural gas rigs have risen by 95 and miscellaneous rigs are level. The Permian Basin of West Texas and New Mexico was once again the largest beneficiary of new drilling activity over the week, adding four rigs alone. The Marcellus Shale, an Appalachian natural gas basin encompassing parts of Pennsylvania, West Virginia and Ohio, and south Texas' Eagle Ford Shale both saw modest, two-rig increases. Oil breaks even at $40 a barrel in the Permian, a factor that has led to a majority of drilling equipment being moved to the play following efforts made by strategic operators such as Exxon Mobil XOM, RSP Permian and Diamondback Energy to bolster their acreage positions there in recent months. Out of the 874 land rigs now active in the U.S., 361 are focused on the Permian, according to Baker Hughes' data. By comparison, the basin with the nearest level of activity to that of the Permian is the Eagle Ford with 85 rigs online.
Rise In Rig Count Threatens To Undermine Recent Oil Price Spike - The number of active oil and gas rigs in the United States rose for the eighteenth straight week, Baker Hughes reported on Friday—this time by 16.The number of oil rigs in operation increased by 8, and gas rigs increased by the same number. Combined, the total oil and gas rig count in the US now stands at 901 rigs, or 497 above the count a year ago. The last time oil and gas rigs in the US exceed 900 was May 1, 2015.At 12:27pm EST, WTI was trading up 2.21% for the day at $50.44—having crossed the ever-important $50-per-barrel mark. Brent Crude traded up 2.19% at that time, at $53.66. Both benchmarks had picked up almost $3.00 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 may consider not only extending production cuts into 2018, but that it may consider deepening them as well. With the extension into 2018 likely already priced into each oil barrel, a deepening of the production cut—or rumors of deepening the production cut—was the only tool OPEC had left in its arsenal to combat the effects of U.S. shale to lift prices, even if only temporary.The last four months or more have been particularly difficult for OPEC, as production cuts and talks of extensions and deeper cuts seem to be met at every turn by U.S. shale, backed by its most capable challenger—the Permian Basin. This week, the heavyweight known as the Permian, added 4 rigs, but the Mississippian also put 3 into play, followed by the Marcellus with 2 rigs. DJ-Niobrara, Granite Wash both lost rigs. Both benchmarks started to slip within minutes after data release—proving that OPEC’s clout isn’t what it used to be, with WTI trading at $50.37 and Brent at $53.62%.
Lower 48 Production Nears Cycle Highs As Rig Count Rises For 18th Straight Week -- While much was made of this week's drop in US crude production, it was driven by an Alaskan supply drop, not the Lower 48 whose production is at Aug 2015 highs. WTI back above $50 on the back of more OPEC jawboning appears to have everyone convinced this time is different, but for the 18th week in a row US oil rig counts rose (by 8 to 720). The 18th weekly oil rig count rise...Production from the Lower 48 continues to soar...And WTI dipped a little on the print...And while prices hover above $50, OilPrice.com's Brian Noble warns that as breakeven prices converge an oil price crash nears...No one should underestimate the impact of AI (artificial intelligence) on the future of the entire capital markets complex. The LinkedIn group, Algorithmic Traders Association, has recently been running a series of articles warning of the seismic shift that is and will continue to be felt in the global hedge fund industry as machines take over from people on trading desks. But what intelligent human being would ever suddenly have turned bullish on the morning of Monday 15 May 2017 just because of renewed jawboning from Saudi Arabia and Russia, indulging in the same old two-step as they did at Doha in April 2016 and Vienna in November of last year. That is however precisely what the machines did. Hallelujah. Despite the occasional rally, it’s hard to see that the outlook for oil is encouraging on both fundamental and technical levels. The charts look to be screaming double top for WTI, while the fundamentals seem to be saying Economics 101: too much supply, too little demand. The parallel with 2014 is there if you want to see it. At the heart of the matter is the same old cast of characters that recur again and again. What’s different this time is the rise in cheap U.S. production, primarily shale.While it’s perfectly true that there isn’t enough U.S. shale to flood the world with oil, a lot of what there is is historically cheap to produce so as to give crude from the Middle East a real run for its money; and a solid proportion of that production has been sold forward at attractive levels in the futures market ensuring financial stability for U.S. producers.
Oil at one-month high, supply-cut extension expected | Reuters: Oil prices rose on Friday, closing out a second week of gains on growing expectations that OPEC and other producing countries will agree next week to extend output cuts. Brent crude settled up $1.10, or 2.1 percent, at $53.61, the highest settlement for the international benchmark since April 18. U.S. benchmark crude oil rose 98 cents to $50.33, the highest close since April 19. U.S. crude gained 5.2 percent for the week, while Brent rose 5.4 percent. The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia are scheduled to meet on May 25. They are expected to extend output cuts of 1.8 million barrels a day until the end of March 2018. The OPEC-led group is trying to reduce a global crude glut that has been slow to balance out due to weak demand and rising production elsewhere, particularly the United States. An OPEC panel is considering even deeper supply cuts to try to boost prices. Many investors remain concerned about high global inventories, and supply data from around the world shows that drawdowns of global inventories have slowed or even reversed. U.S. crude production has climbed 10 percent since mid-2016 to 9.3 million barrels per day as shale producers have taken advantage of higher prices to boost activity. Energy services firm Baker Hughes said U.S. drillers added oil rigs for an 18th week in a row, the second-longest streak on record. U.S. drillers added eight oil rigs in the week to May 19, bringing the total count to 720, the most since April 2015.On Thursday, official data showed OPEC leader Saudi Arabia's crude exports rose 275,000 bpd in March from February and its stockpiles increased.
OPEC nears decision time: rollover or deepen cuts? Kemp | Reuters: OPEC ministers head to Vienna next week where they are expected to ratify an extension of the current production cuts that has been agreed informally among the key participants. Saudi Arabia and Russia announced earlier this week that they have agreed on the need to extend OPEC and non-OPEC output cuts for a further nine months until March 2018. Riyadh and Moscow pledged the bulk of cuts under the current agreement between OPEC and non-OPEC exporters so their agreement on the need for an extension has made an extension very likely when OPEC meets formally next week. Other OPEC ministers have already signaled support. Crucially both Iraq and Iran have stated they are in favor, which removes any remaining obstacles. In theory, OPEC could try to surprise the market by announcing deeper cuts or an even longer extension beyond March 2018, though most analysts and traders have discounted the possibility. Saudi Arabia and Russia left the door open by promising "to do whatever it takes to achieve the desired goal of stabilizing the market and reducing commercial oil inventories to their 5-year average". Past experience suggests a decision to deepen the cuts would cause a sharp increase in prices in the days following the announcement but an extension would have little impact or cause prices to fall slightly.Researchers have studied the impact on oil prices of all OPEC decisions between 1983 and 2008 They found that OPEC decisions to cut production caused prices to rise significantly over the following month, but decisions to rollover an existing agreement caused prices to fall slightly.
Here Are The Three Choices Facing OPEC Next Week - The last time OPEC (and Non-OPEC) member nations sat down to attempt a coordinated increase in oil prices by cutting production they succeeded... for about three months. Every since then, oil has been on a gradual declining path, boosted by a surge in US shale output and declining global demand, with WTI recently even sliding sliding below OPEC's implicit price floor of $50/barrel. Which is why on May 25, after the failure of the first 6 month production cut, the same nations will try the same exercise, this time looking to cut output for 9 months, and hoping for a different outcome. At least that is the general expectation. Overnight, BofA's Francisco Blanch has released a note previewing next week's OPEC meeting titled "OPEC: extend and pretend", and which boils down to the 3 choices faced by OPEC: maintain, curb, or hike output. For its part, BofA believes that OPEC will extend cuts and hope demand recovers. Additionally, Blanch also states that oOPEC’s goal for the oil market is to reach backwardation, not a specific price level and does not believe that OPEC will proceed with deeper cuts as this would likely mean ceding more market share to U.S. shale production.As Blanch explains in the summary, the global oil market deficit is smaller than the bank thought (see the dramatic, 500kb/d downward revision to global demand growth in chart 2 below) and as a result the cartel is struggling to bring down global stocks. This situation presents a major challenge for the cartel, as OPEC is targeting a shift in the term structure of global crude markets and not a specific oil price band according to Blanch: the idea is to penalize forward sellers and squeeze refiners. But soft demand in India and Mexico, a warm US winter, and an OPEC crude oil production overhang from 4Q16 have gotten in the way of a good plan. Which brings up a question that has been floated by some (including this site) in recent days: "Why not cut further?"Well, according to BofA, if OPEC cuts production even more, it will likely lose additional market share to US shale and prices may not move up much more. Conversely, if OPEC hikes output, oil prices could collapse to $35/bbl, setting the cartel on an even more difficult fiscal path. In our view, most OPEC members can not afford either scenario at this point. With many member countries already experiencing large government and current account deficits at current oil prices, neither lower prices nor a permanent loss in output are appealing options.As a result, BofA is confident OPEC will stay the course, keeping production on hold over 6 to 9 months and hoping that demand improves.
Full tanks and tankers: a stubborn oil glut despite OPEC cuts | Reuters: After the first OPEC oil production cut in eight years took effect in January, oil traders from Houston to Singapore started emptying millions of barrels of crude from storage tanks. Investors hailed the drawdowns as the beginning of the end of a two-year supply glut - raising hopes for steadily rising per-barrel prices. It hasn't worked out that way. Now, many of those same storage tanks are filling back up or draining more slowly than investors and oil firms had expected, according to global inventory estimates and more than a dozen oil traders and shipping sources who told Reuters about storage in facilities that do not make their oil volumes public. The stalled drawdowns shed light on the broader challenge facing OPEC - the Organization of the Petroleum Exporting Countries - as it struggles to steer the industry out of the downturn caused by oversupply. With U.S. shale oil production surging, inventories remain stubbornly high and prices appear stuck in the low-$50s per-barrel range. The market has not strengthened enough to drain many major storage facilities around the globe - which OPEC oil ministers had hoped would be a first step toward rebalancing what has been a buyer's market since late 2014. Estimated inventories in industrialized nations totaled 3.025 billion barrels at the end of March - about 300 million barrels above the five-year average, according to the International Energy Agency’s latest monthly report. Preliminary April data indicated stocks would rise further, the IEA said. Crude stocks stood at a record 1.235 billion barrels. OPEC and other non-OPEC nations - most notably Russia - are now widely expected to extend production cuts for another nine months, through March 2018.
Venezuela's Oil Production On The Brink Of Collapse - Desperation is spreading in Venezuela as violent protests continue to paralyze the country, further damaging the country’s shattered economy. Venezuela’s already-decrepit oil industry is deteriorating by the day, and an outright implosion is no longer out of the question. Food shortages have been common for quite some time, but are deepening and wearing down the population. Three out of four people surveyed by the WSJ reported involuntary weight loss last year. Hospitals have completely broken down. This meltdown is taking a toll on Venezuela’s oil production, the last thing keeping the country from becoming a failed state. Venezuela’s oil production has been declining for more than a decade, mainly because oil revenues are used to finance the government, leaving little for state-owned PDVSA to reinvest in its operations. But things are getting worse. The cash shortage is accelerating the decline. As of April, oil production stood at 1.956 million barrels per day (mb/d), down 10 percent from last year, and down more than 17 percent from 2015 levels - and output continues to trend downward. James Williams, energy economist at WTRG Economics, told Marketwatch in March that heexpects Venezuela to lose another 200,000 to 300,000 bpd this year, another 10 to 15 percent decline from 1Q2017 levels. The problem is downstream as well, as the shortage of refined products worsens. Three out of Venezuela’s four oil refineries are operating significantly below capacity because of the inability to find spare parts for maintenance, according to Reuters. The Paraguana Refining Center, for example, is only producing 409,000 bpd compared to its nameplate capacity of 955,000 bpd. PDVSA’s third largest refinery, which has a capacity of 187,000 bpd, is operating “at minimum levels due to problems at two of its three distillation units,” Reuters says.
Saudis to boost US ties with $40bn investment: Report | Middle East Eye: Saudi Arabia is planning to cement ties with US President Donald Trump by investing $40bn in US infrastructure development, according to media reports. The kingdom’s sovereign wealth fund is set to announce the plans which may be unveiled next week to coincide with Trump’s visit to the kingdom, sources told Bloomberg on Thursday. Trump will be making his first foreign trip since taking office on 19 May, visiting Saudi Arabia and Jerusalem then heading to Europe. According to CNBC, Saudi Arabia has been expressing an interest in investing in the US for months. Saudi Energy Minister Khalid al-Falih told CNBC in March his government believed US infrastructure, in particular, was an attractive investment. "The infrastructure programme of President Trump and his administration is something that we're interested in because it broadens our portfolio and it opens a new channel for secure, low-risk yet healthy return investments that we seek," he said. Saudi Arabia is also eager to reset relations with the new US administration after bilateral relations deteriorated under former US president Barack Obama, who brokered a historic 2015 nuclear deal with the kingdom’s chief regional rival Iran.
Saudi oil wealth is again a magnet for western leaders: Kemp | Reuters: Saudi Arabia has again become the favorite destination for western political leaders seeking to promote arms sales and encourage other exports to boost their economies at home. UK Prime Minister Theresa May visited last month to promote trade as the country seeks to diversify its export markets after Brexit. U.S. President Donald Trump is scheduled to make his own pilgrimage to Riyadh later this week with reports suggesting the two countries have been negotiating arms deals worth more than $100 billion. Britain and the United States are both angling to secure part of the stock market listing following the planned sale of shares in Saudi Aramco. Both have major oil companies, oilfield service providers and technology firms that hope to secure contracts to develop the kingdom’s oil, gas, refining and petrochemical industries. And both are also major financial services centers that see lucrative opportunities helping the kingdom raise external capital and manage its enlarged sovereign wealth fund. But there is a contradiction between the kingdom’s need to reduce its foreign spending and plans to build up domestic industries on the one hand, and the hopes of U.S., UK and other leaders for an export bonanza. More generally, there is a tension between western countries’ tendency to see the kingdom as a fabulously rich customer and its current need to reduce foreign spending following the slump in oil prices. For the time being, it suits political leaders on both sides to talk up the potential for deals, but some may turn out to be long on symbolism and shorter on substance.
Saudi Minister Expects Expansionary 2018 Budget Based on Savings --Saudi Arabia’s budget next year will be “expansionary but not significantly” and in line with plans to balance state finances by 2020, Finance Minister Mohammed Al-Jadaan said.“Where the expansion will come is from the efficiency,” Al-Jadaan said in an interview in Jeddah on Tuesday. “So we are working on that -- reducing a lot of the fat that is not necessary and then utilizing that in more productive investments.”The target for a balanced budget is central to the kingdom’s long-term plan to wean the economy off oil, which includes creating the world’s biggest sovereign wealth fund and privatizing some state assets. The Finance Ministry reported this month that the first-quarter deficit narrowed on higher oil revenue, boosting efforts to repair public finances.Deputy Crown Prince Mohammed bin Salman is trying to transform the Saudi economy as the plunge in oil prices squeezes state coffers. The government initially implemented an austerity drive that included reducing subsidies and temporarily trimming the wage bill. That led to rare public grumbling among some citizens and more privately from companies reliant on state spending.The government started preparing the 2018 budget in January, Al-Jadaan said. The first draft should be ready in two months, he said. The country is also shifting to quarterly reports on economy from annual to boost transparency as it implements the economic plan, dubbed Saudi Vision 2030. In December, the government said it planned to spend 890 billion riyals ($237 billion) in 2017, with revenue at 692 billion riyals and a full-year deficit of 198 billion riyals. Austerity measures, combined with the drop in oil prices that prompted them, have caused the kingdom’s worst economic slowdown since the global financial crisis. There are plans to impose an excise tax on soda and tobacco from the second quarter of 2017 and a 5 percent value-added tax in the first quarter of 2018 to boost government revenue.
US Nears Record $100 Billion Arms Deal For Saudi Arabia - Earlier this month, US officials said the US was seeking to reach “billions” of dollars in arms sales to Saudi Arabia as part of Trump’s visit to Riyadh. With a week left before the visit, officials now say the White House is very close to the deal, and that it will amount to over $100 billion in sales. Details are still emerging, but the plan is for this to set out a series of growing deals over the next decade that will involve more than $300 billion going to arms dealers, not just to arm the Saudis, but in extra aid to Israel to ensure their “qualitative military edge” over the Saudis.White House officials said the move would be good for the economy, and insisted that building Saudi Arabia’s already substantial military was “essential” because of regional problems. Saudi Arabia, of course, spends much of its military budget invading Yemen and trying to reinstall former President Hadi in power.Given Saudi Arabia’s Yemen-centric foreign policy, US sales are likely to be heavily on warplanes and bombs to drop on northern Yemen, as the conflict has lasted far longer than the Saudis anticipated, and there is little sign they are interested iin extricating themselves from the conflict anytime soon. How much this means Israel will get greatly depends on the sort of weapons the US is giving Saudi Arabia, and particularly if there is anything “new” in the shipments, or just more of the same old stuff. The US commitment to ensuring Israel has an advantage over the rest of the Middle East militarily, while at the same time selling large amounts of arms to the rest of the Middle East, has been icing on the cake for US arms makers, who end up supplying all sides of this arms race.
Yemen’s Disaster - The first thing any socialist, of whatever hue, needs to understand about the war in Yemen is that none of the leaders of any of the many factions involved has objectives worthy of support. Former president Ali Abdullah Saleh — the kleptocrat who ruled the country autocratically for thirty-three years — has allied with the Houthis, a familial, fundamental Zaydist movement that believes that only the prophet’s descendants have the right to rule. They are fighting Saleh’s former vice president, Abdrabbuh Mansur Hadi, the southerner elected to implement the transition to a “new Yemen” following the Gulf Cooperation Council (GCC) agreement of November 2011, which outlined a democratic transition process. The GCC states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates) as well as the international community endorsed and supported this agreement. The transitional regime collapsed in 2014, leading to civil war and the Saudi-led coalition intervention in March 2015. What led Yemen down this path to chaos? After all, the country includes the former People’s Democratic Republic of Yemen, the only socialist state in the Arab world. In the 1970s, the other Yemeni state, the Yemen Arab Republic, had a strong rural movement based on community and tribal solidarity, which organized, financed, and managed development initiatives. The Republic of Yemen, born in 1990, was the only democracy in the Arabian Peninsula. However flawed, it held real multiparty elections. In 2011, Yemen had the longest and deepest Arab Spring revolutionary movement, which extended to the remotest locations. Why did the transition fail? How did the country collapse into civil war? What brought about external military intervention?
Slavery Now: Migrant Labor in the Persian Gulf and Saudi Arabia - Slavery still exists today. And it exists in the Gulf states and in Saudi Arabia. I am Syrian, but I was born and raised in Dubai where my parents worked. When I was in grade school we often collected donations to give to the migrant laborers in a construction camp near our school. We went to visit the camp to deliver the donations, and I witnessed with my own eyes the miserable conditions of the laborers. I could not believe my eyes—it was a dump. A twelve by ten room shared by eight men. Forty-five workers shared one toilet and a shower. The toilet and the shower were filthy. In the eighteen years I spent living in the United Arab Emirates, I learned a lot about how people treat other people. Over nine million people live in the United Arab Emirates, ninety-two percent of them are expats and migrant workers. Most of the migrant laborers come from Pakistan, India, Philippines, Bangladesh, or Sri Lanka. They work long hours and earn very little money in construction, garbage collection, and other menial jobs. The gap between the rich and the poor is huge. People from those states furnish cheap labor, and they face racism and discrimination. There is a hierarchy. Arab expatriates may hold higher paying positions, but even within Arab expatriates there is another hierarchy. Expatriates from Saudi Arabia are usually treated better than expatriates from Egypt for example. They are also discriminated against. Nationality plays a major role in what position a person can hold in the United Arab Emirates. Even at McDonalds or KFC the managers were always Arabs while the other employees were Filipinos, Indians, and the other people at the bottom of the social hierarchy. You will never find a Filipino being a manager over an Arab worker. The division of labor is appalling – the same inequities that exist in the economic system of the United States have been reproduced in these countries as well.
Syrian De-Escalation Memorandum a Significant Step - On 5 May 2017 following a meeting in Astana, Kazakhstan, a memorandum was signed by three of the principal parties involved in the Syrian conflict: Russia, Turkey and the Islamic state of Iran. It represents a significant step in achieving a resolution of the Syrian conflict, which has cost more than 400,000 lives. The reaction to the memorandum, and the lack of reaction in key quarters by other parties to the conflict is also significant. The memorandum stipulates that it is “guided by the provisions of UNSC resolution 2254 (2015)”. This linkage to a key Security Council resolution is one of the principal reasons it was welcomed both by UN Secretary General Antonio Guterres and UN Special Envoy for Syria Steffan de Mistura. A second stipulation in the memorandum was the “strong commitment to the sovereignty, independence, unity and territorial integrity of the Syrian Arab Republic.” This provision will not be welcomed in Washington and Tel Aviv, where the break up of Syria into small parts has long been a strategic geopolitical goal.The memorandum creates a series of “de-escalation and security zones.” These are in Idlib province. Parts of neighbouring Latakia, Hama and Aleppo provinces, certain parts north of Homs province, and areas in the south of Syria in Deraa and Al-Quneitra provinces. Precise maps of the affected areas will be published by 4 June 2017.The significance of the designated areas is that they are all regions that are dominated by jihadi groups under the protection and support of foreign sponsors, notably Saudi Arabia, Israel, the United States and the two small Gulf States, Qatar and the UAE. The designated security zones and their links to foreign sponsors of the terrorist groups is one factor why both the United States and Saudi Arabia have failed to commit to abiding by the terms of the memorandum. The United States had refused the opportunity to be a party to the negotiations, sending only an observer.
Evacuation of rebel Damascus district begins - France 24: (AFP) - Civilians and rebels began evacuating a third opposition-held district of Damascus on Sunday, bringing the government closer to cementing its control over the Syrian capital. An AFP correspondent inside Qabun saw around 10 buses carrying out residents and fighters in the morning, after a deal for the neighbourhood was announced late Saturday following heavy fighting. The agreement mirrors those implemented earlier this week in the nearby rebel-held districts of Barzeh and Tishrin. State media announced the evacuation had started, and an activist inside the remaining opposition-held part of the district earlier confirmed preparations for the operation were underway. "The buses are being prepared, they are waiting in the areas controlled by the regime," Odai Awdeh told AFP. "The names of those who want to leave, whether civilians or fighters, are being registered," he added. The evacuation deal came on Saturday night after government forces advanced inside the neighbourhood.
CentCom Breaks “Safe Passage” Deal – Making Its Allies Bleed For It -- On Friday the U.S. "Inherent Resolve" command of its operations in Syria and Iraq released an statement that points to unnecessary intensified fighting about the city of Raqqa and elsewhere. SAC and SDF Liberate Tabqah The Syrian Arab Coalition and their Syrian Democratic Force partners completed the liberation of the Tabqah Dam, as well as the city of Tabqah and its nearby airfield May 10. In Tabqah, the SDF's increased pressure on ISIS from each flank allowed it to accelerate the pace of the fight, clear the final neighborhoods of the city, and isolate Tabqah Dam. Approximately 70 ISIS fighters conceded to the SDF's terms, which included the dismantling of IEDs surrounding the dam, the surrender of all ISIS heavy weapons, and the forced withdrawal of all remaining fighters from Tabqah City. The SDF accepted ISIS's surrender of the city to protect innocent civilians and to protect the Tabqah dam infrastructure which hundreds of thousands of Syrians rely on for water, agriculture, and electricity. (The "Syrian Arab Coalition" is U.S. propaganda parlance for its own forces in the area. That force is part of its Central Command. The "Syrian Democratic Force" are predominantly fighters of the Syrian-Kurdish YPG and a few U.S. special forces embedded with them.) The Kurdish forces obviously made a deal with the ISIS rearguard. They offered safe passage (safe conduct) to the ISIS fighters if those would dismantled their demolition charges on the Tabqa dam and leave their heavy weapons behind. The ISIS group accepted and fulfilled its part of the deal. The dam was saved. The ISIS forces withdrew. The Kurdish commander had made the right decision. Any fighting around, on or within the dam structure could have led to a catastrophic dam failure which would have killed ten-thousands (at least) further down the Euphrates. The next line in the U.S. press release is therefore ominous:The Coalition tracked fleeing fighters and targeted those that could be safely hit without harming civilians. The U.S. military broke the "safe passage" deal the Kurds had made with the ISIS fighters.
U.S. says Syrians built crematorium at prison to dispose of bodies | Reuters: The United States has evidence Syrian President Bashar al-Assad's government has built a crematorium at a large military prison outside the capital Damascus, a State Department official said on Monday. Stuart Jones, acting assistant secretary of state for Near Eastern Affairs, said U.S. officials believe the crematorium could be used to dispose of bodies at a prison where they believe Assad's government authorized the mass hangings of thousands of inmates during Syria's six-year-old civil war. "Credible sources have believed that many of the bodies have been disposed in mass graves," Jones told reporters. During the briefing, he showed aerial images of what he said was a crematorium. "We now believe that the Syrian regime has installed a crematorium in the Sednaya prison complex which could dispose of detainees' remains with little evidence." Amnesty International reported in February that an average of 20 to 50 people were hanged each week at the Sednaya military prison north of Damascus. Between 5,000 and 13,000 people were executed at Sednaya in the four years since a popular uprising descended into war, it said. Jones also said he was not optimistic about a Russia-brokered deal to set up "de-escalation zones" inside Syria. The deal was reached with support from Iran and Turkey during ceasefire talks in the Kazakh capital of Astana earlier this month. Jones attended the talks. "In light of the failures of the past ceasefire agreements, we have reason to be skeptical," Jones said. Jones said Assad's government had carried out air strikes, chemical attacks, extrajudicial killings, starvation, and other measures to target civilians and its opponents. He criticized Russia and Iran for maintaining their support for Assad despite those tactics.
US Coalition Jets Strike Assad Convoy In Southern Syria - With most expecting Trump to strike North Korea as part of his next foreign military adventure-cum-distraction from the chaos in D.C., the president once again surprised everyone by pulling a lighting bolt, striking twice in one month in the same place.According to Reuters coalition jets have struck an Assad convoy in Southern Syria. A US-led coalition spokesperson has confirmed that coalition strikes in southern Syria struck Syrian government militia "after it moved against US-backed forces in Syria." US official confirms to @BuzzFeedNews that the US-led Coalition hit Assad regime forces with air strikes in southern Syria today— Mike Giglio (@mike_giglio) May 18, 2017According to a BuzzFeed News reporter, Syrian rebels based with the US Special Forces in the area said that militia supporting the Syrian army has been nearby as well. Media reports suggested that Syrian rebels have voiced concerns over the Syrian army getting "too close" to the US Special Forces' base at Tanf.rebels worried last week that regime forces would get too close to US SF base at Tanf. it seems that happened today, and Coalition struck— Mike Giglio (@mike_giglio) May 18, 2017 As previously reported Tanf is the area in Syria where US Special Forces train Syrian opposition groups for "counter ISIS" missions.
U.S. Bombs Syrian Regime Forces For First Time - American aircraft bombed a military convoy flying Syrian flags in the country’s southeast on Friday, marking the first time the U.S. military has targeted regime forces in Syria’s six-year civil war, according to U.S. Defense officials. The U.S. strikes came after the military convoy came too close to a U.S commando base and failed to respond to multiple warnings, according the officials. The strike showed American commanders are willing to use force to maintain de facto safe zones in the country’s east, where U.S. forces are training local militias to battle the Islamic State and provide security in liberated regions. U.S. forces spotted a convoy of vehicles, bulldozers and tanks moving toward the garrison at al-Tanf near the Jordanian and Iraqi borders early Friday, and watched as the group stopped within 20 miles of the outpost and began digging defensive positions. The Americans first alerted their Russian colleagues using a special hotline the two sides set up to ensure their aircraft don’t operate in the same airspace. The Russians were unsuccessful in reaching the regime or convincing the group to turn around, after which U.S. aircraft buzzed the encampment to warn the forces off, according to the officials. Warning shots were then fired, followed by airstrikes that destroyed the ground positions, along with one tank and several vehicles. Officials would not comment on any casualties. The strikes were taken on the order of American military commanders in the region under the authorities granted by the Trump administration allowing the military greater leeway to strike targets they deem necessary.
U.S. air strike in Syria hit 'military point', caused deaths: Syrian military source on state media | Reuters: A military source on the Syrian government side said on Friday that a U.S. air strike against a Damascus-backed militia the day before hit "one of our military points", without elaborating, state media outlets reported. The air strike late on Thursday killed several people and caused material damage, the source said, adding that this hampered efforts by the Syrian army and its allies to fight Islamic State. The U.S. military carried out the strike on the militia as they headed towards the al-Tanf military base in southern Syria - near the Syria-Iraq-Jordan border - used by U.S. and U.S.-backed rebel forces. U.S. officials said the strike was purely a defensive measure. A member of the U.S.-backed Syrian rebel forces told Reuters the convoy comprised Syrian and Iranian-backed militias and was headed toward the Tanf base when they clashed with some rebel forces. Syria's ally Russia said on Friday that the strike had hit civilians and was unacceptable, Russian news agencies reported. Russian Deputy Foreign Minister Gennady Gatilov, who the agencies said was speaking in Geneva, said the U.S. strike had violated Syria's sovereignty and would not help efforts to find a political solution to the conflict.
U.S. Attacks Syrian Government Forces – It Now Has To Make Its Choice -- The Syrian army is on the way to liberate the ISIS besieged city of some 100,000 and garrison of Deir Ezzor in the east of the country. The U.S. has trained a few thousand "New Syrian Army" insurgents in Jordan and is reportedly prepared to march these and its own forces from Jordan through the east-Syrian desert all the way up to Raqqa and Deir Ezzor. About a year ago it occupied the al-Tanf (al-Tanaf) border station which consists of only a few buildings in the mid of the desert. The station between Syria and Iraq near the Jordan border triangle was previously held by a small ISIS group. A U.S. move from the south up towards the Euphrates would cut off the Syrian government from the whole south-east of the country and from its people in Deir Ezzor. While that area is sparsely populated it also has medium size oil and gas fields and is the land connection to the Syrian allies in Iraq. Yesterday a small battalion size force (~2-300 men) of the regular Syrian army, Syrian National Defense Organization volunteers and Iraqi Popular Mobilization Forces (PMF/PMU of the Kata'ib al-Imam Ali) marched on the road from the west towards al-Tanf. They were about 23 kilometers away from the border station when they were attack by U.S. aircraft coming in low from Jordan. The U.S. jets directly fired at the convoy, allegedly after earlier giving some "warning shots". At least one Syrian tank and several other vehicles were destroyed. Six Syrian government forces were reported killed and more were wounded. The U.S. attack was clearly a willful, illegal attack on Syrian ground against legitimate forces of the sovereign Syrian government. (The Iraqi PMU contingent in Syria is a legitimate allied force under control of the Iraqi prime minister.) There is no clause in international law, no UNSC resolution or anything similar, that could justify such an attack. The U.S. military has no right at all to be at al-Tanf or anywhere else in Syria. There is nothing to "defend" for it. If it dislikes regular Syrian and Iraqi forces moving in their own countries towards their own border station and retaking it from Jihadi "rebels", it can and should move out and go home. Moreover - the U.S. claims it is "fighting ISIS" in Syria. Why then is it attacking the Syrian government forces while these launch a large operation against the very same enemy? The U.S. has a simple choice: Either go in with full force and bear the above consequences, or concede to the sovereign Syrian government and its allies and coordinate with them to retake the country from ISIS and al-Qaeda. This will have to be done as they, not the U.S., see it proper to do. To believe that the U.S. can take the east and convert into some peaceful vassal statelet is pure fantasy. Way too many regional forces and interests are strung against that. There is little grey between these black and white alternatives.
Syria Has Effectively Ceased to Exist - Six years into the Syrian war, the survival of President Bashar al-Assad’s regime is ensured — but it has become something of a facade and lacks a strategy for reuniting the country. The sometimes sharply differing interests of Russia and Iran from above, and the local concerns of a myriad array of pro-regime irregular militias from below, are the decisive factors — not the decisions of the country’s nominal rulers. This impacts the calculus of the “regime” side in the war, in determining its strategy in the conflict.Just take a look at how the war has developed since late last year, when things seemed to be going well for the regime. The rebellion had been driven out of its last fingerholds in eastern Aleppo city, seemingly paving the way for the eventual defeat of the insurgency. But five months later, while the general direction of the war has been against the rebels, they appear still far from collapse. Idlib province, areas of Latakia, Hama, northern Aleppo, and large swaths of the south remain in rebel hands.The rebels in the south received a boost this week when a coalition airstrike targeted forces loyal to Assad that were advancing on a base used by U.S. and British Special Forces. If the United States and its partners are willing to use force to defend allied groups in the area, it is hard to envision how the regime can hope to reestablish its rule there.Further east, the war against the Islamic State is being prosecuted by a powerful U.S.-backed, Kurdish-led force called the Syrian Democratic Forces (SDF). This force will shortly embark on the conquest of Raqqa, the last remaining city in Syria fully controlled by the retreating Islamic State. In other words, the rumors of the death of the rebellion have been greatly overstated. And some of its component parts apparently possess considerable vigor and strength. Does the Assad regime have a strategy for the reunification of the country, or has Syria’s fragmentation now become an unavoidable reality?
Hassan Rouhani wins Iran's presidential election - Al Jazeera: Iran's reformist President Hassan Rouhani has decisively won the country's presidential election, according to official results, fending off a challenge by principlist rival, Ebrahim Raisi. With all of votes in Friday's poll counted, Rouhani was re-elected with 57 percent, Interior Minister Abdolreza Rahmanifazli said on Saturday. "Of some 41.2 million total votes cast, Rouhani got 23.5 ... and won the election," Rahmanifazli said in remarks carried live by state TV. The election was seen by many as a verdict on Rouhani's policy of opening up Iran to the world and his efforts to rebuild its stagnant economy. Rouhani swept into office four years ago on a promise to reduce Iran's international isolation. Friday poll was the first since he negotiated a historic deal with world powers in 2015 to curb the country's nuclear programme in exchange for sanctions relief. In the campaign trail, Rouhani sought to frame the vote as a choice between greater civil liberties and "extremism", criticising the continued arrest of reformist leaders and activists. Raisi, for his part, accused Rouhani of mismanaging the economy and positioned himself as a defender of the poor and calling for a much tougher line with the West.
China Still Wants To Import Commodities, Not Manufactures (Judging From The “Early Harvest” Trade Deal) -- China tends to import natural resources—oil, iron ore, soybeans and the like. Now that China has a large industrial economy, it doesn’t have much choice: China wasn’t blessed with a ton of oil or gas, or a ton of arable land (relative to its population).And China tends to export a lot of manufactures relative to its own imports.mIt isn’t just that the cargo ships that sail across the Pacific often struggle to find cargoes for the return trip—the trains that have been set up to send China’s manufactures to Europe as part of China’s highly touted One Belt and One Road Initiative also often return empty. Changing this basic pattern will be hard. On the U.S. side, tax cuts that push up the budget deficit won’t help, especially if budget deficits raise interest rates and push the dollar up. And for all of China’s new pro-trade rhetoric, China remains committed to developing an indigenous aircraft industry, an indigenous semiconductor industry, and a stronger medical equipment industry. In a host of sectors where China is now an importer, it wants to become an exporter: see Keith Bradsher’s reporting in the New York Times.The new, highly touted “early harvest” deal with China doesn’t try to change this pattern. It focuses on commodity exports (beef, natural gas) and increasing the ability of U.S. financial services firms to compete in China—not on opening new opportunities to export manufactures to China. That in part is why Dan DiMicco of Nucor is not a fan of the deal: “This is disappointing on many levels. We are rewarding China before stopping their massive trade cheating.” China’s willingness to trade beef for poultry isn’t new, or a surprise—in fact China had already agreed in principle to resume beef imports last year. In some ways, the most interesting bit of the agreement is the hint of a future agreement to increase U.S. LNG exports to China. The details aren’t all that clear. The announced deal didn’t actually do more than encourage Chinese energy companies to buy U.S. LNG: “The United States welcomes China, as well as any of our trading partners, to receive imports of LNG from the United States. …. Companies from China may proceed at any time to negotiate all types of contractual arrangement with U.S. LNG exporters, including long-term contracts, subject to the commercial considerations of the parties.”
China Watchers Caught Off Guard as Bond Rout Just Won't End -- The ferocity of China’s bond rout is surprising some of the market’s top observers.The yield on sovereign debt due in a decade surged to a two-year-high of 3.7 percent last week, wrong-footing analysts from Citic Securities Co. and Haitong Securities Co. -- the country’s two biggest brokerages -- who had in April predicted a maximum level of 3.6 percent in the near term. The tumble comes amid intensifying efforts to crack down on excessive borrowing, a drive that has beaten down stocks and pressured the yuan.“No one knows what kind of indicator would suggest the campaign is over, and no one knows how long this process will last," said Shan Kun, head of China markets strategy at BNP Paribas (China) Ltd. in Shanghai. “When the market is so pessimistic, investors are trading based on expectations, and declines can be illogical.”China’s government bonds advanced Monday, pushing the 10-year yield down three basis points to 3.62 percent in Shanghai. The nation will maintain a stable supply of liquidity to support appropriate expansion of credit, the central bank said in its quarterly monetary policy report released late Friday.Here are three charts illustrating the extent of the pressure on Chinese debt:The 10-year sovereign yield surged 41 basis points in the last seven weeks amid policy tightening fears. The market is entering an “irrational mode” as recent economic data don’t support the selloff and regulators haven’t taken concrete deleveraging steps this month, Citic analysts led by Ming Ming wrote in a May 11 note titled "Finding Hope in Despair." The yield will peak at 3.80 percent by end-June, according to a Bloomberg survey this month. A similar poll in March had foreseen a maximum reading of 3.4 percent.
China's economy loses momentum as policymakers clamp down on debt risks | Reuters: China's growth took a step back in April after a surprisingly strong start to the year, as factory output to investment to retail sales all tapered off as authorities clamped down on debt risks in an effort to stave off a potentially damaging hit to the economy. Waking up to the systemic threat posed by cheap credit-fueled stimulus since the 2008-9 global financial crisis, Beijing has continued to tighten the screws on speculative financing over the past several months. Data on Monday highlighted the broad economic impact of these regulatory curbs, with below-forecast factory output in April and fixed-asset investment in the first four months of the year reinforcing evidence of a weakening manufacturing sector and slowing momentum in the world's second-biggest economy. "If anything (the slowdown) is even faster than we expected," said Julian Evans-Pritchard at Capital Economics in Singapore in an interview before the data was released. However, "we're still some way off from the economy weakening to the point where it will test the tolerance of policymakers...as the urgency to address some of these financial risk issues (is even greater)," he said. Factory output was up 6.5 percent in April from a year earlier, down from 7.6 percent in March, and fixed-asset investment rose 8.9 percent in the first four months of the year, off the 9.2 percent pace in Jan-March. Analysts polled by Reuters had predicted factory output would grow by 7.1 percent in April, and tipped fixed asset investment to rise 9.1 percent in Jan-April.
China Blinks! -- So scream the headlines, via WSJ: President Xi Jinping’s call for financial stability ahead of a major leadership shuffle later this year led regulators to unleash a blitz of new rules. The banking regulator under new chief Guo Shuqing has cracked down on speculative investment practices that relied on borrowed money and has also imposed sharply higher fines for irregularities. But the new regulations, alongside tighter monetary conditions in China, have proven hard for investors to absorb. China’s main stock market has dropped 5.4% in just over a month, while yields on Chinese government bonds have risen to more-than two-year highs. Bond yields rise as their prices fall. The Chinese central bank’s cash injection came a day after data showed the world’s second-largest economy weakened more than expected last month on flagging consumer demand and slowing investment levels. Borrowing costs for businesses, including bond yields, have risen sharply since China’s central bank raised a suite of key short-term interest rates twice since early February. As a result, new corporate bond issuance in China has plunged in recent months, making life difficult for struggling private firms that have limited access to a banking sector designed to favor inefficient but politically influential state-run enterprises. Chinese companies have raised a total of 674 billion yuan via bond issuance since this year, down from 1.8 trillion yuan during the same period a year ago. SCMP has more: China has sent a subtle signal that it may back off from some of its aggressive financial regulation and deleveraging efforts after sell-offs in domestic stock, bond and futures markets in the past several weeks. During a meeting with International Monetary Fund managing director Christine Lagarde on Sunday, Chinese Premier Li Keqiang said China has the ability to maintain the stability of financial markets. In a small but significant change of wording, Li put financial stability ahead of financial deleveraging and economic growth
Stiglitz’s China Whiz Says Excavator Demand Shows Growth Isn’t Over -- Surging Chinese demand for excavators shows that the current of fiscal stimulus running through the nation’s economy has a long way to go. That’s according to Mo Ji, chief economist for Asia ex-Japan at Amundi Asset Management, who called a bottom to China’s slowdown in late 2015 well before it was a consensus view. Now, Mo’s using high-frequency data sets -- like sales of construction equipment -- to form her view on the economy’s underlying trends. Mo has been working with Joseph Stiglitz on China’s economy for the past 12 years having first met the Nobel laureate when she studied under him for a doctorate at Columbia University. She went on to work for Deutsche Bank AG in Hong Kong alongside Ma Jun, now the chief economist of the People’s Bank of China research bureau, and she later was global chief economist at Azentus Capital Management. Mo also holds degrees from two of China’s most elite schools: Renmin University and Peking University. In October 2015, she spotted a turning point amid signs China producer prices had stabilized, and less than a year later PPI climbed out of deflation for the first time in four years. She remains confident that the infrastructure construction pipeline means the economy will remain stable through the end of next year, forecasting 6.5 percent growth for this year and for the yuan to trade 7.2 against the dollar at year-end. Growing up in Qiqihar, a rust belt city in the northeastern province of Heilongjiang, Mo witnessed firsthand how economic and societal change followed major reforms in the 1990s, when there were mass layoffs at state-owned enterprises. Here are excerpts of a recent conversation:
China invests $124bn in Belt and Road global trade project The Chinese government is investing tens of billions of dollars as part of an ambitious economic plan to rebuild ports, roads and rail networks. China's President Xi Jinping has pledged $124bn (£96bn) for the scheme, known as the Belt and Road initiative. "Trade is the important engine of economic development," Mr Xi said at a summit of world leaders in Beijing. The plan, which aims to expand trade links between Asia, Africa, Europe and beyond, was first unveiled in 2013. Part of the massive funding boost, which is aimed at strengthening China's links with its trading partners, includes 60bn yuan ($9bn; £7bn) in aid to developing countries and international institutions that form part of the Belt and Road project. Mr Xi used his speech to assure Western diplomats that the plan, described as the new Silk Road, was not simply an attempt to promote Chinese influence globally. "In advancing the Belt and Road, we will not re-tread the old path of games between foes. Instead we will create a new model of co-operation and mutual benefit," Mr Xi said at the opening of the two-day summit. "We should build an open platform of co-operation and uphold and grow an open world economy," he added.
India skips China's Silk Road summit, warns of 'unsustainable' debt | Reuters: India has not sent an official delegation to attend the "Belt and Road Forum" in Beijing and instead criticized China's global initiative, warning of an "unsustainable debt burden" for countries involved. Chinese President Xi Jinping is hosting dozens of world leaders and senior officials on Sunday for the country's biggest diplomatic showcase of the year, touting his vision of a new "Silk Road" that opens trade routes across the globe. Government officials from New Delhi did not travel, Indian officials said, although scholars from Indian think-tanks have flown to Beijing to attend some of the meetings at the forum. Indian foreign ministry spokesman Gopal Baglay, asked whether New Delhi was participating in the summit, said India could not accept a project that compromised its sovereignty. India is incensed that one of the key Belt and Road projects passes through Kashmir and Pakistan. The nuclear-armed rivals have fought two of their three wars over the disputed region. "No country can accept a project that ignores its core concerns on sovereignty and territorial integrity," Baglay said. He also warned of the danger of debt. One of the criticisms of the Silk Road plan is that host countries may struggle to pay back loans for huge infrastructure projects being carried out and funded by Chinese companies and banks.New Delhi's criticism of the Belt and Road initiative came as Xi pledged $124 billion to the plan, and called for the abandonment of old models based on rivalry and diplomatic power games. Leaders from 29 countries and ministerial delegates from many more are attending the forum in Beijing, including India's smaller neighbors - not just Pakistan, but also Sri Lanka and Nepal.
Who Is Actually Attending China’s Belt and Road Forum? - It’s almost here — after months of emphasis from Chinese government officials and state media, the Belt and Road Forum will open in Beijing on May 14. The two-day forum is dedicated to President Xi Jinping’s signature foreign policy project, the Belt and Road Initiative (also known as “One Belt, One Road” after its two main components: the Silk Road Economic Belt and the 21st Century Maritime Silk Road). China has touted the forum as the major international event of the year, with 29 heads of state or government to be in attendance (along with, of course, Xi himself). International organizations will be well-represented too, with UN Secretary General António Guterres, President of the World Bank Jim Yong Kim, and Managing Director of the International Monetary Fund Christine Lagarde all set to attend. Chinese media has also highlighted the level of global interest by citing the number of countries to be represented: up to 130 in the most recent publications. Yet that figure, and the earlier 110 countries, should not be taken as a count of states sending official delegations, though it’s sometimes implied that way. According to Xinhua, “More than 1,200 people will attend the forum scheduled for mid-May, including officials, scholars, entrepreneurs, representatives of financial institutions, and media organizations from 110 nations [emphasis added].” In other words, if the New York Times is sending a reporter, China is counting the United States in that “110 (now 130) nations” figure. The Diplomat has attempted to pull together a list of confirmed attendees, but even this should not be taken as comprehensive. Not all embassies and foreign ministries returned requests for comment as of publication time, meaning some countries’ level of participation could not be confirmed. For example, Xinhua says “nearly 20” Latin American and Caribbean countries will be sending ministerial-level delegations; The Diplomat could not confirm which countries, however.
Behind China’s $1 Trillion Plan to Shake Up the Economic Order - “Chinese engineers are drilling hundreds of tunnels and bridges to support a 260-mile railway, a $6 billion project that will eventually connect eight Asian countries. Chinese money is building power plants in Pakistan to address chronic electricity shortages, part of an expected $46 billion worth of investment. Chinese planners are mapping out train lines from Budapest to Belgrade, Serbia, providing another artery for Chinese goods flowing into Europe through a Chinese-owned port in Greece. The massive infrastructure projects, along with hundreds of others across Asia, Africa and Europe, form the backbone of China’s ambitious economic and geopolitical agenda. President Xi Jinping of China is literally and figuratively forging ties, creating new markets for the country’s construction companies and exporting its model of state-led development in a quest to create deep economic connections and strong diplomatic relationships. The initiative, called ‘One Belt, One Road’ looms on a scope and scale with little precedent in modern history, promising more than $1 trillion in infrastructure and spanning more than 60 countries. … Mr. Xi is aiming to use China’s wealth and industrial know-how to create a new kind of globalization that will dispense with the rules of the aging Western-dominated institutions. The goal is to refashion the global economic order, drawing countries and companies more tightly into China’s orbit. … ‘President Xi believes this is a long-term plan that will involve the current and future generations to propel Chinese and global economic growth,’ said Cao Wenlian, director general of the International Cooperation Center of the National Development and Reform Commission, a group dedicated to the initiative. ‘The plan is to lead the new globalization 2.0.’ Mr. Xi is rolling out a more audacious version of the Marshall Plan, America’s postwar reconstruction effort. Back then, the United States extended vast amounts of aid to secure alliances in Europe. China is deploying hundreds of billions of dollars of state-backed loans in the hope of winning new friends around the world, this time without requiring military obligations. Mr. Xi’s plan stands in stark contrast to President Trump and his “America First” mantra. …
China Cannot Finance the Belt and Road Alone - There is no doubt that Asia needs infrastructure. The Asian Development Bank (ADB) recently increased its already very high estimates of the amount of infrastructure needed in the region to 26 USD trillion in the next 15 years, or 1.7 USD trillion per annum (Chart 1). The great thing about the China driven Belt and Road initiative is that it aims to address that pressing need, especially in transport and energy infrastructure. But this is easier said than done. The a-priori is that the financing will be there thanks to China’s massive financial resources. Chinese authorities have come up with their own estimates of the projects that will be financed. The numbers start at USD 1 trillion and go all the way to USD 5 trillion in only 5 years. In the same vein, the official list of countries does nothing but increase over time to more than 65 countries today. Such a-priori was probably well taken when China was flooded with capital inflows and reserves had nearly reached USD 4 trillion and needed to be diversified. In the same vein, Chinese banks were then improving their asset quality if, anything, because the economy was booming and bank credit was growing at double digits. The situation today is very different. China’s economy has slowed down and banks’ balance sheets are saddled with doubtful loans, which keep on being refinanced and do not leave much room for the massive lending needed to finance the Belt and Road initiative.
Why US firms are giving the cold shoulder to China’s ‘Belt and Road’ globalization strategy -- While US equipment vendors including General Electric, Caterpillar and Honeywell have said they’ve already clinched some Belt and Road-related contracts and plan to bid for more, US construction and engineering companies – those that would need to invest time and figure out how to net returns on costly bridges, ports and railroads – have been largely silent on the One Belt, One Road initiative.Part of the reluctance among US infrastructure engineers to celebrate a draft communique that China managed to get 29 state leaders to sign in Beijing might be a result of conflicting technical standards.“In addition to increasing economic interdependence between China and the region, the initiative could create new barriers to US exports and investment by exporting Chinese standards,” the Brookings Institution, a Washington-based think tank, said in a report issued soon after the One Belt, One Road forum ended. “For instance, OBOR’s development of high-speed rail connections across Southeast Asia comes with a willingness to accept Chinese high-speed rail standards, creating barriers to competing US technologies.”One Belt, One Road doesn’t show up anywhere in Aecom’s recent external communications or news reports about the company. The same goes for Fluor Corp., Bechtel Group, and Kiewit Corp.Emails the Post sent to these companies and three other US global construction and engineering companies on Monday, asking about their current and future participation in Belt and Road projects, went unanswered.Over-inflated estimates of how much money is flowing into Belt and Road projects may have further dampened enthusiasm. “US media have taken some of the headline figures literally and painted a picture of an enormous Chinese effort,” David Dollar, a senior fellow at Brookings, said in an emailed response to questions. “In fact, official Chinese data reveal that not much has been invested so far. Lack of interest from American construction firms may simply reflect that there is not much substance to the effort so far.”
North Korea fires ballistic missile off its coast, Pentagon confirms - North Korea launched some type of ballistic missile at about 10:30 a.m. Hawaii time, a Pentagon official confirmed to Fox News. The missile was launched near Kusung and landed in the Sea of Japan. The type of missile is being assessed and the flight was not consistent with an intercontinental ballistic missile. U.S. Pacific Command is fully committed to working closely with our Republic of Korea and Japanese allies to maintain security. The North American Aerospace Defense Command (NORAD) determined the missile launch from North Korea did not pose a threat to North America. South Korea's Yonhap reported the missile traveled about 435 miles. The launch is the first in two weeks since the last attempt to fire a missile ended in a failure just minutes into flight. The isolated regime attempted but failed to test-launch ballistic missiles four consecutive times in the past two months but has conducted a variety of missile testing since the beginning of last year at fast pace. Weapons experts and government officials believe the North has accomplished some technical progress with those tests. U.S. President Donald Trump warned in an interview with Reuters in late April that a "major, major conflict" with the North was possible, but he would prefer a diplomatic outcome to the dispute over its nuclear and missile programs. The launch is the first since a new liberal president took office in South Korea on Wednesday, saying dialog as well as pressure must be used to ease tensions on the Korean peninsula and stop the North's weapons pursuit.
North Korea Test-Fires 7th Ballistic Missile Of 2017, Projectile Flew 700Km, Landed In Sea Of Japan - As we detailed earlier, on the eve of a summit in Beijing, and just hours after Pyongyang's chief nuclear negotiator said North Korea is ready to hold talks with the United States "if the conditions are mature", South Korea's Yonhap reports that North Korea has fired a projectile believed to be a ballistic missile, from a region named Kusong located northwest of Pyongyang, where the North previously test-launched its intermediate-range missile. The nature of the projectile was not immediately clear, a South Korean military official told Reuters. The ballistic missile firing is North Korea’s seventh this year. South Korea's Yonhap News confirms North Korea has fired what appears to be a ballistic missile from its west coast, the South Korean military reported early Sunday. The launch would be the first in two weeks since the last attempt to fire a missile ended in a failure just minutes into flight. It would also be the first launch since a new, liberal president took office in South Korea on Wednesday saying dialogue as well as pressure must be used to ease tensions on the Korean peninsula and stop the North's weapons pursuit. The new president Moon has said he is willing to engage in dialogue with his northern neighbor. Weapons experts and government officials, cited by Reuters, "believe the North has accomplished some technical progress with those tests." South Korean Military has now confirmed it was a ballistic missile that flew 700 km. The Japanese government confirms the missile flew 30 minutes and landed in The Sea of Japan.
North Korea's Latest Ballistic Missile Was A "New Type" With Dramatically Longer Range -- After North Korea provoked both its neighbors and the US when on Sunday morning it fired off yet another ballistic missile from Kusong near the border with China - one which this time did not explode upon launch - just days after the election of a new South Korean president who ironically advocates more engagement with Pyongyang, experts said the missile appeared to be a new type of ballistic missile, and had a far greater range than any other weapon North Korea has successfully launched.According to Japanese Defense Minister Tomomi Inada, the missile rose to a height of about 2,000 kilometers, a much steeper trajectory than usual for a North Korean missile test. She also confirmed that officials were looking into the possibility that it was a "new type of ballistic missile." Japan's cabinet secretary, Yoshihide Suga, said the missile traveled for about 30 minutes and landed 700 kilometers east of the launch site. A spokesman for South Korea’s Joint Chiefs of Staff estimated the distance at 435 miles.Cited by the WSJ, independent experts said the missile, if fired at a conventional angle, could have flown 2,800 miles—far enough to reach the U.S. military base in Guam. That is a “considerably longer range than its current missiles,” said David Wright, co-director of the Global Security Program at the Union of Concerned Scientists, in an analysis of the launch.
North Korea's latest missile launch suggests progress toward ICBM: experts | Reuters: North Korea's successful missile test-launch signals major advances in developing an intercontinental ballistic missile, such as mastery of re-entry technology and better engine performance key to targeting the United States, experts say. The isolated country has been developing a long-range missile capable of striking the mainland United States mounted with a nuclear warhead. That would require a flight of 8,000 km (4,800 miles) or more and technology to ensure a warhead's stable re-entry into the atmosphere. The North's official KCNA news agency said the new strategic ballistic missile named Hwasong-12, fired on Sunday at the highest angle to avoid affecting neighboring countries' security, flew 787 km (489 miles) on a trajectory reaching an altitude of 2,111.5 km (1,312 miles). The details reported by KCNA were largely consistent with South Korean and Japanese assessments that it flew further and higher than an intermediate-range missile (IRBM) tested in February from the same region, northwest of Pyongyang. Such an altitude meant it was launched at a high trajectory, which would limit the lateral distance traveled. But if it was fired at a standard trajectory, it would have a range of at least 4,000 km (2,500 miles), experts said. The test "represents a level of performance never before seen from a North Korean missile", John Schilling, an aerospace expert, said in an analysis on the U.S.-based 38 North website. "It appears to have not only demonstrated an intermediate-range ballistic missile (IRBM) that might enable them to reliably strike the U.S. base at Guam, but more importantly, may represent a substantial advance to developing an intercontinental ballistic missile (ICBM)."KCNA said the test launch verified the homing feature of the warhead that allowed it to survive "under the worst re-entry situation" and accurately detonate.
North Korea: Latest Missile Test Successful, Can Deliver "Nuclear Warheads" -- Two days after the latest provocative missile test by North Korea, in which it launched a "new type" of ballistic missile, one which experts warned had a substantially longer range than any existing rocket North Korea had fired, on Monday morning North Korea announced that it had successfully conducted a mid-to-long range missile test on Sunday supervised by leader Kim Jong Un which was aimed at verifying the capability to carry a "large scale heavy nuclear warhead." The country's KCNA news agency further said that the Hwasong-12 missile was launched at the highest angle so as not to affect the security of neighboring countries and flew 787 kilometers reaching an altitude of 2,111.5 kilometers. According to Japanese Defense Minister Tomomi Inada, the missile rose to a height of about 2,000 kilometers, a much steeper trajectory than usual for a North Korean missile test. She also confirmed that officials were looking into the possibility that it was a "new type of ballistic missile." Japan's cabinet secretary, Yoshihide Suga, said the missile traveled for about 30 minutes and landed 700 kilometers east of the launch site. A spokesman for South Korea’s Joint Chiefs of Staff estimated the distance at 435 miles.Cited by the WSJ, independent experts said the missile, if fired at a conventional angle, could have flown 2,800 miles—far enough to reach the U.S. military base in Guam. That is a “considerably longer range than its current missiles,” said David Wright, co-director of the Global Security Program at the Union of Concerned Scientists, in an analysis of the launch.
Japan GDP Rises 2.2%; Longest Growth Stretch In 11 Years -- In the same quarter in which the US teetered on the verge of contraction (supposedly due to inclement weather despite not one but two seasonal adjustments meant to eliminate "residual seasonality"), Japan grew at the fastest pace in a year and nearly triple that of the US.On Thursday morning, Japan's Cabinet Office reported that Japan's Q1 GDP rose at a 2.2% annualized pace, beating estimates of 1.7% growth, and up from the 1.2% SAAR growth in Q4 of 2016. It was also Japan's 5th consecutive quarter of positive GDP, the longest stretch of growth going back 11 years. On a sequential basis, Japan's economy grew by 0.5% in Q1, up from 0.3% in Q4, and in line with expectations (which begs a question, how did economists who predicted 0.5% sequential growth get 1.7% annualized, while the actual number was indeed 0.5%, yet when annualized resulted in 2.2%. The answer is probably in non-GAAP rounding). Broken down by components, domestic demand rose 0.4% in Q4 compared to the previous quarter, when consumption posted a modest decline. Residential investment was the biggest growth component of private demand, rising by 0.7%, while public demand was a more modest 0.1%. Net exports rose 2.1% in the quarter, down modestly from 3.4%, due to the 5% increase in the Yen over the time period. Imports were a 0.2% offset to annualized GDP growth, after growing by 1.4% sequentially.
Stress in Japanese corporate bonds seen as a sign of things to come | Reuters: Yields are rising in Japan's tiny corporate bond market as traders pre-emptively brace for the Bank of Japan to stop being buyer of last resort, making this market a microcosm of wider fears over the end of Japan's four-year-long stimulus policy. Five year corporate bond yields have risen 10 basis points since mid-April as the 59.2 trillion yen ($521 billion) corporate bond market fretted that the BOJ could soon reduce its purchases of these securities. That's a sizeable move in yields in an economy where short-term policy rates are negative and where the central bank massively buys up securities, including government bonds and equities, to keep rates near zero. Most economists also reckon the BOJ is a long way off from exiting that policy, given it is nowhere close to achieving its 2 percent inflation target. But the corporate bonds market is becoming uneasy, providing a worrying glimpse of what lies ahead for the mammoth government bonds sector when the time comes. "It is getting difficult for brokers to sell the corporate bonds they buy in the primary market to the BOJ," said a director at a U.S. securities house. "This could be the indirect impact of a reduction in the Bank of Japan's bond buying," he said, referring to the BOJ's purchases of Japanese government bonds (JGBs). While Japan's central bank has for long held that any talk of an exit from its four-year-old quantitative easing policy is premature, there have been subtle changes this year.The BOJ has, for example, gradually reduced the pace of its bond buying. In April, the BOJ bought 8.4 trillion yen of JGBs, compared to the average of 9.5 trillion yen last year.
The trouble with Aung San Suu Kyi - "She runs her party like a dictator.".. "She doesn't listen, or accept advice." .. "She treats us as if we are school children and that we dare not question her as the elder." It was hardly a positive assessment of Aung San Suu Kyi that I received upon returning to the country where I once lived, Myanmar. It was to be expected that the optimism of the Nobel Peace Prize laureate taking power would fade, but frustrations among those working with her government seemed to be boiling over. Even more alarming, these anecdotes were delivered in hushed tones, with sideways glances, and only after I promised not to quote the people telling them. It felt like I had returned to the bad old Myanmar, when I had to report undercover and meet people in secret. For a brief period under the quasi-civilian government led by former general Thein Sein, people felt free to test the boundaries of their new-found freedoms, especially on Facebook, which exploded in popularity once Myanmar went online. But then came 66D, a section of the telecommunications act which allows anyone to sue for online criminal defamation. Judges have used it to lock up dozens of people critical of Suu Kyi, her party and the military, without bail.
Aadhaar and an Omnipresent State That Will Never Forget You - Attorney general Mukul Rohatgi’s argument to the Supreme Court that “citizens do not have absolute right over their bodies” elicited justified outrage. More revealing though, was his claim that the state is like a corporation, individuals are its members and therefore the “collective might of the state” could be deployed in the interest of an “orderly life, peace and tranquility”. This doctrine – with its origins in the writings of Jean-Jacques Rousseau, later perfected by G.W.F. Hegel – conceives the state and other corporate and legal entities as ‘social organisms’ that exist logically prior to, and have rights over and above, their constituent parts. The state, so conceived, has a life of its own, cares most for its own preservation and is the source and basis of all rights. Since it emerges from a mythical union of its members, it is the embodiment of the social and moral ‘whole’ and the realisation of the ‘common will’. Freedom then is the freedom to do what the state prescribes; greatness, in the readiness to subordinate oneself in the service of the state. If this is the theory, it follows that such a state must be all seeing, all knowing and all pervasive to enforce an “orderly, peaceful and tranquil life” for all. It is hardly surprising that the Indian state has been gradually building a stupendous machine to identify and profile, intercept, track and monitor its population. While it is common for bureaucracies to collect information on citizens, databases produced by various departments and agencies remain safely isolated from each other, making it difficult to monitor and profile people. The Aadhaar programme’s most important function is to create ‘linkage’ between databases, by attaching identification data – biometric and demographic – with behavioural data – bank transactions, communications, locational information or anything that can be picked up by surveillance systems. When ready, this Argus Panoptes will grow a billion eyes, sprout a billion ears and record in a boundless ledger of statistics the thoughts, desires and deeds of all. In an ominous tone, Rohatgi announced in the Supreme Court, “Even if you want to be forgotten, the state is not willing to forget you.”
Exclusive - Indonesian Islamist leader says ethnic Chinese wealth is next target | Reuters: The leader of a powerful Indonesian Islamist organisation that led the push to jail Jakarta's Christian governor has laid out plans for a new, racially charged campaign targeting economic inequality and foreign investment. In a rare interview, Bachtiar Nasir said the wealth of Indonesia's ethnic Chinese minority was a problem and advocated an affirmative action programme for native Indonesians, comments that could stoke tensions already running high in the world's largest Muslim-majority nation. "It seems they do not become more generous, more fair," the cleric said, referring to Chinese Indonesians, in the interview in an Islamic centre in South Jakarta. "That's the biggest problem." Ethnic Chinese make up less than 5 percent of Indonesia's population, but they control many of its large conglomerates and much of its wealth. Nasir also said also that foreign investment, especially investment from China, has not helped Indonesians in general. Indonesia, Southeast Asia's biggest economy, is a major destination for foreign investment in the mining and retail sectors. Jakarta is also trying to lure investors for a $450 billion infrastructure drive to revive economic growth. "Our next job is economic sovereignty, economic inequality," said Nasir, an influential figure who chairs the National Movement to Safeguard the Fatwas of the Indonesian Ulemas Council (GNPF-MUI). "The state should ensure that it does not sell Indonesia to foreigners, especially China."His group organised protests by hundreds of thousands of Muslims in Jakarta late last year over a comment about the Koran made by the capital's governor, Basuki Tjahaja Purnama, an ethnic-Chinese Christian. Purnama was found guilty this week of blasphemy and sentenced to two years in prison, raising concerns that belligerent hardline Islamists are a growing threat to racial and religious harmony in this secular state.
Media Silent As Christian Extremists Slaughter Muslims In Central Africa -- Hundreds of civilians are seeking refuge inside a mosque in the Central African Republic (CAR)’s border town of Bangassou, Reuters reports. What may be surprising to the American public is that these civilians are trying to escape ongoing attacks committed by Christian militias that killed at least 30 civilians over the weekend, according to U.N. officials and aid workers. According to Reuters, the weekend attacks in Bangassou, located on the Congolese border, have involved hundreds of fighters with heavy weaponry. The fighting is aimed at the Muslim populations and signals that the conflict currently besieging the country is worsening.“The situation is extremely deplorable and we are doing everything to rapidly retake control of Bangassou,” MINUSCA (the U.N. mission) chief Parfait Onanga-Anyanga told Reuters in an interview. According to Onanga-Anyanga, many of the fighters are child soldiers who appeared to be under the influence of drugs. The head of the Red Cross in CAR, Antoine Mbao-Bogo, said his staff has counted 115 bodies in Bangassou following the latest fighting. While these developments may be unheard of in the eyes and ears of much of the American public, the truth is that this conflict has been raging for some time now. According to the Guardian, thousands of Muslims have been killed or displaced in the conflict. For example, the city of Bangui previously had approximately 130,000 Muslim residents; the number of Muslims is now likely less than 1,000. According to Reuters, the U.N. base in Bangassou has also been targeted. CAR has been besieged by this violence since 2013, when mostly Muslim Seleka fighters ousted then-President Francois Bozize. Amnesty International has referred to the developments in the country as “ethnic cleansing” since the fighting erupted. As this conflict rages on, however, don’t expect the corporate media to pay too much attention to it anytime soon — it doesn’t fit the mainstream narrative that only majority Muslim countries deploy groups of extremists that terrorize civilians.
Brazil Plunges Into Fresh Political Crisis After Temer "Hush Money" Recordings Emerge - The presidency of Brazil's Michel Temer, who replaced disgraced and impeached predecessor Dilma Rouseff last summer, lasted about one year without a major corruption scandal. That changed tonight, when Brazil's O Globo newspaper which was instrumental in exposing the Carwash scandal which ultimately led to Rouseff's downfall and the arrest and incarceration of countless politicians, reported that the chairman of meatpacking giant JBS secretly recorded his discussion with Temer about "hush money" payments to jailed former House Speaker Eduardo Cunha in return for his silence. The allegations are the latest development in Operation Carwash, a sprawling corruption probe that has implicated many of Brazil’s business and political elite, including some in the president’s own party. Temer has repeatedly denied any wrongdoing.Readers may recall that in a delightfully ironic case study of political irony and power vacuum, Eduardo Cunha, the conservative Brazilian political leader who led the push in 2016 to oust Dilma Rousseff, was sentenced in March to more than 15 years in prison himself, when a Brazil judge found him guilty of corruption, money laundering and illegally sending money abroad, all in connection with the sprawling graft investigation involving the state-run oil company Petrobras, and which Cunha himself used as a pretext to dispose of Rouseff.The tragically ironic Cunha was the highest-profile politician to be sentenced as a result of the Operation Car Wash investigation into corruption at Petrobras, which has shaken Brazil’s political and business establishments to their core. Ultimately, he was convicted of charges that included receiving bribes during Petrobras’ acquisition of a Benin oil field for $35.5 million in 2011, and of money laundering crimes between 2011 and 2014. Yet somehow he was the man tasked with bringing justice to Rouseff. And now, there appears to be a clear and definite corruption link between Cunha and Temer himself.
Brazil's Temer refuses to resign in face of investigation | Reuters: Brazil's President Michel Temer on Thursday defiantly said he would not resign from office despite a Supreme Court decision authorizing an investigation into allegations he condoned bribery of a potential witness in a major corruption probe. In a terse five-minute speech broadcast nationwide, Temer said he had done nothing wrong, that his presidency was helping turn around Brazil's stalled economy and that he welcomed an investigation so that he could prove his innocence. "I did not buy the silence of anyone," Temer said, referring to the allegations made against him. "I will not resign." The investigation into a sitting president sent Brazilian financial markets tumbling and raised doubts that Congress would pass Temer's ambitious austerity agenda. Temer's situation grew more perilous after the Supreme Court approved an investigation into allegations against him, according to a source with direct knowledge of the decision. A Supreme Court justice also approved plea-bargain testimony and an audio recording that allegedly captured him conspiring to obstruct justice with Joesley Batista, chairman of the world's largest meatpacker, JBS SA (JBSS3.SA). That approval allows the court to quickly make both the testimony and audio public. Leaders of Temer's biggest allied party in Congress, the PSDB, said that if the allegations proved true, they would demand the resignation of three of their members who are in the president's cabinet."The president is absolutely convinced he committed no crime, but that has to be made clear to the eyes of everyone," a top presidential aide told Reuters.
Bank of China ATMs Go Dark As Ransomware Attack Cripples China - In the aftermath of the global WannaCry ransomware attack, which has spread around the globe like wildfire, a significant number of corporations and public services have found their infrastructure grinding to a halt, unable to operate with unprotected if mission-critical computers taken offline indefinitely. Some of the more prominent examples so far include:
- NHS: The British public health service - the world's fifth-largest employer, with 1.7 million staff - was badly hit, with interior minister Amber Rudd saying around 45 facilities were affected. Several were forced to cancel or delay treatment for patients.
- Germany's Deutsche Bahn national railway operator was affected, with information screens and ticket machines hit. Travelers tweeted pictures of hijacked departure boards showing the ransom demand instead of train times. But the company insisted that trains were running as normal.
- Renault: The French automobile giant was hit, forcing it to halt production at sites in France and its factory in Slovenia as part of measures to stop the spread of the virus.
- FedEx: The US package delivery group acknowledged it had been hit by malware and said it was "implementing remediation steps as quickly as possible." .
- Russian banks, ministries, railways: Russia's central bank was targeted, along with several government ministries and the railway system. The interior ministry said 1,000 of its computers were hit by a virus. Officials played down the incident, saying the attacks had been contained.
- Telefonica: The Spanish telephone giant said it was attacked but "the infected equipment is under control and being reinstalled," said Chema Alonso, the head of the company's cyber security unit and a former hacker.
- Sandvik: Computers handling both administration and production were hit in a number of countries where the company operates, with some production forced to stop. "In some cases the effects were small, in others they were a little larger," Head of External Communications Par Altan said
How to Accidentally Stop a Global Cyber Attacks - MalwareTech. A digital “police procedural” detective story on “the WannaCrypt fiasco.” May give you a message about DDoS attacks when you click through. Just wait.
Skip the hysteria. What you need to know about the big ransomware attack. Today the news is all a’flutter about the massive malware/extortion attack on hospitals all over the place. The sky is falling! What’s happening? Many companies have really bad security, and have comfortably had it for a long time. Medical informatics is particularly hard because of a “these hands have been touched by god!” attitude from doctors. Doctors are the second worst ‘users’ you can have, after politicians, in terms of blockheaded self-importance and risk profile. Combine this with industry regulation that makes it harder to update software on devices. There’s a really bad negative synergy with device certification: to get lawyers to sign off that a device is suitable for hospital use it has to be in a specific, documented, configuration – which means that if your device is certified, you don’t patch it or update it. So there are plenty of patient monitors out there running old versions of Windows that a hacker can blow straight through. In principle, that would be OK except that those devices are not on isolated device networks, so if Dr Jones clicks on a PDF from patientrecords@quest_diagnostics.com that says “X-ray results for your patient” and gets their machine owned, now the hacker is on the backend network where everything is reachable. There are a lot of obvious things that can and should have been being done, but the certification process, plus “oh, we have a firewall so it’s OK!” concept have act to block any demand for better security. There is still a great deal of “hard shell around a soft, chewy center” as Bill Cheswick described firewalls back in the mid 1980s. Some organizations realized that malware was going to be a problem, and others didn’t. The two that have had their heads most thoroughly in the sand are medical, and government. Often, you’ve got a situation where a hospital network, with thousands of authorized users, is going to be completely open shortly after one user clicks on the wrong attachment. Worse, some of the devices and internal servers are not treated as core infrastructure and are not under system administration.
24 Hours Later: "Unprecedented" Fallout From "Biggest Ransomware Attack In History" - 24 hours after it first emerged, it has been called the first global, coordinated ransomware attack using hacking tools developed by the NSA, crippling over a dozen hospitals across the UK, mass transit around Europe, car factories in France and the UK, universities in China, corporations in the US, banks in Russia and countless other mission-critical businesses and infrastructure. According to experts, "this could be one of the worst-ever recorded attacks of its kind." The security researcher who tweets and blogs as MalwareTech told The Intercept, “I’ve never seen anything like this with ransomware,” and “the last worm of this degree I can remember is Conficker.” Conficker was a notorious Windows worm first spotted in 2008; it went on to infect over 9 million computers in nearly 200 countries. The fallout, according to cyber-specialists, has been "unprecedented": it has left unprepared governments, companies and security experts from China to the United Kingdom on Saturday reeling, and racing to contain the damage from the audacious cyberattack that spread quickly across the globe, raising fears that people would not be able to meet ransom demands before their data are destroyed. As reported yesterday, the global efforts come less than a day after malicious software, transmitted via email and stolen from the National Security Agency, exposed vulnerabilities in computer systems in almost 100 countries in one of the largest “ransomware” attacks on record. The cyberattackers took over the computers, encrypted the information on them and then demanded payment of $300 or more from users in the form of bitcoin to unlock the devices. The ransomware was subsequently identified as a new variant of "WannaCry" that had the ability to automatically spread across large networks by exploiting a known bug in Microsoft's Windows operating system.
Microsoft Slams NSA For Letting Its Hacking Tools Cause Global Malware Epidemic - In early April, when we reported that the hacker group known as the Shadow Brokers had released the password to NSA's "Top Secret Arsenal" of tools that allowed anyone to "back door" into virtually any computer system (in what it claimed was a protest of Trump's betrayal), few people noticed. On Friday, however, the entire world did notice when an unknown group of hackers reportedly used the same set of NSA-created tools to launch a global malware cyberattack using the WannaCry ransomware virus, holding at least 200,000 computer systems around the globe hostage, and demanding a payment of $300 in bitcoin to unlock infected computers, or else threatening to wipe out the contents of the infected machine. Meanwhile, on Sunday afternoon, Microsoft itself got involved in the global hacking scandal and criticized the NSA for its role in spreading the WannaCry epidemic; specifically the tech giant urged governments to use and store their cyber warfare tools responsibly. “We have seen vulnerabilities stored by the CIA show up on WikiLeaks, and now this vulnerability stolen from the NSA has affected customers around the world,” Microsoft President and Chief Legal Officer Brad Smith wrote in a blog post this afternoon. “This attack provides yet another example of why the stockpiling of vulnerabilities by governments is such a problem.” Ahead of the Shadow Brokers' leak of the NSA hacking tools, Microsoft had released a patch against the vulnerability one month prior, on March 14, which indicates that the company was notified by the US intelligence agency that their tools using that particular backdoor had been compromised. However, older, unsupported operating systems such as Windows XP were not included in the update, in addition to millions of used who do not update their systems regularly. As a result, the WannaCry malware infected more than 200,000 unpatched computers, and was threatening to spread to countless more as the hacker further weaponized their virus. Needless to say, Microsoft was not happy. "Repeatedly, exploits in the hands of governments have leaked into the public domain and caused widespread damage" Smith wrote, adding that an "an equivalent scenario with conventional weapons would be the U.S. military having some of its Tomahawk missiles stolen. And this most recent attack represents a completely unintended but disconcerting link between the two most serious forms of cybersecurity threats in the world today – nation-state action and organized criminal action."
Is Microsoft to blame for the largest ransomware attacks in internet history? -- Friday saw the largest global ransomware attack in internet history, and the world did not handle it well. We’re only beginning to calculate the damage inflicted by the WannaCry program — in both dollars and lives lost from hospital downtime — but at the same time, we’re also calculating blame. There’s a long list of parties responsible, including the criminals, the NSA, and the victims themselves — but the most controversial has been Microsoft itself. The attack exploited a Windows networking protocol to spread within networks, and while Microsoft released a patch nearly two months ago, it’s become painfully clear that patch didn’t reach all users. Microsoft was following the best practices for security and still left hundreds of thousands of computers vulnerable, with dire consequences. Was it good enough? For some, the answer is an obvious no. Writing in The New York Times over the weekend, sociologist Zeynep Tufekci placed the blame squarely on Microsoft for its decision to stop supporting older Windows versions. “Companies like Microsoft should discard the idea that they can abandon people using older software,” Tufekci wrote. “Industry norms are lousy to horrible, and it is reasonable to expect a company with a dominant market position, that made so much money selling software that runs critical infrastructure, to do more.” ZDNet was even harsher. “The real problem here is that for decades the IT industry as a whole has been selling rubbish products,” a post argued. “It's become fabulously wealthy by making products that are broken to begin with, and often, directly or indirectly, charging customers to fix them.” Tech folk keep saying Win XP is ancient. It's not. Software can't run infrastructure w/ expectation to junk it in a decade. Time to adjust.
Huge cyberattack ebbs as investigators work to find culprits | Fox Business: The cyberattack that took computer files hostage around the world appeared to slow on Monday as authorities worked to catch the extortionists behind it — a difficult task that involves searching for digital clues and following the money. Thousands more infections were reported with the start of the workweek, largely in Asia, which had been closed for business when the "ransomware" locked up computers Friday at hospitals, factories, government agencies, banks and other businesses. But the big second-wave outbreak that many feared they would see when users returned to their offices Monday morning and switched their computers back on failed to materialize. Lynne Owens, director-general of Britain's National Crime Agency, said there was no indication of a second surge in the cyberattack but warned, "That doesn't mean there won't be one." Security researchers in the meantime have been disassembling the malicious software, known as WannaCry, in hopes of uncovering clues to who released it. They are doing the same with the "phishing" emails that helped the ransomware embed itself in computers. Investigators also hope to learn more by examining ransom payments made by computer users via bitcoin, the hard-to-trace digital currency often used by criminals.WannaCry paralyzed computers running mostly older versions of Microsoft Windows in some 150 countries. It encrypted users' computer files and displayed a message demanding anywhere from $300 to $600 to release them; failure to pay would leave the data mangled and likely beyond repair. A cybersecurity researcher in Britain managed to slow down its spread by activating the software's "kill switch," but there were fears that the cybercriminals would release even more malicious versions. Steve Grobman of the security company McAfee said forensics experts are looking at how the ransomware was written and how it was run. WannaCry is a sophisticated piece of work, he said, which helps rule out the possibility it was released by mere pranksters or lower-level thieves.
Putin Jabs NSA For Letting The Ransomware "Genies Out Of The Bottle" - Following the worldwide "Wanna Cry" cyber attack that was launched last Friday and quickly spread to thousands of computers, Vladimir Putin took a jab at the NSA for authoring tools that"may harm their own authors and creators" should the "genies be let out of the bottle." Per The Hill: "We are fully aware that the genies, in particular, those created by secret services, may harm their own authors and creators, should they be let out of the bottle."“Microsoft’s management has made it clear that the virus originated from US intelligence services." For those who haven't followed the story closely, the outbreak of the virus, dubbed WannaCry, began last Friday. According to cybersecurity experts, and subsequently confirmed by Microsoft, the WannaCry virus is based on an NSA-developed tool that was leaked to the public by a group called Shadow Brokers. The virus, which is ravaging computer networks worldwide, encrypts user files and demands a ransom in cryptocurrency Bitcoin to release them. Here is an animated map from the NYT showing how quickly the virus spread:Animated map of how tens of thousands of computers were infected with ransomware https ://t.co/LDFCW9K5Ls pic.twitter.com/E5Ep9KesaV Microsoft, which has criticized the American spy agencies for their alleged role in creating the situation, released a patch for its no longer supported Windows XP operating system to prevent computers still running it from being infected. Meanwhile, Microsoft President and Chief Legal Officer Brad Smith, blasted "the stockpiling of vulnerabilities by governments" which then get leaked into the public domain as equivalent to the "U.S. military having some of its Tomahawk missiles stolen."
Chinese state media says U.S. should take some blame for cyber attack | Reuters: Chinese state media on Wednesday criticized the United States for hindering efforts to stop global cyber threats in the wake of the WannaCry "ransomware" attack that has infected more than 300,000 computers worldwide in recent days. The U.S. National Security Agency (NSA) should shoulder some blame for the attack, which targets vulnerabilities in Microsoft Corp (MSFT.O) systems and has infected some 30,000 Chinese organizations as of Saturday, the China Daily said. "Concerted efforts to tackle cyber crimes have been hindered by the actions of the United States," it said, adding that Washington had "no credible evidence" to support bans on Chinese tech firms in the United States following the attack. The malware attack, which began on Friday and has been linked by some researchers to previous hits by a North Korean-run hacking operation, leveraged a tool built by the NSA that leaked online in April, Microsoft says. It comes as China prepares to enforce a wide-reaching cyber security law that U.S. business groups say will threaten the operations of foreign firms in China with strict local data storage laws and stringent surveillance requirements. China's cyber authorities have repeatedly pushed for what they call a more "equitable" balance in global cyber governance, criticizing U.S. dominance. The China Daily pointed to the U.S. ban on Chinese telecommunication provider Huawei Technologies Co Ltd [HWT.UL], saying the curbs were hypocritical given the NSA leak.
French researchers find way to unlock WannaCry without ransom | Reuters: French researchers said on Friday they had found a last-chance way for technicians to save Windows files encrypted by WannaCry, racing against a deadline as the ransomware threatens to start locking up victims' computers first infected a week ago. WannaCry, which started to sweep round the globe last Friday and has infected more than 300,000 computers in 150 nations, threatens to lock out victims who have not paid a sum of $300 to $600 within one week of infection. (bit.ly/2q0gVEr) A loose-knit team of security researchers scattered across the globe said they had collaborated to develop a workaround to unlock the encryption key for files hit in the global attack, which several independent security researchers have confirmed. The researchers cautioned that their solution only works in certain conditions, namely if computers had not been rebooted since becoming infected and if victims applied the fix before WannaCry carried out its threat to lock their files permanently. Europol said on Twitter that its European Cybercrime Centre had tested the team's new tool and said it was "found to recover data in some circumstances". The group includes Adrien Guinet, who works as a security expert, Matthieu Suiche, who is an internationally known hacker, and Benjamin Delpy, who helped out by night, in his spare time, outside his day job at the Banque de France. "We knew we must go fast because, as time passes, there is less chance to recover," Delpy said after a second sleepless night of work this week allowed him to release a workable way to decrypt WannaCry at 6 am Paris time (0400 GMT) on Friday.
"It's Much Bigger Than WannaCry" Security Experts Warn Of New "Stealthy" Cyber-Attack Using NSA Tools -- Another large-scale, stealthy cyberattack is underway on a scale that could dwarf last week's assault on computers worldwide, a global cybersecurity firm told AFP on Wednesday. Meet Adylkuzz - the new cyberattack that "is much bigger than WannaCry." Instead of completely disabling an infected computer by encrypting data and seeking a ransom payment, Adylkuzz uses the machines it infects to "mine" in a background task a virtual currency, Monero, and transfer the money created to the authors of the virus. Proofpoint said in a blog that symptoms of the attack include loss of access to shared Windows resources and degradation of PC and server performance, effects which some users may not notice immediately."As it is silent and doesn't trouble the user, the Adylkuzz attack is much more profitable for the cyber criminals. It transforms the infected users into unwitting financial supporters of their attackers," said Godier.
NATO Builds Infrastructure For Permanent Military Presence Near Russia's Borders - A group of about 50 combat engineers based at Canadian Forces Base Gagetown were deployed to Latvia on April 29 as part of Operation Reassurance. The mission is to build a town for 500 soldiers. According to commanding officer Lt.-Col. Chris Cotton, the installation will have «everything you would expect in a small town, from its kitchen to its quarters, its electrical distribution system, water distribution system, internet, gym facilities that would allow people to survive over the long term in Latvia». Obviously, this is an element of vast infrastructure to provide for a long-term commitment. In early April, a US-led battle group of 1,350 soldiers for NATO’s Enhanced Forward Presence in Eastern Europe arrived at its base near Orzysz in northeastern Poland. It took place just a few days after a NATO-Russia Council meeting took place on March 30. Secretary-General Jens Stoltenberg called the talks with Moscow «frank» and «constructive». Then the usual song and dance followed under the slogan of Russian threat.British RAF fighters are scheduled to be stationed to Romania this May. In March the first of 800 UK troops arrived in Estonia supported by around 300 armed vehicles. Along with French and Danish forces they’ll be stationed there on what NATO leadership calls «rotational basis». In January, German and Belgian forces arrived in Lithuania near the Russian enclave of Kaliningrad.The UK leads the Estonia Battlegroup while other NATO members are deploying forces to Latvia, Lithuania and Poland as part of the bloc’s Enhanced Forward Presence battalion. All in all, 4,000 NATO troops with tanks, armored vehicles, air support, and high-tech intelligence centers deployed to Poland, Latvia, Lithuania, and Estonia. In accordance with the fiscal year 2017 European Reassurance Initiative budget proposal, the US Army is reopening or creating five equipment-storage sites in the Netherlands, Poland, Belgium and two locations in Germany.
EU Warns Turkey After 141 Greek Airspace Violations In Single Day -- Turkish aircraft and helicopters illegally entered Greece’s airspace 141 times on May 15, the Hellenic National Defence General Staff reported. As KeepTalkingGreece reports, airspace violations are a common practice by Ankara to reiterates its unfounded claims in the Aegean Sea. 20 Turkish F-16, 5 CN-235 maritime surveillance aircraft and 19 helicopters entered the Athens flight information region (FIR) without submitting a flight plan. The Turkish aircraft were identified and intercepted by Greek fighters, while in nine cases the interception process resulted in near combat situations (dog fights). In addition, two Turkish missile boats entered Greek territorial waters off the southeast Aegean island of Agathonisi.The vessels, which were taking part in a maritime exercise code-named Deniz Kurdu (Seawolf),stayed in Greek territorial waters for about 20 minutes.Contacted by EURACTIV.com, an EU spokesperson sent a strict message to Turkey, urging that it respect the sovereignty of the EU’s member states. “The EU underlines that Turkey needs to commit itself unequivocally to good neighbourly relations and urges Turkey to avoid any kind of source of friction, threat or action directed against a member state, which damages good neighbourly relations and the peaceful settlement of disputes,” the spokesperson said.The same official added that negative statements that damage good neighbourly relations should also be avoided.
Times of Malta ‒ Pulitzer prize winner blocked from Facebook after series of 'corruption facts' posts: Pulitzer prize winner Matthew Caruana Galizia has been temporarily locked out of his Facebook page after complaints were filed about a series of 'corruption facts' posts. Mr Caruana Galizia discovered to his surprise this morning that he had been temporarily locked out of his Facebook profile. A number of his 'corruption facts' posts have also been removed. Over the past few weeks, the ICIJ journalist has been posting original documents from the Panama Papers leak to lay bare the extent to which minister Konrad Mizzi and the prime minister's chief of staff Keith Schembri tried to hide their offshore structures behind complex structures geared towards secrecy. Similar posts have been put up about former Allied Newspapers managing director Adrian Hillman and building contractor Pierre Sladden, who both had companies in the British Virgin Islands that were hidden from the public eye behind nominees. Mr Caruana Galizia's posts have been shared over a thousand times. Four of those posts have now been removed completely from Facebook, after a number of complaints were filed with the social media giant. The posts were removed for violating Facebook's community standards. Facebook allows users to report content that they do not like or they feel violates these standards. In comments to Times of Malta, Mr Caruana Galizia said people had been upset by what was revealed by the posts, rather than the posts themselves.
Is Europe really a sanctuary? - Immigration amounting to 0.2% of the EU population has triggered a ‘refugee crisis’ that is really a crisis of the European Union itself, and of its ability to rally member states around values that guarantee much needed fundamental rights. The reaction of European Union member states to the arrival of migrants and refugees has been to do everything possible to prevent more arrivals — short of committing themselves — even if it means numerous violations of human rights and refugee law. They have adopted techniques ranging from physically strengthening national borders (including the construction of walls and of camps where migrants can be held and screened) to developing subtler legal mechanisms that increase the ambiguities of the European project (1). The common immigration policy officially began with the adoption of the Treaty of Lisbon in 2008. But only some aspects of migration have been addressed, notably policy on asylum and short-stay visas, and the harmonisation of conditions for the deportation of irregular immigrants from non-EU countries.In reality, EU member states — perceiving a need to protect themselves from foreigners portrayed as delinquents, criminals and terrorists, at a time of economic crisis — are applying double standards. On one hand, they reject the common standards and institutions that require them to accept refugees and other migrants. For instance, they have rejected the European Commission’s plan to impose quotas for resettling refugees in the EU, and to relocate asylum seekers who have already arrived in Greece and Italy within the Union. Yet on the other hand, when it suits their purpose, they strengthen those standards and institutions: they have agreed to develop networks of data and metadata files that make it possible to monitor the movements of foreign nationals (and European citizens), and also to strengthen the EU border agency Frontex, by creating a border and coastguard force with greater powers and autonomy (2).
Hungary Unveils New Electrified Border Wall, Watch Towers, And Guards With Machine Guns -- The country of Hungary, 95% of whose citizens opposed European Union migrant quotas in a recent referendum, has reportedly electrified key portions of their border fence. According to Index.hu, when approaching the border outside of authorized border crossings, those attempting to enter the country will be met with warning signs in Hungarian, Serbian and Arabic advising them that the fence has been electrified. Kit Daniels reports:It may not be a full fence shield, but there are fixed wires running parallel to the ground,” reported journalist András Földes. “The 12 wires mounted on insulated points are visible on both fences of the double fence, with insulated portions on the inside of the fences since it’s assumed they [the migrants] will only come from the outside if they come in.” “…We also learned that a worker was shaken at the time of the installation and that he was hospitalized,” he added. The images below paint a very intimidating picture of what migrants attempting to cross the border will see.
Victorious Macron Must Quickly Figure Way to Escape Gridlock - Winning the French presidential vote may have been the easy part for Emmanuel Macron. Now, the 39-year-old, who on Sunday defeated the far right National Front’s Marine Le Pen with a resounding 66 percent of the vote, has five weeks to turn his year-old En Marche! -- or On the Move! -- political movement into a vehicle capable of winning a majority or at least garnering enough seats in parliament to govern or form a coalition. Without that, Macron could find himself a figurehead from the get-go, incapable of putting into action his campaign promises of economic modernization. That in turn might embolden populists who France has managed to keep at bay this time, but may not be able to again. The narrower margin of victory over the National Front compared with previous elections shows that parties that see France’s central role in the European Union may not get many more chances. “Macron’s biggest challenge now is to win the battle for parliament,” Dominique Reynie, politics professor at Sciences Po, said in an interview. “In the French system, if he doesn’t have a majority he’d have only limited power, he’d become a constitutional monarch. If he has his own majority, he’d have all the powers which the Fifth Republic grants the president.” The French go back to the polls June 11 and 18 to elect their 577 members of parliament. Although every recent French presidential election has been followed by the winner’s party going on to take control of parliament -- necessary to name the cabinet and pass laws -- the outcome this time around has been made murky by Macron’s lack of an established base. “The idea since 1958 that whoever is elected president would have a governing majority is about to be shattered,” said Nicolas Lebourg, a researcher in politics at the University of Montpellier. “Everything possible has happened so far in this election, and anything can happen. But it’s pretty certain that it will be difficult for En Marche! to win a majority.”
Macron Appoints Centre-Right Mayor Edouard Philippe As Prime Minister -- One day after Emmanuel Macron was inaugurated as France's new president, he announced the appointment of a centre-right Republican Edouard Philippe, the 46-year-old mayor of the port city of Le Havre, as France’s new prime minister tasked with implementing Macron's economic reforms and to galvanize public support as France’s centrist president seeks to build a majority in parliament for his year-old party. According to Bloomberg, which cited to French press reports, Philippe is an aficionado of Bruce Springsteen, his favorite actor is Sean Connery, and he’s a fan of the “Godfather” movies. Since 2010, Philippe has been mayor of Le Havre, France’s second-largest port, which was a longtime communist stronghold before drifting to the center-right as its economy diversified. Like Macron, he’s a graduate of France’s elite ENA, the National School of Administration. Philippe is a Republican party MP close to Alain Juppe, the former prime minister who lost the Republican party’s presidential nomination to François Fillon in primary elections last year. By picking Philippe, Macron, who was a former minister in Socialist Francois Hollande’s government, is looking to broaden his appeal ahead of the legislative elections in June which many have predicted would be an even greater hurdle for the youngest ever French president than defeating Marine Le Pen.
The European Commission doesn’t agree with the ECB -- In the Eurozone it’s not just the European Central Bank which publishes its forecasts on a regular basis, but the European Commission also releases its own expectations. And those don’t necessarily agree with the ECB’s assessments! In its Spring Economic Forecast, which was released last week, the EC is now clearly more positive about the outlook in the Eurozone as the Commission increased its GDP growth expectations by 0.1% to 1.7%, although it’s still warning for downside. This downside could be related to the decrease in inflation expectations. Yes, the official inflation rate will increase from 0.2% in 2016 to 1.6% in 2017 (thanks to the higher oil and gas prices), but according to the Commission, the inflation will start to trend down again and will fall back to 1.3% next year. That’s an interesting view, and it shines a completely different light on the statement of the ECB, which was also released last week. As the ‘hard data’ coming out of the Eurozone are pointing in the direction of a continuously strengthening economy (with the factory orders in Germany finally picking up whilst the Netherlands and France saw a 4% and 3.5% increase in their manufacturing production results), the ECB was finally starting to think about reducing its monthly purchases of securities on the open market. There has been a lot of chatter lately about ‘normalizing’ the monetary policy, but the expected parameters used by the Commission might cause the ECB to ‘re-think’ its plans. The unemployment rate on the Eurozone will remain relatively high at 8% in 2017 and 7.8% in 2018 and when you compare this to the much lower unemployment rate in the USA (less than 4.5%) it’s clear the situation in the Eurozone isn’t nearly as good as in the United States. Keep in mind we have no details on the underemployment rate in the Eurozone (compared to the USA), and whilst we would expect the ratio of underemployed people to be lower, we think the total percentage of unemployed and underemployed people will be in excess of 10% in the Eurozone.
Deutsche Bank Sued For Running An "International Criminal Organization" In Italian Court - Having been accused, and found guilty, of rigging and manipulating virtually every possible asset class, perhaps it was inevitable that Deutsche Bank, currently on trial in Milan for helping Banca Monte dei Paschi conceal losses (as first reported last October in "Deutsche Bank Charged By Italy For Market Manipulation, Creating False Accounts") is now facing accusations that it was actually running an international criminal organization at the time. In the closely watched lawsuit, prosecutors used internal Deutsche Bank documents and emails to persuade a three-judge panel to rule that there were additional, aggravating circumstances to the charges the German lender already faces related to various derivatives transactions. AsBloomberg reported overnight, the material included a London trader’s "well done!" message to a banker who is now on trial. The reason why prosecutors are seeking expanded charges against the German banking giants is that by allowing prosecutors to argue that the bank's market manipulation crimes were committed by an organization operating in several countries would lead to higher penalties if they win a conviction. Predictably, Deutsche Bank's lawyer, Giuseppe Iannaccone, sought to block the move at Tuesday’s hearing, saying there wasn’t a clear connection between the original charge of market manipulation and the alleged aggravating circumstances. “The trial for Deutsche Bank managers becomes more problematic after the judge’s decision,” said Giampiero Biancolella, an attorney specializing in financial crime who isn’t involved in the case. “If proven, the aggravating circumstance may increase the eventual jail sentence for the market manipulation to a maximum of nine years.”
Deutsche Bank says former executives set to pay for missteps - Deutsche Bank is close to an agreement with former executives at Germany’s biggest bank to have them help pay for fines the lender suffered because of past misconduct. The bank’s supervisory board “expects that in the coming months, there will be an arrangement which ensures that the individuals involved make a substantial financial contribution,” Chairman Paul Achleitner told shareholders Thursday at the annual meeting in Frankfurt. Achleitner, 60, did not name any executives. He said discussions are at an “advanced stage,” though no definitive deal has been reached. John Cryan, the current chief executive officer, has said previous management teams made the bank too complex and inefficient by putting short-term earnings ahead of Deutsche Bank’s long-term interests. The lender posted two consecutive years of losses, in part because of misconduct fines, and in January completed a $7.2 billion settlement with the U.S. over its handling of mortgage-backed securities before 2008. Cryan, 56, took the top role in 2015, when co-CEO Anshu Jain stepped down, and ran the bank together with Juergen Fitschen before becoming sole CEO the following year. Jain helped build Deutsche Bank into Europe’s biggest securities firm under former CEO Josef Ackermann. In 2012, he became co-CEO, succeeding Ackermann, who in the course of a decade overhauled the management structure to centralize decision-making. A cascade of bad news followed Jain’s appointment as he and co-CEO Fitschen worked to shore up the bank’s capital, cut costs and boost returns. The lender was probed for tax evasion in carbon markets, raided by the police and ordered to pay $2.5 billion for its role in rigging benchmark interest rates known as Libor. Ackermann is among former executives in talks with Deutsche Bank about a potential financial contribution, according to a person with knowledge of the matter, asking not to be identified as the talks are private. Negotiations have been going on for over a year and it’s not yet clear how close Deutsche Bank and Ackermann are to an agreement, the person said.
Italy Inflation, Debt Rise - Italy’s annual inflation rate rose to 1.9% in April, up from 1.4% in March, according to ISTAT’s flash estimate released on Monday. It is necessary to go back to January 2013, when the inflation rate was 2.2%, to find a higher figure. The national statistic agency added that its consumer price index was up 0.4% in month-on-month terms. Meanwhile, Italy’s public debt hit a new high of €2.2603 trillion ($2.48 trillion) in March, an increase of €20.1 billion with respect to February, the Bank of Italy said on Monday. The previous high was the 2.2522 trillion registered in June 2016, ANSA reported. Late April, Italy’s credit rating was cut closer to junk territory by analysts at Fitch, who cited “weak economic growth” and the country’s “persistent track record of fiscal slippage”. Fitch reduced the rating to “BBB” from “BBB+”, leaving it just two notches above speculative-grade. “Italy’s persistent track record of fiscal slippage, back-loading of consolidation, weak economic growth, and resulting failure to bring down the very high level of general government debt has left it more exposed to potential adverse shocks,” the ratings group said. Fitch added that Italy has “missed successive targets” for its debt-to-gross domestic product ratio, which rose by 0.5 percentage points to 132.6% last year. At the same time, “banking sector weakness adds to downside risks to the economy and public finances,” Fitch noted.
Angela Merkel's Party Scores Big Win in Key German State Election -- The party of Chancellor Angela Merkel scored an upset victory on Sunday in elections in Germany’s most populous state that were seen as a dress rehearsal for national parliamentary elections in September, when she will seek a fourth term. The victory in North Rhine-Westphalia, home to 18 million people and one in five German voters, dealt a severe blow to Martin Schulz, Ms. Merkel’s Social Democratic challenger, who admitted to a bitter defeat in his home state, traditionally the leftists’ heartland. Cheers erupted at the state headquarters of Ms. Merkel’s Christian Democratic Union when early results came in. With almost all ballots counted, the Christian Democrats had won almost 33 percent of votes cast, compared with around 31 percent for the center-left Social Democrats. The national elections are still more than four months away — a long time in an era of febrile politics across Europe, where mainstream parties have seen their grip weaken in recent elections. But Ms. Merkel, in power since 2005, seems to be bucking the trend, buoyed by experience, a calm temperament and the exceptional economic strength of Germany, which has 4.1 percent unemployment and just last week announced record exports and tax revenues that will exceed expectations by 55 billion euros by 2020. Mr. Schulz, reacting to the results, said that it was a “tough day” but that he and his party would now focus on winning the national elections in September.
Nicola Sturgeon admits an independent Scotland might not seek immediate membership of the EU -- Nicola Sturgeon has admitted for the first time that an independent Scotland might not immediately seek to rejoin the European Union.Despite calling for a new independence referendum over Brexit, the First Minister confirmed Scotland may need a “phased” approach to becoming a full EU member. She said that “by necessity”, in the event of a vote to break-up the UK, Scotland might have to pursue membership of the European Free Trade Association (Efta), whose members include Norway and Iceland, before achieving full EU membership. Her admission comes after The Daily Telegraph revealed in March that she was set to abandon the long-held SNP policy amid record Euroscepticism in Scotland. The move is understood to be seen by senior Nationalists as a more realistic goal than full EU membership after 400,00 voters who backed independence in 2014 also voted Leave in last year’s EU referendum. Alex Salmond, Ms Sturgeon’s predecessor, has argued that by following the so-called “Norway model” an independent Scotland could have “continuous” membership of the EU’s single market. However, the Scottish Conservatives said Ms Sturgeon’s position on Europe had descended into “complete chaos”. The First Minister told the BBC's Andrew Marr Show that her position remained that she wanted an independent Scotland to be in the EU. She added: ”If Scotland is independent our position always has been, as long as I've been in the SNP and continues to be, that we want Scotland to be a full member of the European Union. "We have to set out, if we're in an independence referendum, and we're not in that right now, the process for regaining or retaining, depending on where we are in the Brexit process, EU membership. Now it may be that we have a phased approach to that by necessity."
May gives all workers new rights to time off - Employees will be promised today the right to take up to a year off work to care for family members with illness or disability. In what Theresa May will claim is the “greatest extension of rights and protections for employees by any Conservative government” she will also commit her party to introducing statutory child bereavement leave and the right to request time off work for training. The moves form part of a series of manifesto pledges aimed at rebranding the Tories as the party for workers. They will also include a crackdown on abuses in the so-called gig economy with new rules likely to extend maternity and sickness pay to workers who are at present classed as self-employed. All listed companies will be required to appoint a non-executive director to act as an employee representative at board level, while new powers will be created to block takeovers that could have an impact on the sustainability of pension funds. The policies, drawn up by the prime minister’s aides, mark a decisive shift away from the party’s traditional business-first approach and are likely to create tensions with industry.
Blair allies plot new party to replace ‘dead horse’ Labour - Close allies of Tony Blair have drawn up plans to create a new political party if Labour crashes to a historic defeat and have already received pledges of funding if it is needed, according to sources familiar with the discussions. The former prime minister has said he wants to see the moderates reclaim control of Labour after the general election. But some of his political allies have concluded that the party cannot be saved from the clutches of the hard left and that a “plan B” will be required.A source who used to work for Blair told The Sunday Times: “People are waiting to see just how bad the damage is on June 9. They will look at the results and say, ‘Is this horse a dead horse or can it still be revived? Some people have already come to the conclusion that it can’t and therefore something else will have to be born. “They’re certainly entertaining possibilities they wouldn’t have entertained before. The unthinkable is being thought.” Donors are already standing by to fund a new party. “Don’t underestimate the genuine love most people have for the Labour Party,” the former Blair employee said. “But if it was to go the other way, the money would be there.” “One of Clegg’s mates said: ‘If you wanted to just take the Lib Dems over it would be yours’ Most of the moderates seeking re-election as MPs are convinced they should first try to wrest the party from Jeremy Corbyn and his hard-left acolytes by seizing control of Labour’s governing body, the national executive committee (NEC). They also want to bring back the old leadership election rules, which give MPs far more voting power than individual members. Last week it was reported that, if Corbyn cannot be ousted, up to 100 potential Labour MPs are considering making a unilateral declaration of independence from the party leadership, sitting on the benches as a new grouping, which would potentially be called the Progressives. It is understood that this theory has been discussed by possible leadership contenders, including Dan Jarvis, a former paratrooper. Another friend of Blair said: “I think the priority after the election is to get control of the NEC and get the leadership rules changed.
Labour Party Promises to End UK Funding of US-Backed, Saudi-Led War Crimes in Yemen - The move would be a shift for the Labour Party, given its history of backing imperialist wars, especially under the leadership of former PM and war criminal Tony Blair. Under the leadership of long-time anti-war activist Jeremy Corbyn, the United Kingdom’s social democratic party, the UK Labour Party, promised Friday to suspend all arms sales to Saudi Arabia should they be elected during the June 8 elections. It will be a return to an "ethical foreign policy," the shadow foreign secretary Emily Thornberry said, the Middle East Eye reported. The move would be a shift, indeed, given the Labour Party's history of being mired in imperialist wars, most notably the Iraq War under the leadership of former Prime Minister and war criminal Tony Blair.Writing in the Guardian, Thornberry stated the party would return to a more human rights-focused "Cook doctrine," making a reference to the party's former foreign secretary Robin Cook, who resigned in 2003 over the Iraq war."We will strive to reduce not increase global tensions, and give new momentum to talks on non-proliferation and disarmament," Thornberry wrote.The Labour Party would also demand an independent UN investigation into war crimes in Yemen.
Jeremy Corbyn far more likely to be attacked by media than Theresa May, election reporting audit reveals | The Independent: The media is attacking Jeremy Corbyn far more than Theresa May through the election campaign, according to a new analysis. A “considerable majority” of the reports on Labour are critical of the party and its manifesto, a report from Loughborough University claims. Newspapers are being far more balanced in their coverage of the Conservatives, the report said, with positive and negative reporting balancing each other out. What's more, the attacks on Jeremy Corbyn's party are coming from the most popular newspapers, with The Sun and the Daily Express particularly focusing their negative coverage on Labour. The Mail and The Times have also been hostile to Labour, the academics report, but have balanced that out with positive reporting on the Conservatives.
UK Brexit boost as ECJ rules trade deals do not require extra ratification -- The European court of justice has raised a ray of hope for British trade negotiators with a surprise ruling that will make it harder for national parliaments to block key components of any future post-Brexit deal between the EU and the UK.In a long-awaited test case that had been expected to complicate the Brexit process, the court instead ruled that EU officials had exclusive powers to negotiate international trade deals without ratification by national and regional parliaments.Ratification is still required in specific areas, such as inward investment and dispute resolution, but the definition of the EU “competences” is much broader than had been expected.The ECJ ruling stems from a request by the European commission to rule on its authority over a trade deal between the EU and Singapore, but the case took on much wider importance after the Brexit vote. Getting a deal approved in national parliaments could add five years to the process, leaving the risk that one single national or regional body could block full agreement – a difficulty hinted at last year when the Walloon regional parliament threatened to veto an EU-Canada trade deal that had been seven years in the making. The ECJ ruling concerning the EU deal with Singapore was in part a victory for EU institutions and is likely to help the British government. This is because the court also decided the power to negotiate the core of a trade agreement – goods, services and public procurement – is allowed without individual national consultation. This means the most important parts of a post-Brexit free-trade deal could enter into force without the approval of national parliaments.
Court ruling makes Brexit harder. Or easier -- At first glance, Britain’s trade deal with the EU after Brexit just got harder.A ruling by the EU’s top court on Tuesday set an important precedent that trade agreements will have to be ratified by the bloc’s 38 national and regional parliaments if they include clauses about investors’ rights.That sounds like bad news for Britain. Running a gauntlet of approvals from Lisbon to Tallinn would be highly likely to stretch out the timetable of any EU-U.K. trade deal.“The government’s objective to agree [to] a comprehensive U.K.-EU trade deal within the next two years will be challenging if the deal needs to be approved by … national and regional parliaments,” said Alice Darling, a lawyer in the trade team at Clifford Chance.Despite the perils of a what is known as a “mixed agreement,” however, the outlook may not be as gloomy as it first appears for the U.K., as the Singapore ruling also offers a relatively easy way for Europe to strike trade deals more quickly and avoid getting bogged down in parliamentary debates across Europe.To be sure, the precedent set by the European Court of Justice’s ruling on the EU-Singapore trade deal locks in the concept that EU pacts should require approval by the bloc’s member countries. That revives memories of last year’s diplomatic battle over a landmark EU trade deal with Canada, which almost collapsedbecause of objections from the Belgian regional parliament of Wallonia. “Any meaningful EU-U.K. deal” such as the “bold and ambitious” trade agreement that British Prime Minister Theresa May has vowed to strike “will undoubtedly have to be a mixed agreement,” said Marco Bronckers, a professor of trade law at Leiden University, the Netherlands. “Parliaments across the EU will want to exert their influence on Brexit,” he added.
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