Is This Why The Fed Is Raising Rates??? --As the Fed is in the midst of a rate hike cycle, it seems important to remember why this cycle is like no previous rate hike cycle. The mechanics of this hiking cycle are completely unique and experimental...thus the outcome is far more of an unknown than "normal". Why? In a typical cycle, the Fed would sell a relatively small portion of its assets...er, balance sheet (typically short duration bills and notes) to banks. This would withdraw some of banks liquid funds (replacing them with less liquid assets) and create "tightness". This tightness would push overnight lending rates higher and the daisy chain of rising rates would work its way through from the shortest eventually all the way to the 30yr Treasury bonds. However, this time, nothing like that is happening. This is because the Fed sold all its short term notes/bills (in Operation Twist) and bought longer duration MBS (mortgage backed securities) and longer duration Treasuries in Quantitative Easing to the tune of $4.5 trillion. Further, since the Fed bought most of these assets from large banks, these banks held much of the proceeds from these sales at the FRB (Federal Reserve Bank). For the Fed to perform typical rate hikes, it would need to remove most of the $2.1 trillion banks are now sitting on in excess reserves @ the FRB...likely creating a crisis in the process. Conversely, if the Fed can't contain the $2.1 trillion at the FRB, and the reserves are leveraged into the market...stand back in awe of the mother of all bubbles. Thus, the Fed has instead determined to raise rates via paying banks interest on these excess reserves to maintain the reserves at the Federal Reserve. In short, pay banks not to lend money, not to invest the reserves. This is just like Federal programs that paid farmers not to farm...IOER (interest on excess reserves) pays big bankers not to bank. Since the end of QE in late 2014, the Federal Reserve has continued to buy bonds with the intent of maintaining a consistent quantity of assets on its balance sheet. But interestingly, banks excess reserves have been declining, by as much as $800 billion since late 2014 (chart below). Apparently, during this Fed balance sheet maintenance phase (as the Fed continues to buy assets from the banks to maintain its balance sheet) banks aren't doing their part and have been unwilling to retain these proceeds as excess reserves.
Bullard says current rate likely appropriate for forecast horizon -- The Federal Reserve can be patient in setting monetary policy and the current rate may be the right level for the forecast horizon, Federal Reserve Bank of St. Louis President James Bullard said Friday. “The [Federal Open Market Committee] can wait and see how key macroeconomic developments play out in the quarters ahead,” Bullard told the Illinois Bankers Association’s annual conference in Nashville, Tenn., according to materials released by the Fed. “The current level of the policy rate is appropriate given current macroeconomic data.”
PCE Price Index: Headline & Core Down in May, Core Under 1.5% - The BEA's Personal Income and Outlays report for May was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index fell 0.06% month-over-month (MoM) and is up 1.44% year-over-year (YoY). The latest Core PCE index (less Food and Energy) came in at 0.07% MoM and 1.39% YoY. Core PCE remains below the Fed's 2% target rate and is below 1.5% for the first time since late 2015. Revisions were made going back to January. The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when Core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016. The first chart below shows the monthly year-over-year change in the personal consumption expenditures (PCE) price index since 2000. Also included is an overlay of the Core PCE (less Food and Energy) price index, which is Fed's preferred indicator for gauging inflation. The two percent benchmark is the Fed's conventional target for core inflation. However, the December 2012 FOMC meeting raised the inflation ceiling to 2.5% for the next year or two while their accommodative measures (low FFR and quantitative easing) are in place. More recent FOMC statements now refer only to the two percent target. The index data is shown to two decimal points to highlight the change more accurately. It may seem trivial to focus such detail on numbers that will be revised again next month (the three previous months are subject to revision and the annual revision reaches back three years). But core PCE is such a key measure of inflation for the Federal Reserve that precision seems warranted. For a long-term perspective, here are the same two metrics spanning five decades.
Chicago Fed "Index Points to Slower Economic Growth in May" -- From the Chicago Fed: Chicago Fed National Activity Index Points to Slower Economic Growth in May Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to –0.26 in May from +0.57 in April. Three of the four broad categories of indicators that make up the index decreased from April, and three of the four categories made negative contributions to the index in May. The index’s three-month moving average, CFNAI-MA3, declined to +0.04 in May from +0.21 in April. This graph shows the Chicago Fed National Activity Index (three month moving average) since 1967. This suggests economic activity was close to the historical trend in May (using the three-month average).
Chicago Fed: Slower Economic Growth In May --"Index points to slower economic growth in May." This is the headline for today's release of the Chicago Fed's National Activity Index, and here is the opening paragraph from the report:Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) moved down to –0.26 in May from +0.57 in April. Three of the four broad categories of indicators that make up the index decreased from April, and three of the four categories made negative contributions to the index in May. The index’s three-month moving average, CFNAI-MA3, declined to +0.04 in May from +0.21 in April. [Link to News Release]The previous four months were revised upward. The Chicago Fed's National Activity Index (CFNAI) is a monthly indicator designed to gauge overall economic activity and related inflationary pressure. It is a composite of 85 monthly indicators as explained in this background PDF file on the Chicago Fed's website. The index is constructed so a zero value for the index indicates that the national economy is expanding at its historical trend rate of growth. Negative values indicate below-average growth, and positive values indicate above-average growth. The first chart below shows the recent behavior of the index since 2007. The red dots show the indicator itself, which is quite noisy, together with the 3-month moving average (CFNAI-MA3), which is more useful as an indicator of the actual trend for coincident economic activity.
Q1 GDP Revised up to 1.4% Annual Rate -- From the BEA: Gross Domestic Product: First Quarter 2017 (Third Estimate) Real gross domestic product (GDP) increased at an annual rate of 1.4 percent in the first quarter of 2017, according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2016, real GDP increased 2.1 percent.The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 1.2 percent. With the third estimate for the first quarter, personal consumption expenditures (PCE) and exports increased more than previously estimated, but the general picture of economic growth remains the same ... Here is a Comparison of Third and Second Estimates. PCE growth was revised up from 0.6% to 1.1%. (still soft PCE, but better than the 0.3% reported in the Advance estimate of GDP). Residential investment was revised down slightly from 13.8% to +13.0%. This was above the consensus forecast.
Q1 GDP Third Estimate: Real GDP at 1.4%, Better Than Forecast --The Third Estimate for Q1 GDP, to one decimal, came in at 1.4% (1.42% to two decimal places), a decrease over 2.1% in the Q4 Third Estimate. Investing.com had a consensus of 1.2%. Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:Real gross domestic product (GDP) increased at an annual rate of 1.4 percent in the first quarter of 2017 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2016, real GDP increased 2.1 percent.The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 1.2 percent. With the third estimate for the first quarter, personal consumption expenditures (PCE) and exports increased more than previously estimated, but the general picture of economic growth remains the same (see "Updates to GDP" on page 2). [Full Release] Here is a look at Quarterly GDP since Q2 1947. Prior to 1947, GDP was an annual calculation. To be more precise, the chart shows is the annualized percentage change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product. We've also included recessions, which are determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.21% average (arithmetic mean) and the 10-year moving average, currently at 1.40%.
Third Estimate 1Q2017 GDP Revised Upward. Corporate Profits Down. - The third estimate of first quarter 2017 Real Gross Domestic Product (GDP) was revised upward to 1.4 %. This improvement was mainly due to lower inflation numbers relative to the second estimate.•Headline GDP is calculated by annualizing one quarter's data against the previous quarters data. A better method would be to look at growth compared to the same quarter one year ago. For 1Q2017, the year-over-year growth is now 2.1 % - up marginally from 4Q2016's 2.0 % year-over-year growth. So one might say that the rate of GDP growth improved from the previous quarter. The same report also provides Gross Domestic Income which in theory should equal Gross Domestic Product. Some have argued the discrepancy is due to misclassification of capital gains as ordinary income - but whatever the reason, there are differences. Real GDP (blue line) Vs. Real GDI (red line) Expressed As Year-over-Year Change This third estimate released today is based on more complete source data than were available for the "second" estimate issued last month. (See caveats below.) Real GDP is inflation adjusted and annualized - the economy improved on a per capita basis. The table below compares the previous quarter estimate of GDP (Table 1.1.2) with the advance estimate this quarter which shows:
- consumption for goods and services decelerated..
- trade balance improved and increased GDP by 0.2% (imports grew and exports declined)
- inventory change removed 1.1 % to GDP
- except for inventory growth, fixed investment growth improved
- there was a decline in federal spending removing 0.2 % from GDP
The following is Table 1.1.2 before the revision: [click to enlarge] What the BEA says about the third estimate of GDP:Real gross domestic product (GDP) increased at an annual rate of 1.4 percent in the first quarter of 2017 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2016, real GDP increased 2.1 percent. The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 1.2 percent. With the third estimate for the first quarter, personal consumption expenditures (PCE) and exports increased more than previously estimated, but the general picture of economic growth remains the same
Final Q1 GDP Revised To 1.4% Due To Spike In Consumer Spending; Corporate Profits Tumble - Moments ago the BEA released its third estimate of GDP, according to which Q1 GDP rose by 1.4% in the quarter, above the second estimate of 1.2%, and double the initial estimate of 0.7%. It was also above the consensus estimate of 1.2%, primarily as a result of a jump in personal consumption, which contributed 0.75% to the bottom line, well above the 0.44% estimated last quarter. In annualized terms, personal consumption rose 1.1% in 1Q, beating estimates of 0.6%, and above the 0.6% second estimate however, it was still well below last quarter's 3.5% increase. In addition to consumer spending, the upward revision to GDP growth reflected upward revisions to exports, which were partly offset by a downward revision to business investment. Additionally, denying the poor recent string of CPI prints, inflation continued to run hot, with prices of goods and services purchased by U.S. residents increased 2.5% in the first quarter after increasing 2.0% in the fourth quarter. Excluding energy and food, prices rose 2.2 percent after increasing 1.6 percent. On a Q/Q basis, Core PCE Prices rose 2.0%, missing the expectations of a 2.1% increase, while the final GDP price index rose 1.9%, below the expected 2.2%.Despite the weaker dollar in Q1, net trade contributed only 0.2% to the bottom line GDP. And now for the bad news: corporate profits decreased 2.3 percent at a quarterly rate in the first quarter of 2017 a fter increasing 0.5 percent in the fourth quarter of 2016, a far cry from the non-GAAP numbers posted by S&P companies. Profits of domestic nonfinancial corporations decreased 1.0 percent after decreasing 4.9 percent. Profits of domestic financial corporations decreased 5.4 percent after increasing 5.4 percent. Profits from the rest of the world decreased 2.1 percent after increasing 11.0 percent. Still, as Citi summarizes, "this data argues that even with the list of challenges discussed in the market in Q1, the data suggests the strength of the US economy was underestimated. Will we see more of that in the data (or data revisions) ahead?"
This Is What Americans Spent The Most Money On In The First Quarter -- As noted earlier, it was a stronger than expected quarter for the US, in which US households reportedly spent far more than initially estimated, with Real Consumer Spending rising 1.1%, above the 0.6% expected, and contributing 0.75% to the bottom line annualized growth, or just over half the 1.4% GDP print. As Citi commented after the GDP data, "The market didn’t expect this much of a positive revision in the Q1 GDP print; in fact, it didn’t expect a revision at all. We zoom in on the personal consumption print, which has seen an uptick of 0.5% to 1.1%." So, as we always do, we decided to take a look at what Americans spent the most money on in Q1, to find what the source of this unexpected spending splurge. Here traditionally we expect healthcare (i.e., the Obamacare tax) to provide the bulk of the upside, but in Q1 we found only a modest contribution, with a spending increase of only $11.2 billion compared to Q4. Additionally, we found that in the quarter American spending actually declined on such staples as housing and utilities, clothing and footwear, gasoline (to be expected with dropping gas prices) and, perhaps the biggest surprise, motor vehicles and parts, which declined by a whopping $17.5 billion annualized: a bright red flag over the US auto industry. So what jumped? Well, as was the case in the first GDP estimate, for some inexplicable reason, in the first quarter American consumer were scrambling to buy... recreational vehicles!? Incidentally, this won't be the first time Americans splurged on RVs. The last time they did this? Exactly one year ago. To be sure, the ongoing surge in RV purchases sure would explain why the housing recovery, overdue by about 5 years, still fails to materialize. And another observation: if it wasn't for the inexplicable splure on RVs, GDP would have grown by one third less, or less than 1%.
Q1 Real GDP Per Capita: 0.81% Versus the 1.4% Headline Real GDP -- The Third Estimate for Q1 GDP came in at 1.4% (1.42% to two decimals), down from 2.1% in the Third Estimate of Q4 GDP. With a per-capita adjustment, the headline number is lower at 0.81% to two decimal points. Here is a chart of real GDP per capita growth since 1960. For this analysis, we've chained in today's dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence our 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale. The chart includes an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than the long-term trend. In fact, the current GDP per-capita is 9.9% below the pre-recession trend. The standard measure of GDP in the US is expressed as the compounded annual rate of change from one quarter to the next. The current real GDP is 1.42%. But with a per-capita adjustment, the data series is lower at 0.81%. The 10-year moving average illustrates that US economic growth has slowed dramatically since the last recession.
Forecasts Still Point To Stronger GDP Growth In Q2 vs. Q1 - Picerno - Most estimates of second-quarter US GDP growth continue to project an acceleration in economic activity following Q1’s sluggish rise. But weaker-than-expected numbers in yesterday’s data releases may be a sign that analysts will trim expectations for Q2’s rebound. Durable goods orders in May fell by a deeper-than-forecast 1.1%, the Commerce Department reported on Monday. The drop marked the second consecutive monthly setback. Meanwhile, the Chicago Fed National Activity Index’s monthly print fell to its lowest reading since January.It’s unclear if yesterday’s numbers will weigh on revised Q2 GDP estimates in the days ahead, although at least one projection remains unaffected. The Atlanta Fed’s GDPNow model remained unchanged at 2.9% (as of June 26) in the wake of yesterday’s update of durable goods orders. The Fed bank’s revised projection for Q2 still represents a healthy improvement over the weak 1.2% increase in Q1. Meantime, IHS Markit on Friday reported that “the economy ended the second quarter on a softer note,” based on survey data published by the firm. “The June PMI surveys showed some pay-back after a strong May, indicating the second-weakest expansion of business activity since last September.” Using the US Composite PMI as a guide, the consultancy advised estimated the economy is growing at a 0.4% quarterly rate (1.5% annualized) in Q2, “or just over 2% once allowance is made for residual seasonality in the official GDP data.” In addition, the PMI survey points to non-farm payroll growth of roughly 170,000, a moderate pace that’s slightly above the monthly average reported for the year so far through May.The weaker-than-expected readings in yesterday’s data may be a reason to trim expectations a bit, but for the moment it’s still reasonable to assume that Q2 GDP growth will pick up in the government’s report that’s due out at the end of next month. Projecting a strong rebound of 3% or more looks slightly challenged, but a 2% rise still looks reasonable.
Latest GDP Forecast - Down To 2.7% -- June 30, 2017 ---GDP Now link here. Latest forecast: 2.7 percent — June 30, 2017.The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2017 is 2.7 percent on June 30, down from 2.9 percent on June 26. The forecast of the contribution of net exports to second-quarter real GDP growth fell from –0.34 percentage points to –0.51 percentage points after Wednesday's advance release on inventories and international trade in goods from the U.S. Census Bureau.
Jim Chanos: U.S. Economy is Worse Than You Think - Lynn Parramore, Senior Research Analyst, Institute for New Economic Thinking. -- Since the election of Donald Trump, the stock market has soared and many pundits have noted positive economic trends in the US. Jim Chanos of Kynikos Associates, known for his financial prescience, is less sanguine. He sat down with INET’s Lynn Parramore to discuss the underlying components of the economy, in which he finds several areas of concern. Chanos is a member of INET’s Global Partners Council.
Treasury Will Run Out Of Cash In Mid-October, CBO Warns --With Trump tax reform far on the backburner, as the administration is focused on at least getting Obamacare repeal past the Senate, the CBO reminded that in just 4 months a more material threat is facing the US: according to the latest CBO calculations, the Treasury will "most likely" run out of cash in early to mid-October, unless the most polarized Congress in history raises the debt ceiling.This is what the CBO just said in its latest report on the "Federal Debt and the Statutory Limit", released moments ago.If the debt limit is not increased above the amount that was established on March 16, 2017, the Treasury will not be authorized to issue additional debt that increases the amount outstanding. (It will be able to issue additional debt only in the amount of maturing debt or the amounts cleared by taking extraordinary measures.) That restriction would ultimately lead to delays of payments for government programs and activities, a default on the government’s debt obligations, or both. CBO estimates that without an increase in the debt limit, the Treasury, by using all available extraordinary measures, would most likely be able to continue borrowing and have sufficient cash to make its usual payments until early to mid-October of this year.In recent weeks, Treasury Secretary Mnuchin has urged Congress to lift the debt limit before its August recess (with others calling to abolish it altogether) although he also conceded that the nation can likely pay its bills if action waited until September, which is all lawmakers needed to know they don't have to rush until the very last minute. He has also warned that the closer the U.S. gets to breaching the debt ceiling in mid-October, the more likely financial markets are to react unfavorably, although that warning appears to have been negated by his first one. On Thursday following the release of the CBO report, he again urged Congress to take action.
The Budget Reform Idea That Won’t Die - The U.S. budget is a messy and contentious political process. That fact is greatly exacerbated by the deepening political and ideological divides at work within the country. That may sound defeatist, but maybe, just maybe, the the depth of division coupled with the desire for change means that the time is finally right for the lauded but never-passed bipartisan budget-reform effort, Simpson-Bowles. The budget agreement, put forth by Alan Simpson and Erskine Bowles in 2010, was defeated three-times before supporters figured it was time to lay the idea to rest. The duo then tried again in 2013, to the same outcome. Critics have been slamming President Trump’s budget proposal—which stands to add $2 trillion to the debt over the next few years, according to the Tax Policy Center. That’s in addition to the massive cuts to poverty initiatives and health-care funding, that have left more economists, policymakers, and business executives trying to formulate better, more sustainable options. Despite it’s history of continual defeat, David Cohen a senior executive at Comcast, posited that Simpson-Bowles might be the precise thing that the American economy needs right now. And Cohen apparently isn’t alone. His suggestion that the constantly resurfacing plan might be the way forward was met with large applause and echoes of “that’s exactly right” from members of the audience at the Aspen Ideas Festival, which is co-hosted by the Aspen Institute and The Atlantic. Simpson-Bowles called for more than $1 trillion in cuts for military spending, $2.6 trillion in tax increases over a decade (including big tax hikes for wealthier Americans due to the treatment of capital gains and dividends as ordinary income), shifted charitable deductions and mortgage interested to a tax-credit capped at 12 percent, and increased both the retirement age and the maximum amount of income that could be subject to social security tax. As my colleague, Derek Thompson wrote back in 2010, “everybody found something to hate.’
Under Trump, US foreign policy is increasingly being left to the generals - Qatar is home to the US’s largest military base in the Middle East and a long-time US ally. Since its Gulf neighbors, led by Saudi Arabia, imposed a blockade two weeks ago, president Donald Trump has enthusiastically praised the blockade and attacked Qatar—contradicting the messages from his own Defense Department, State Department, and Senate Republicans. His ex-ambassador to Qatar, who abruptly stepped down last week, this week took to Twitter to cheer the State Department for chiding the Saudis. That same day, Trump chastised China’s attempts to rein in North Korea, tweeting that it had “not worked out.” That must have made for an uncomfortable meeting, just hours later, between top Chinese defense officials and diplomats and the US secretaries of State, Rex Tillerson, and Defense, James Mattis. US foreign policy experts say they’ve rarely seen such a wide-open divide between what a US president is saying and long-stated US government agenda, or between the president and his own top policy and security advisors. “It looks like we have two governments at the moment,” . Aside from contradicting his own officials, Trump has made a habit of bypassing them. This week his son-in-law and senior adviser, Jared Kushner, and the Trump Organization’s former legal counsel are in Israel for peace talks with Israeli and Palestinian authorities—cutting out the State Department and its decades of experience. Kushner will brief Trump, Tillerson, and national security advisor HR McMaster on his return, according to the White House. During Trump’s last visit to the Middle East, Kushner sat in on a meeting with Israeli prime minister Binyamin Netanyahu, while McMaster was left outside, reportedly for hours. White House officials seem to have given up trying to reconcile the conflicting approaches. Asked on Air Force One on June 21 how the president’s tweets affected Mattis and Tillerson’s meeting with Chinese officials, a spokeswoman had only this enigmatic response: “The president is not going to project his strategy. And tweets speak for themselves.” While Trump has focused on a few hot spots, the result is that the bureaucrats and generals are running much of US foreign policy.
American Special Ops Forces Have Deployed to 70 Percent of the World’s Countries in 2017 - The Nation - The tabs on their shoulders read “Special Forces,” “Ranger,” “Airborne.” And soon their guidon—the “colors” of Company B, 3rd Battalion of the US Army’s 7th Special Forces Group—would be adorned with the “Bandera de Guerra,” a Colombian combat decoration. Colombia is hardly an anomaly when it comes to US special-ops deployments—or the results that flow from them. For all their abilities, tactical skills, training prowess, and battlefield accomplishments, the capacity of US Special Operations forces to achieve decisive and enduring successes—strategic victories that serve US national interests—have proved to be exceptionally limited, a reality laid bare from Afghanistan to Iraq, Yemen to the Philippines. The fault for this lies not with the troops themselves but with a political and military establishment that often appears bereft of strategic vision and hasn’t won a major war since the 1940s. Into this breach, elite US forces are deployed again and again. While special-ops commanders may raise concerns about the tempo of operations and strains on the force, they have failed to grapple with larger questions about the raison d’être of SOF, while Washington’s oversight establishment, notably the House and Senate Armed Services Committees, have consistently failed to so much as ask hard questions about the strategic utility of America’s Special Operations forces. “We operate and fight in every corner of the world,” boasts Gen. Raymond Thomas, the chief of US Special Operations Command (USSOCOM or SOCOM). “On a daily basis, we sustain a deployed or forward stationed force of approximately 8,000 across 80-plus countries. They are conducting the entire range of SOF missions in both combat and non-combat situations.” Those numbers, however, only hint at the true size and scope of this global special-ops effort. Last year, America’s most elite forces conducted missions in 138 countries—roughly 70 percent of the nations on the planet, according to figures supplied to TomDispatch by US Special Operations Command. Halfway through 2017, US commandos have already been deployed to an astonishing 137 countries, according to SOCOM spokesman Ken McGraw.
Trump, Qatar and the Danger of Total Confusion - The isolation of Qatar appears to be a major step in the Saudi plan, directed by the newly pronounced crown prince, Mohammed bin Salman (the 31-year-old in charge of the Saudi war in Yemen), to provoke a general confrontation between the Sunni world (led by itself) and Shiite world (led by Iran). After the announcement by the five Arab nations on June 5 that they would break ties with Qatar, Donald Trump praised the move.“During my recent trip to the Middle East,” he tweeted on June 6. “I stated that there can no longer be funding of Radical Ideology. Leaders pointed to Qatar – look!” And later that day: “So good to see the Saudi Arabia visit with the King and 50 countries already paying off. They said they would take a hard line on funding……extremism, and all reference was pointing to Qatar. Perhaps this will be the beginning of the end to the horror of terrorism!” “The nation of Qatar unfortunately has historically been a funder of terrorism at a very high level,” Trump told reporters at the White House June 9. “So we had a decision to make, do we take the easy road or do we finally take a hard but necessary action. We have to stop the funding of terrorism. I decided … the time had come to call on Qatar to end its funding. They have to end that funding. And their terrorist ideology.” But then on June 14 Pentagon spokesman Lt. Col. Roger Cabiness told CNN: “Secretary of Defense Jim Mattis met today with Qatari Minister of State for Defense Affairs Dr. Khalid al-Attiyah to discuss concluding steps in finalizing the Foreign Military Sales purchase of US-manufactured F-15 fighter aircraft by the State of Qatar. The $12 billion sale will give Qatar a state of the art capability and increase security cooperation and interoperability between the United States and Qatar.” And on June 21 State Department spokeswoman Heather Nauert declared that the more time passes, “the more doubt is raised about the actions taken by Saudi Arabia and the UAE…” Some people speculate that Trump in his sly wisdom is sending out contrasting messages to obtain his mysterious ends to make America great again. This gives the man too much credit. His problem is that he blabbers whatever—he thinks for the moment—makes him look tough. He projects confidence, without knowing what the hell he’s talking about. He’s a dangerous buffoon.
Saudi-Led Demands ‘Difficult’ for Qatar to Meet, Tillerson Says - Qatar will find it “very difficult” to comply with some demands made by the Saudi-led bloc to end the Gulf diplomatic crisis, though they can be a basis for talks, U.S. Secretary of State Rex Tillerson said on Sunday. “A productive next step would be for each of the countries to sit together and continue this conversation,” Tillerson said in an emailed statement. “We believe our allies and partners are stronger when they are working together towards one goal which we all agree is stopping terrorism and countering extremism. A lowering of rhetoric would also help ease the tension.” Tillerson had called on the bloc to spell out exactly what Qatar must do to end the diplomatic and economic isolation imposed nearly three weeks ago. The Saudis responded with 13 demands, including shutting the Al-Jazeera TV network, cutting back diplomatic ties with Iran and ending Turkey’s military presence in the country -- a list Qatar said was far from the “reasonable and actionable” proposals Tillerson said on June 21 he was seeking. “Qatar has begun its careful review and consideration of a series of requests presented by Bahrain, Egypt, Saudi Arabia and U.A.E.,” Tillerson said. “While some of the elements will be very difficult for Qatar to meet, there are significant areas which provide a basis for ongoing dialogue leading to resolution.” The crisis is adding uncertainty to a region fraught with instability and sectarian violence, and also comes at a time when the Gulf Arab monarchies are trying to attract foreign investment to reduce their economies’ dependency on oil exports. Iran and Turkey have backed Qatar in the crisis, with Turkish President Recep Tayyip Erdogan calling the demands an attack on the gas-rich nation’s sovereignty and against international law.
Tillerson and Mattis Cleaning Up Kushner’s Middle East Mess - Mattis was stunned by the Saudi move. “His first reaction was shock, but his second was disbelief,” a senior military officer says. “He thought the Saudis had picked an unnecessary fight, and just when the administration thought they’d gotten everyone in the Gulf on the same page in forming a common front against Iran.” At the time of the Saudi announcement, Mattis was in Sydney with Secretary of State Rex Tillerson to dampen concerns about the Trump administration’s withdrawal from the Trans-Pacific Partnership and the Paris climate accords. When the burgeoning split between the Saudis and Qataris was mentioned, Tillerson described it as no more than one of “a growing list or irritants in the region” that would not impair “the unified fight against terrorism …” But while Tillerson’s answer was meant to soothe concerns over the crisis, behind the scenes he and Mattis were scrambling to undo the damage caused by Saudi action. The two huddled in Sydney and decided that Tillerson would take the lead in trying to resolve the falling out. Which is why, three days after the Sydney press conference, Tillerson called on Saudi Arabia, the UAE, Bahrain and Egypt to ease their anti-Qatar blockade and announced that the U.S. supported a Kuwaiti-led mediation effort. The problem for Tillerson was that his statement was contradicted by Donald Trump who, during a Rose Garden appearance on the same day, castigated Qatar, saying the emirate “has historically been a funder of terrorism at a very high level.” A close associate of the secretary of state says that Tillerson was not only “blind-sided by the Trump statement,” but “absolutely enraged that the White House and State Department weren’t on the same page.” Tillerson’s aides, I was told, were convinced that the true author of Trump’s statement was U.A.E. ambassador Yousef Al Otaiba, a close friend of Trump son-in-law Jared Kushner. “Rex put two-and-two together,” his close associate says, “and concluded that this absolutely vacuous kid was running a second foreign policy out of the White House family quarters. Otaiba weighed in with Jared and Jared weighed in with Trump. What a mess.” The Trump statement was nearly the last straw for Tillerson, this close associate explains: “Rex is just exhausted. He can’t get any of his appointments approved and is running around the world cleaning up after a president whose primary foreign policy adviser is a 31-year-old amateur.”
The Qatar Crisis and the Trump Administration’s Foreign Policy Dysfunction -- American Conservative - Mark Perry reports on the internal rifts inside the Trump administration over the Qatar crisis: A close associate of the secretary of state says that Tillerson was not only “blind-sided by the Trump statement,” but “absolutely enraged that the White House and State Department weren’t on the same page.” Tillerson’s aides, I was told, were convinced that the true author of Trump’s statement was U.A.E. ambassador Yousef Al Otaiba, a close friend of Trump son-in-law Jared Kushner. “Rex put two-and-two together,” his close associate says, “and concluded that this absolutely vacuous kid was running a second foreign policy out of the White House family quarters. Otaiba weighed in with Jared and Jared weighed in with Trump. What a mess.” The Trump statement was nearly the last straw for Tillerson, this close associate explains: “Rex is just exhausted. He can’t get any of his appointments approved and is running around the world cleaning up after a president whose primary foreign policy adviser is a 31-year-old amateur.” This is consistent with other reports, and it matches up with my view of the split between the State Department and the White House during this crisis. The rift between Tillerson and Trump on this issue has been impossible to miss, and it has been the latest in a series of episodes in which Trump publicly undermines or contradicts his own Cabinet officials about what the U.S. position on a given issue is. That dysfunction has been on display for months, but it finally seems to be exhausting the patience of Trump’s top Cabinet members. Under these circumstances, it is hard to see how Tillerson can effectively do his job when he is being repeatedly sabotaged and overridden and everyone in foreign governments knows that he has little or no clout with the president. The role of Kushner in all this helps explain why Trump has so credulously accepted the Saudi-Emirati line, since Kushner has close ties with both Mohammed bin Salman and the UAE’s crown prince. The striking thing in Perry’s report is how surprised Mattis reportedly was by the move to blockade and punish Qatar: In fact, Mattis was stunned by the Saudi move. “His first reaction was shock, but his second was disbelief,” a senior military officer says. “He thought the Saudis had picked an unnecessary fight, and just when the administration thought they’d gotten everyone in the Gulf on the same page in forming a common front against Iran.”
Nick Turse: The Special Ops Fallacy – Throwing Elite Resources at “Winless Wars” - For all their abilities, tactical skills, training prowess, and battlefield accomplishments, the capacity of U.S. Special Operations forces to achieve decisive and enduring successes — strategic victories that serve U.S. national interests — have proved to be exceptionally limited, a reality laid bare from Afghanistan to Iraq, Yemen to the Philippines. The fault for this lies not with the troops themselves, but with a political and military establishment that often appears bereft of strategic vision and hasn’t won a major war since the 1940s. Into this breach, elite U.S. forces are deployed again and again. While special ops commanders may raise concerns about the tempo of operations and strains on the force, they have failed to grapple with larger questions about the raison d’être of SOF, while Washington’s oversight establishment, notably the House and Senate Armed Services Committees, have consistently failed to so much as ask hard questions about the strategic utility of America’s Special Operations forces. “We operate and fight in every corner of the world,” boasts General Raymond Thomas, the chief of U.S. Special Operations Command (USSOCOM or SOCOM). “On a daily basis, we sustain a deployed or forward stationed force of approximately 8,000 across 80-plus countries. They are conducting the entire range of SOF missions in both combat and non-combat situations.” Those numbers, however, only hint at the true size and scope of this global special ops effort. Last year, America’s most elite forces conducted missions in 138 countries — roughly 70% of the nations on the planet, according to figures supplied to TomDispatch by U.S. Special Operations Command. Halfway through 2017, U.S. commandos have already been deployed to an astonishing 137 countries, according to SOCOM spokesman Ken McGraw. Special Operations Command is tasked with carrying out 12 core missions, ranging from counterinsurgency and unconventional warfare to hostage rescue and countering the proliferation of weapons of mass destruction. Counterterrorism — fighting what the command calls violent extremist organizations (VEOs) — may, however, be what America’s elite forces have become best known for in the post-9/11 era. “The threat posed by VEOs remains the highest priority for USSOCOM in both focus and effort,” says Thomas. “Special Operations Forces are the main effort, or major supporting effort for U.S. VEO-focused operations in Afghanistan, Syria, Iraq, Yemen, Somalia, Libya, across the Sahel of Africa, the Philippines, and Central/South America — essentially, everywhere Al Qaeda (AQ) and the Islamic State of Iraq and Syria (ISIS) are to be found…” Year after year, U.S. special operators find themselves fighting new waves of militants across multiple continents, including entire terror groups that didn’t exist on 9/11. All U.S. forces killed in Afghanistan in 2017 have reportedly died battling an Islamic State franchise, which began operations there just two years ago.
Senator: US Strikes on Syrian Forces ‘Unlawful’ - In comments that will likely add to the push for a new Authorization for the Use of Military Force (AUMF) to be drafted, Sen. Tim Kaine (D – VA) has pointed out that recent US strikes inside Syria against the Syrian government and its allies are “unlawful” under the current AUMF. The whole operation in Syria is on dubious footing under the 2001 AUMF, which President Obama initially cited sending troops to Syria, but Sen. Kaine noted that the AUMF only authorized action against the perpetrators of 9/11, and that “nobody claims that Syria was a perpetrator. Nobody claims that they are connected to al-Qaeda. In fact, they’re battling against al-Qaeda in Syria.Kaine and Sen. Jeff Flake (R – AZ) are pushing a new AUMF designed to replace the 2001 version, and that version would explicitly focus on ISIS and al-Qaeda, as opposed to the vague “perpetrators” language that the old version uses. Neither would permit attacks on Syrian military targets, however. The Pentagon argued that last weekend’s attack on a Syrian Su-22 bomber was “collective self-defense” intended to protect the Kurds from Syria’s military. This is, however, well beyond the scope of the supposed US mission in Syria, which is to fight against ISIS, as was a previous flurry of Tomahawk missiles fired at a Syrian Air Force base a few months prior. There were some debates on a new AUMF back in 2015, but they never advanced to a proper vote on the question, and since then administrations have basically treated the lack of a specific new AUMF with specific limits as tantamount to a limitless authorization to go anywhere without approval.
Trump‘s Red Line - Seymour Hersh, Die Welt. - On April 6, United States President Donald Trump authorized an early morning Tomahawk missile strike on Shayrat Air Base in central Syria in retaliation for what he said was a deadly nerve agent attack carried out by the Syrian government two days earlier in the rebel-held town of Khan Sheikhoun. Trump issued the order despite having been warned by the U.S. intelligence community that it had found no evidence that the Syrians had used a chemical weapon. The available intelligence made clear that the Syrians had targeted a jihadist meeting site on April 4 using a Russian-supplied guided bomb equipped with conventional explosives. Details of the attack, including information on its so-called high-value targets, had been provided by the Russians days in advance to American and allied military officials in Doha, whose mission is to coordinate all U.S., allied, Syrian and Russian Air Force operations in the region. Some American military and intelligence officials were especially distressed by the president's determination to ignore the evidence. "None of this makes any sense," one officer told colleagues upon learning of the decision to bomb. "We KNOW that there was no chemical attack ... the Russians are furious. Claiming we have the real intel and know the truth ... I guess it didn't matter whether we elected Clinton or Trump.“ Within hours of the April 4 bombing, the world’s media was saturated with photographs and videos from Khan Sheikhoun. The provenance of the photos was not clear and no international observers have yet inspected the site, but the immediate popular assumption worldwide was that this was a deliberate use of the nerve agent sarin, authorized by President Bashar Assad of Syria. Trump endorsed that assumption by issuing a statement within hours of the attack, describing Assad’s "heinous actions" as being a consequence of the Obama administration’s "weakness and irresolution" in addressing what he said was Syria’s past use of chemical weapons. To the dismay of many senior members of his national security team, Trump could not be swayed over the next 48 hours of intense briefings and decision-making. In a series of interviews, I learned of the total disconnect between the president and many of his military advisers and intelligence officials, and was provided with evidence of that disconnect, in the form of transcripts of real-time communications, immediately following the Syrian attack on April 4.(very detailed report)
Hersh’s Big Scoop: Bad Intel Behind Trump’s Syria Attack -- Legendary investigative reporter Seymour Hersh is challenging the Trump administration’s version of events surrounding the April 4 “chemical weapons attack” on the northern Syrian town of Khan Sheikhoun – though Hersh had to find a publisher in Germany to get his information out. In the Sunday edition of Die Welt, Hersh reports that his national security sources offered a distinctly different account, revealing President Trump rashly deciding to launch 59 Tomahawk missiles against a Syrian airbase on April 6 despite the absence of intelligence supporting his conclusion that the Syrian military was guilty. Hersh draws on the kind of inside sources from whom he has earned longstanding trust to dispute that there ever was a “chemical weapons attack” and to assert that Trump was told that no evidence existed against the Syrian government but ordered “his generals” to “retaliate” anyway. Marine General Joseph Dunford, Chairman of the, Joint Chiefs of Staff, and former Marine General, now Defense Secretary James “Mad-Dog” Mattis ordered the attacks apparently knowing that the reason given was what one of Hersh’s sources called a “fairy tale.” They then left it to Trump’s national security adviser Army General H. R. McMaster to further the deceit with the help of a compliant mainstream media, which broke from its current tradition of distrusting whatever Trump says in favor of its older tradition of favoring “regime change” in Syria and trusting pretty much whatever the “rebels” claim. According to Hersh’s sources, Russia and Syrian Air Force officers gave details of the flight path to and from Khan Sheikhoun in English, Hersh reported. The target was a two-story cinderblock building in which senior leaders – “high-value targets” – of the two jihadist groups controlling the town were about to hold a meeting. Because of the perceived importance of the mission, the Russians took the unusual step of giving the Syrian air force a GPS-guided bomb to do the job, but the explosives were conventional, not chemical, Hersh reported. The meeting place was on the floor above the basement of the building, where a source whom Hersh described as “a senior adviser to the U.S. intelligence community,” told Hersh: “The basement was used as storage for rockets, weapons, and ammunition … and also chlorine-based decontaminates for cleansing the bodies of the dead before burial.”
Seymour Hersh: Trump Ignored Intel Before Bombing Syria - naked capitalism - Jerri-Lynn here: Veteran investigative journalist Seymour Hersh needs no introduction. In this Real News Network interview, Aaron Maté and Hersh discuss his recent Die Welt article on Trump’s decision to bomb Syria. Formerly, Hersh’s work appeared regularly in The New Yorker. Now, he must turn to foreign outlets to disseminate his work, and as he says below about this important story, ” I had a hell of a time getting it published.” I wonder why that’s so? For interested readers, I’m including a link to the English version of Hersh’s Die Welt piece, Trump‘s Red Line. For those who have the time, it might make sense to read that first, before turning to this interview. (interview & transcript)
U.S. Military Officials: There Was NO Chemical Weapons Attack In Syria … Trump Bombed Syria DESPITE Advice From Military -- A top U.S. missile and chemical weapons expert has documented for months that the Syrian government did not carry out a chemical weapons attack against civilians, and that contrary claims by the Trump White House, French intelligence services, the New York Times, CNN and other “mainstream” sources are wrong … and worthless propaganda. Former top military and intelligence officials – including many who warned against the faulty Iraq intelligence in advance of the Iraq war – have long said that the claims that Assad carried out the chemical weapons attacks was bunkum. Pulitzer-prize winning investigative reporter Seymour Hersh – who broke the stories of the Mai Lai massacre in Vietnam and the Iraq prison torture scandals, which rightfully disgraced the Nixon and Bush administrations’ war-fighting tactics – reported yesterday in the large German publication Weld that U.S. military officials tried to tell Trump that a chemical weapons attack never occurred at all: On April 6, United States President Donald Trump authorized an early morning Tomahawk missile strike on Shayrat Air Base in central Syria in retaliation for what he said was a deadly nerve agent attack carried out by the Syrian government two days earlier in the rebel-held town of Khan Sheikhoun. Trump issued the order despite having been warned by the U.S. intelligence community that it had found no evidence that the Syrians had used a chemical weapon. The available intelligence made clear that the Syrians had targeted a jihadist meeting site on April 4 using a Russian-supplied guided bomb equipped with conventional explosives. Details of the attack, including information on its so-called high-value targets, had been provided by the Russians days in advance to American and allied military officials in Doha, whose mission is to coordinate all U.S., allied, Syrian and Russian Air Force operations in the region. Some American military and intelligence officials were especially distressed by the president’s determination to ignore the evidence. “None of this makes any sense,” one officer told colleagues upon learning of the decision to bomb. “We KNOW that there was no chemical attack … the Russians are furious. Claiming we have the real intel and know the truth … I guess it didn’t matter whether we elected Clinton or Trump.“
White House accuses Syria of planning another chemical attack, warns it would ‘pay a heavy price’ -- Telegraph --Britain will support any fresh retaliation by the US for the use of chemical weapons by Syria, Michael Fallon has said, after the White House revealed it had intelligence the regime was planning another attack. The US is thought to have observed preparations at Shayrat air base, where jets which carried out a deadly sarin gas strike in April took off from, and warned it would pay a "heavy price" if it went ahead with such an assault. Sir Michael, defence secretary, said that the UK backed the US administration of president Donald Trump when it mounted a Tomahawk missile strike against the regime following the attack on the rebel-held town of Khan Sheikhoun, which left 74 people dead, and was prepared to do so again. "As always in war, the military action you use must be justified, it must be legal, it must proportionate, it must be necessary. In the last case it was," he said."If the Americans take similar action again, I want to be very clear - we will support it.” Sean Spicer, White House spokesman, said in a statement Monday night: “The United States has identified potential preparations for another chemical weapons attack by the Assad regime that would likely result in the mass murder of civilians, including innocent children.” The two-paragraph communique did not offer any evidence for the claims. Syria denied the claims on Tuesday, saying the statement foreshadowed a "diplomatic battle" between the countries. Russia, Assad’s main ally, rebuked what it called US “threats”.
Tight circle of security officials crafted Trump’s Syria warning -- President Donald Trump’s blunt, public warning to the Syrian regime late Monday night was cobbled together in a series of hurried discussions, squeezed in between meetings with Indian Prime Minister Narendra Modi — and kept among a small, tight circle of top officials. Defense Secretary James Mattis and Secretary of State Rex Tillerson both arrived at the White House late Monday afternoon, ahead of the Rose Garden ceremony at which Trump and Modi each read a prepared statement. Upon the Cabinet members’ arrival, according to a senior defense official, they were informed of Trump’s plan to issue a public warning to Syrian President Bashar Assad, based on new intelligence that the Syrian regime was preparing another chemical weapons attack on its own people.National security adviser H.R. McMaster, who also was at the White House for meetings, had already been briefed and had weighed in on the plan, administration sources said. But no stand-alone principals meeting followed to discuss the intelligence, which Trump received Monday morning, according to two senior administration officials. Rather, over the course of the day, officials said, McMaster, Mattis, Tillerson and a few other top officials had the opportunity to “work the language” of the statement, in between meetings with Modi. None of them expressed any hesitation or disagreement about the decision to issue a public warning, according to one of the senior administration officials. But a Defense Department official acknowledged that the events were “fast-moving” and that there were minimal deliberations about the bold move — and that only a limited number of top military officials were aware of the new intelligence and planned response.
Nothing About the White House’s Syria Announcement Was Normal - On Monday night, the White House warned that Syria’s Bashar al-Assad is preparing another chemical-weapons attack, and that if he follows through with it there will be “a heavy price.” The universal response was surprise. Because nothing can be assumed in analyzing the national-security actions of this administration — including competence or traditionally responsible intentions — two big questions hung over the announcement. First: Was it true? Second: As hopes for quick passage of the GOP health-care bill were fading, might it have been a cynical effort to distract from the chaos playing out on Capitol Hill? What got skeptical spider-senses tingling on Twitter is how quickly officials from the Pentagon, State Department, and Central Command (the arm of the military that would carry out those strikes Spicer threatened) said they hadn’t been told of this warning in advance — and were not clear on what intelligence had provoked it. Commenters who either wanted to defend Trump or intimate they were privy to insider knowledge suggested that perhaps the warning was based on intelligence so secret that folks at the Pentagon and State didn’t know about it. On the matter of factual veracity, let’s be clear about just how likely it is that Assad is in fact close to using chemical weapons. The U.N. has documented 160 cases of chemical-weapons use in Syria over the last six years, and considers another 131 incidents suspicious but unproven. The majority were committed by the Assad regime. Three hundred chemical attacks over six years — you do the math. The Trump administration could issue this warning once a week and be right more often than not. Whatever intelligence the Trump administration had to show was enough to engender polite and cooperative responses from Britain and France. The French government said that Trump had spoken with President Macron — who just days earlier was trolling him to energize voters in parliamentary elections — about the need to forge a “common response” in the event of another attack. This is not diplomatic-speak for “we believe you,” but it’s not “get lost” either.
How America Armed Terrorists In Syria --- Three-term Congresswoman Tulsi Gabbard of Hawaii, a member of both the Armed Services and Foreign Affairs committees, has proposed legislation that would prohibit any U.S. assistance to terrorist organizations in Syria as well as to any organization working directly with them. Equally important, it would prohibit U.S. military sales and other forms of military cooperation with other countries that provide arms or financing to those terrorists and their collaborators. Gabbard’s “Stop Arming Terrorists Act” challenges for the first time in Congress a U.S. policy toward the conflict in the Syrian civil war that should have set off alarm bells long ago: in 2012-13 the Obama administration helped its Sunni allies Turkey, Saudi Arabia, and Qatar provide arms to Syrian and non-Syrian armed groups to force President Bashar al-Assad out of power. And in 2013 the administration began to provide arms to what the CIA judged to be “relatively moderate” anti-Assad groups—meaning they incorporated various degrees of Islamic extremism.That policy, ostensibly aimed at helping replace the Assad regime with a more democratic alternative, has actually helped build up al Qaeda’s Syrian franchise al Nusra Front into the dominant threat to Assad.The supporters of this arms-supply policy believe it is necessary as pushback against Iranian influence in Syria. But that argument skirts the real issue raised by the policy’s history. The Obama administration’s Syria policy effectively sold out the U.S. interest that was supposed to be the touchstone of the “Global War on Terrorism”—the eradication of al Qaeda and its terrorist affiliates. The United States has instead subordinated that U.S. interest in counter-terrorism to the interests of its Sunni allies. In doing so it has helped create a new terrorist threat in the heart of the Middle East.
Congress Will Make Sure Taxpayers Keep Sending Money to Terrorists -- One of the few elected Democratic lawmakers with an extensive anti-war record, Rep. Tulsi Gabbard (D-Hawaii), has combined forces with Sen. Rand Paul (R-Kentucky) to push legislation through both the House and the Senate that would bar federal agencies from using taxpayer-backed funds to provide weapons, training, intelligence, or any other type of support to terrorist cells such as al-Qaeda, ISIS, or any other group that is associated with them in any way. The Stop Arming Terrorists Act is so unique that it’s also the only bill of its kind that would also bar the government from funneling money and weapons through other countries that support (directly or indirectly) terrorists such as Saudi Arabia.To our surprise — or should we say shame? — only 13 other lawmakers out of hundreds have co-sponsored Gabbard’s House bill. Paul’s Senate version of the bill, on the other hand, has zero co-sponsors. While both pieces of legislation were introduced in early 2017, no real action has been taken as of yet. This proves that Washington refuses to support bills that would actually provoke positive chain reactions not only abroad but also at home. Why? Well, let’s look at the groups that would lose a great deal in case this bill is signed into law. With trillions of tax dollars flowing to companies such as Boeing, Lockheed Martin, and even IBM, among others, companies that invest heavily in weapons, cyber security systems, and other technologies that are widely used in times of war would stand to lose a lot — if not everything — if all of a sudden, the United States chose to become a nation that stands for peace and free market principles. For one, these companies have a heavy lobbying presence, ensuring that lawmakers sympathetic to their plight are elected every two years. When the possibility of a new conflict appears on the horizon, these companies are the first to lobby heavily for action. But this dynamic isn’t a secret. We all know that the crony capitalist system that thrives in Washington, D.C., is the very bread and butter of politics in America. After all, President Dwight D. Eisenhower warned the nation in his farewell address in 1961 that “an immense military establishment and a large arms industry” were becoming the great powers behind U.S. politics, and that if we weren’t weary of this influence, we would risk living in a perpetual state of war.
"You Will Be Held Accountable Trump" ISIS Hackers Deface Government Website With Threatening Message --The websites of Ohio Governor John Kasich and other state government agencies were hacked on Sunday with a pro-ISIS post warning that President Donald Trump would be “held accountable” for deaths in Muslim countries, according to Bloomberg.Ten state websites and two servers that were affected have been taken off line for an investigation with law enforcement into how the hackers were able to deface them, said Tom Hoyt, a spokesman for the Ohio Department of Administrative Services.The Ohio governor’s website wasn’t loading on Sunday afternoon, and a cached version showed the message “hacked by Team System Dz.’’ The message, pictured below, read: “You will be held accountable Trump, you and all your people for every drop of blood flowing in Muslim countries’’ adding, “I love the Islamic State.” Kasich spokeswoman Emmalee Kalmbach said in a statement that “as soon as we were notified of the situation, we immediately began to correct it, and will continue to monitor until fully resolved.” Ohio Treasurer Josh Mandel, a Republican candidate for the U.S. Senate in 2018, posted on Facebook that the Department of Rehabilitation and Correction website had been hacked and said, “Wake up freedom-loving Americans. Radical Islam infiltrating the heartland.’’ The same pro-Islamic State message, accompanied by music, was also shown on Sunday on the website of Brookhaven, a town on New York’s Long Island about 50 miles from Manhattan,according to the New York Post..
Trump allies push White House to consider regime change in Tehran - Politico - As the White House formulates its official policy on Iran, senior officials and key allies of President Donald Trump are calling for the new administration to take steps to topple Tehran’s militant clerical government. Supporters of dislodging Iran’s iron-fisted clerical leadership say it’s the only way to halt Tehran’s dangerous behavior, from its pursuit of nuclear weapons to its sponsorship of terrorism. Critics say that political meddling in Iran, where memories of a 1953 CIA-backed coup remain vivid, risks a popular backlash that would only empower hard-liners. That’s why President Barack Obama assured Iranians, in a 2013 speech at the United Nations, that “we are not seeking regime change.” But influential Iran hawks want to change that under Trump. “The policy of the United States should be regime change in Iran,” said Sen. Tom Cotton (R-Ark.), who speaks regularly with White House officials about foreign policy. “I don’t see how anyone can say America can be safe as long as you have in power a theocratic despotism,” he added. Cotton advocated a combination of economic, diplomatic and covert actions to pressure Tehran’s government and “support internal domestic dissent” in the country. He noted that Iran has numerous minority ethnic groups, including Arabs, Turkmen and Balochs who “aren’t enthusiastic about living in a Persian Shiite despotism.” Secretary of State Rex Tillerson appeared to endorse subverting the Iranian regime during recent testimony about the State Department’s budget when Rep. Ted Poe (R-Texas) asked the diplomat whether the Trump administration supports “a philosophy of regime change” in Iran.
U.S. to list China among worst human trafficking offenders: sources - The United States plans to place China on its global list of worst offenders in human trafficking and forced labor, said a congressional source and a person familiar with the matter, a step that could aggravate tension with Beijing that has eased under President Donald Trump. The reprimand of China, Washington's main rival in the Asia-Pacific region, would come despite Trump's budding relationship with Chinese counterpart Xi Jinping and the U.S. president’s efforts to coax Beijing into helping to rein in North Korea’s nuclear and missile programs. Secretary of State Rex Tillerson has decided to drop China to "Tier 3," the lowest grade, putting it alongside Iran, North Korea and Syria among others, said the sources, who have knowledge of the internal deliberations and spoke on condition of anonymity. The rating is expected to be announced on Tuesday in an annual report published by the State Department's Office to Monitor and Combat Trafficking in Persons. A State Department official declined to comment on the report's contents and said the department "does not discuss details of internal deliberations." Tier 3 rating can trigger sanctions limiting access to U.S. and international aid, but U.S. presidents frequently waive such action. While it was unclear what led Tillerson to downgrade China, last year's report criticized the communist government for not doing enough to curb "state-sponsored forced labor" and concluded it did not meet "minimum standards" for fighting trafficking – though it still said Beijing was making significant efforts.
China 'outraged' by $1.42 billion planned U.S. arms sales to Taiwan | Reuters: China urged the United States to revoke immediately its "wrong decision" to sell Taiwan $1.42 billion worth of arms, saying it contradicted a "consensus" President Xi Jinping reached with his counterpart, Donald Trump, in talks in April in Florida. The sales would send a very wrong message to "Taiwan independence" forces, China's embassy in Washington said in a statement. A U.S. State Department spokeswoman said on Thursday the administration had told Congress of seven proposed sales to Taiwan, the first under the Trump administration.. "The Chinese government and Chinese people have every right to be outraged," the embassy said. China regards self-ruled Taiwan as a wayward province and has never renounced the use of force to bring it under its control. China's Nationalists fled to the island after losing the civil war with China's Communists in 1949. The United States is the sole arms supplier to Taiwan. "The wrong move of the U.S. side runs counter to the consensus reached by the two presidents in and the positive development momentum of the China-U.S. relationship," the embassy said. China's Defense Ministry said Taiwan was the "most important, most sensitive core issue in Sino-U.S. ties", warning the United States to end such sales to avoid further damaging peace and stability in the Taiwan Strait. Trump was critical of China during his successful 2016 presidential campaign but his meeting at his Mar-a-Lago resort in Florida with Xi raised hopes for warmer relations. Trump later played up his personal relationship with Xi, calling him a "good man", and stressed the need for China's help in reining in a defiant North Korea's development of nuclear weapons and missiles. China's anger over the U.S. plan to supply Taiwan with weapons risks undermining Trump's attempts to press China to help on North Korea.
China lashes out at US as Trump-Xi honeymoon ends -- China lashed out at the US on Friday in protest at an apparent sea change in the Trump administration’s policy towards Beijing as the White House prepared to slap punitive restrictions on Chinese steel imports, agreed an arms deal with Taiwan, and sanctioned a Chinese bank.Cui Tiankai, the Chinese ambassador to Washington, criticised the $1.4bn Taiwanese weapons deal and what he called the “long-arm jurisdiction” of the US in sanctioning Chinese companies. Mr Cui said the US actions undermined the mutual confidence built up by both sides and that they were “counter to the spirit of the Mar-a-Lago summit”. The deteriorating relations come less than 100 days since Mr Trump hosted Mr Xi at his Mar-a-Lago estate and said the leaders would have a “very great relationship”. Since then, the White House has become frustrated China was not doing enough to pressure North Korea to abandon its ballistic missile and nuclear programmes.
A ‘dangerously erratic’ Donald Trump doesn’t solve crises, he creates them -- Sidney Morning Herald-- Donald Trump is unique among US presidents not for his rough treatment of America's enemies but of its allies. His Vice-President, Mike Pence, must be aware of the problem. He offered Julie Bishop a way around it: "If you ever have any issues with the boss", he told Australia's Minister for Foreign Affairs, "give me a call". It's the diplomatic equivalent of a detour around a crash scene, a scene that Malcolm Turnbull had to fight his way through in his notorious first phone call with Trump. Since then, Australia's dealings with the Trump administration have been sound, by all accounts. Probably because the federal government deals chiefly with officials other than the President himself. "It's excellent that there are impressive individuals around Donald Trump," says the head of the Lowy Institute for International Policy, Michael Fullilove. "The system is trying to wrap itself around him and restrain him." But he's not convinced that this is any solution to the problem: "In times of crisis, the restraints fall away. In the end, presidents make history. The long-held instincts of the president cannot but determine overall US foreign policy. It was the case with George W. Bush, it was the case with Barack Obama and it will be the case with Donald Trump."
Addressing Trump’s Errant Foreign Policy - The American Conservative --Conservatives such as myself, who seek a return to America’s historic and successful foreign policy of non-intervention in overseas quarrels that are unrelated to American interests, thought we had won in November. In Donald Trump we had elected a non-interventionist president. He pledged good relations with Russia, avoidance of new wars, and, at least by inference, ending the conflicts he inherited, including the hopeless war in Afghanistan.But that’s not how things turned out. On some issues, Trump has been true to his campaign. On his recent European trip, he refused to bow down and worship the great clay god NATO, which exists primarily to rekindle the Cold War with Russia. He pulled out of the globalist Paris Agreement. So far he has not signed off on the idiotic plan to send more troops to Afghanistan and resume “nation building” there. But on a broader basis, the president has allowed his non-interventionist stance to be subverted by the Republican establishment. He has backed away from seeking an alliance with Russia. He has accepted continued deep American involvement in the Middle East. He has given the Pentagon more money, which, without military reform, just buys more expensive defeats. He has pursued strategically irrelevant quarrels with Iran and, dangerously, North Korea. This is not what “America First” looks like.
Trump to Meet With Putin at G-20 Gathering Next Week — President Trump will meet next week with President Vladimir V. Putin of Russia, the White House national security adviser said on Thursday, announcing highly anticipated talks amid escalating tensions over Moscow’s interference in the 2016 election and a series of inquiries into whether Mr. Trump’s associates colluded with Russia.The White House would not say whether Mr. Trump plans to press Mr. Putin on the issue of Russia’s meddling in last year’s election — a topic the president has avoided talking about despite deep concern inside his own administration and on Capitol Hill.The meeting, the first between the two since Mr. Trump took office, will occur on the sidelines of the Group of 20 economic summit meeting in Hamburg, Germany, providing a dramatic focal point for Mr. Trump’s second international trip as he faces deep skepticism on the world stage.“There’s no specific agenda — it’s really going to be whatever the president wants to talk about,” said Lt. Gen. H. R. McMaster, the president’s national security adviser. The encounter could have broad implications for American foreign policy. But it is also fraught with political overtones for Mr. Trump, who is under scrutiny about his willingness to be tough on Moscow after a campaign in which he praised Mr. Putin effusively and exhorted Russia — in what his aides now call a joke — to hack into Hillary Clinton’s email.
Senate passes deal to advance Russia sanctions bill | TheHill: The Senate on Thursday easily cleared a deal on legislation slapping new sanctions on Moscow, overcoming an unexpected roadblock that stalled the bill for weeks in the House. Senators sent the House a technical fix to the sanctions bill by unanimous consent, sidestepping the need to have a formal vote that would eat up limited floor time and further delay the measure. “The Senate has now transmitted to the House of Representatives the technical changes requested,” Sen. Bob Corker (R-Tenn.) said in a statement. “I had a good conversation with Speaker [Paul] Ryan [(R-Wis.)] last night, and I am hopeful the legislation will be considered in an appropriate and timely manner.” The move caps off week of back-and-forth negotiations after the Senate passed the Russia sanctions bill, which also includes new penalties for Iran, in a 98-2 vote earlier this month. Senators signaled earlier Thursday that they were nearing an agreement to try to overcome the hurdle that was threatening to leave the bill stuck in limbo as lawmakers leave for the weeklong July 4 recess. Corker and a Senate Democratic aide confirmed earlier Thursday that the agreement was being "hotlined," a fast-track process that allows senators to skip lengthy floor debate.
Tillerson blows up at top White House aide - Secretary of State Rex Tillerson’s frustrations with the White House have been building for months. Last Friday, they exploded. The normally laconic Texan unloaded on Johnny DeStefano, the head of the presidential personnel office, for torpedoing proposed nominees to senior State Department posts and for questioning his judgment.Tillerson also complained that the White House was leaking damaging information about him to the news media, according to a person familiar with the meeting. Above all, he made clear that he did not want DeStefano’s office to “have any role in staffing” and “expressed frustration that anybody would know better” than he about who should work in his department — particularly after the president had promised him autonomy to make his own decisions and hires, according to a senior White House aide familiar with the conversation. The episode stunned other White House officials gathered in chief of staff Reince Priebus’ office, leaving them silent as Tillerson raised his voice. In the room with Tillerson and DeStefano were Priebus, top Trump aide Jared Kushner and Margaret Peterlin, the secretary of state’s chief of staff. The encounter, described by four people familiar with what happened, was so explosive that Kushner approached Peterlin afterward and told her that Tillerson’s outburst was completely unprofessional, according to two of the people familiar with the exchange, and told her that they needed to work out a solution. It was the loudest manifestation yet of how frustrated Tillerson is in his new role. He has complained about White House attempts to push personnel on him; about the president’s tweets; and about the work conditions in a West Wing where he sometimes finds loyalty and competence hard to come by. Above all, the former ExxonMobil CEO, accustomed to having the final word on both personnel and policy in his corporate life, has balked at taking orders from political aides younger and less experienced than he is.
Secretary of State Gives Up on Diplomacy, Berates White House – A few months ago, Rex Tillerson was the chief executive of the world’s largest oil company — which is to say, he was the authoritarian ruler of a private empire powerful enough to bend nation-states to its will.Now, he finds himself widely derided as the least influential secretary of State in modern memory — one who appears to be a subordinate of a 36-year-old trust-fund dilettante who bought his way into Harvard, and married himself into power. Jared Kushner has (reportedly) undermined Tillerson’s attempts to shape foreign policy, while the White House won’t let him staff his department with anyone but pro-Trump sycophants.Last Friday, diplomatic relations between the State Department and White House finally broke down. As Politico reports:The normally laconic Texan unloaded on Johnny DeStefano, the head of the presidential personnel office, for torpedoing proposed nominees to senior State Department posts and for questioning his judgment.Tillerson also complained that the White House was leaking damaging information about him to the news media, according to a person familiar with the meeting. Above all, he made clear that he did not want DeStefano’s office to “have any role in staffing” and “expressed frustration that anybody would know better” than he about who should work in his department — particularly after the president had promised him autonomy to make his own decisions and hires, according to a senior White House aide familiar with the conversation.The episode stunned other White House officials gathered in chief of staff Reince Priebus’ office, leaving them silent as Tillerson raised his voice. In the room with Tillerson and DeStefano were Priebus, top Trump aide Jared Kushner and Margaret Peterlin, the secretary of state’s chief of staff.The Politico story goes on to suggest that Tillerson bears significant responsibility for this bad blood. One former State Department aide says that the former Exxon CEO went into his j ob “with a very negative attitude towards the White House,” while others complain that he isolates himself from the administration.
Edward Snowden Asks Ron Paul If Intelligence Reports Ever Swayed His Vote -- During an appearance on the Liberty Report last week, Dr. Ron Paul interviewed former NSA contractor Edward Snowden about the rise of the Deep State and how intelligence agencies are threatening Americans’ freedom. But in the closing moments of that interview, Snowden surprised Paul with an unexpected request: “I was thinking I could ask you a question Dr. Paul, again about the intelligence stuff…I think it’d be interesting to people and I don’t think we’ve ever heard it from your perspective…” As a former intelligence analyst and operative, Snowden wondered how well the intelligence community had performed in its mission to keep US policymakers informed on important world events, given that Paul had for more than two decades been a "consumer" of the intelligence community's products.“In the intelligence community at the working level, not the policy level, everyone is taught that the work that they do is to inform policy makers…to understand what the facts are so they can make the best decisions.”“You were in Congress for an extraordinary time…and one question I’ve always wondered is during all your time in Congress, how many times did the intelligence community provide some reports that they briefed to you…and the material was so impactful…so valuable that they’d been breaking all these laws to get it…how many times did it impact your vote?”Paul’s response? Not once.
Trump "Overrules" Cabinet, Prepares To Unleash Global Trade War --While one of Trump's recurring campaign promises was that he would "punish" China and other key US trade counterparties if elected, for taking advantage of free-trade by imposing steep tariffs and duties on foreign imports to "level the playing field", the President's stance changed drastically after the election, U-turning following his amicable meeting with China's president Xi Jinping in March, but mostly as a result of pressure by his ex-Goldman advisors to keep existing trade arrangements in place and not "rock the boat."Now, all that may be about to fall apart.According to Axios, behind the constant media scandals, "one of the most consequential and contentious internal debates of his presidency unfolded during a tense meeting Monday in the Roosevelt Room of the White House" where with "more than 20 top officials present, including Trump and Vice President Pence, the president and a small band of America First advisers made it clear they're hell-bent on imposing tariffs — potentially in the 20% range — on steel, and likely other imports."In other words, Trump - true to his campaign promises - is set to launch a global trade wars after all, one where then main country impacted would be China, however the collateral damage would extend to Canada, Mexico, Japan, Germany and the UK.And what may be even more striking is that Trump overruled his cabinet, as "the sentiment in the room was 22 against and 3 in favor — but since one of the three is named Donald Trump, it was case closed." Axios adds that while "no decision has been made, the President is leaning towards imposing tariffs, despite opposition from nearly all his Cabinet."
Donald Trump is planning a trade war, and the first casualty will be American jobs - As part of his “America First” principles, president Donald Trump and the steel industry figures he has brought into his administration, including commerce secretary Wilbur Ross, are planning to overrule virtually his entire cabinet to impose 20% tariffs on steel imports, Axios reports. They plan to cite “national security” concerns. Aside from angering US allies and undermining global trade norms, the first victims of such a policy are likely to be American workers who make things with steel. Here are the simple economics: There are 60,000 US workers employed in the steel and iron-working industry. More than 900,000 American workers make cars and car parts out of that steel. While tariffs will be a boon to the domestic steel industry, driving up prices, those same price increases will make using that steel more expensive, especially in a competitive global market. Driving up prices of raw materials is a good incentive to move manufacturing overseas. We even have an object lesson: In 2002, president George W. Bush imposed tariffs on steel imports for much the same reason as Trump—combatting cheap imports from other countries—but ended them when the World Trade Organization ruled them illegal. Over the 18 months that the tariffs were imposed, a spike in steel prices put 200,000 workers out of their jobs, according to a study (pdf) paid for by companies who buy steel. Some of the states with concentrated job losses were those that were key to Trump’s victory in 2016, including Pennsylvania, Ohio, Michigan and Florida. It’s true that the steel industry has suffered in the US and Europe thanks in part to state-backed firms in China dumping cheap steel on the international market. But unilateral tariffs don’t promise a simple solution, since the US bought less than 2% of China’s steel exports in 2015, and less than 1% last year, a result of 20 trade remedies—rules that limit unfair sales—including four that went into effect last December after court wins against China by the Obama administration. Most US steel imports come from Brazil, Canada and South Korea.
GOP Push for 20-Year Tax Cut Grows as Ryan Seeks Permanent Fix -- A Republican senator is building support to change budget rules in order to make temporary tax cuts last for two decades or more, but he has yet to convince a critical figure -- House Speaker Paul Ryan.Ryan says he wants permanent tax cuts, a goal he repeated this week in response to questions about Senator Pat Toomey’s proposal to relax time limits on any cuts that would increase the federal deficit. Beyond Ryan’s skepticism, Toomey’s proposal carries procedural challenges and political risks for the GOP, according to budget experts.The change would at least double the time frame allowed for enacting tax cuts that add to the deficit -- marking a sea change for budget rules and making it easier for the GOP to enact lower rates without any support from Democrats. Republicans control only 52 of the Senate’s 100 seats, and they want to pass a tax bill under a process called reconciliation that allows for a simple-majority vote. Currently, reconciliation rules require that any changes that would add to the deficit outside a 10-year window must be set to expire.Toomey’s proposal to extend the time horizon to 20 or 30 years has gained the support of influential Republicans including Senate Finance Chairman Orrin Hatch and House Freedom Caucus Chairman Mark Meadows, as well as anti-tax activist Grover Norquist and conservative groups such as the Club For Growth. “I’m talking to my colleagues all the time about it, including recently more and more House members who, once you walk people through it, they get the logic of this,” Toomey said to reporters Thursday. “The alternative is really weak tax reform.”
Taxes May Be Certain, but Tax Reform Is Not – Gallup -- Donald Trump is a man who throws down gauntlets, and he threw down several big ones during his campaign for president -- confronting the status quos on immigration, on healthcare and on taxes, to name a few. He is now pursuing bold policy changes on each. But it could be Trump's action on taxes that matters most to whether the stock market continues to ride high, GDP growth returns to a healthy 3% and, therefore, whether his presidency is judged well in posterity. Aside from whether tax experts and Washington politicians are willing to upend the tax code, it is important to note where the American people stand on the need for action on taxes. It must be remembered that taxpayers may dislike the current tax system but not be convinced that Congress and the Trump administration will make it any better -- change could be worse. Without a strong push from the American people, Trump's tax reform might not materialize. During the 2016 presidential campaign, Gallup tested several of candidate Trump's tax proposals.
- He advocated eliminating most federal income tax deductions and loopholes for the very rich, and Gallup found 63% of American adults favoring this with just 17% opposed.
- His proposal to simplify the federal tax code -- reducing the current seven tax brackets to four -- was also popular, with 47% agreeing and only 12% disagreeing.
- Trump's plan to eliminate the estate tax paid when someone dies garnered considerably more agreement than disagreement from Americans, 54% to 19%. Notably, this is an issue that Congress and the wider public have considered in the recent past, and public sentiment on the issue today is in line with past Gallup polls on this issue, such as when it asked about keeping the estate tax from increasing in 2010.
More recently, in March 2017, Americans viewed President Trump's general plan to "significantly cut federal income taxes for the middle class" positively: 61% agreed with the plan (with no mention of Trump in the question), 26% disagreed and 13% had no opinion. Trump's proposal to lower corporate tax rates, however, elicited a split decision, with 38% reacting positively, 43% negatively and the potentially decisive 19% "no opinion" group apparently needing more information. These findings suggest Americans could respond favorably to many of the specific elements of Trump's ultimate tax plan, provided they make it into whatever legislation Congress winds up debating. For example, in spite of closing tax loopholes that favor the rich, the plan is expected to end up cutting taxes on the wealthy, not raising them. But as long as the plan also cuts taxes on the middle class, that fact alone is unlikely to sink it with Americans. Bush's across-the-board tax cuts in 2001, which more Americans at the time said were a "good thing" than a "bad thing," are a perfect illustration of this.
The richest US families own a startling proportion of America’s wealth - Distribution matters. The United States has long taken pride in being the richest nation in the world. It remains so despite China’s quick game of catch-up and much larger population, at least when it comes to the broadest measure of a country’s economic output, gross domestic product (GDP). Yet deep inequalities, which became a hot-button political issue in the wake of a deep recession and financial crisis that highlighted those disparities, paint a different picture of how well off most Americans really are. Research from Berkeley economists has found incomes at the top 0.001% of the income strata surged a whopping 636% between 1980 and 2014, while wages for the bottom half of the population were basically stuck in place. Critics of that body of work say its use of pre-tax data masks some of the equalizing effects of the tax code, and thus overstates inequality. If that were indeed the case, a look at the distribution of wealth as opposed to just income, while harder to measure, could be a better barometer as to the true state of America’s social divide. This chart courtesy of Deutsch Bank economist Torsten Slok shows the picture with regards to wealth is even bleaker. The richest 10% of families are worth a combined $51 trillion, equal to 75% of total household wealth. To put that figure in perspective, US GDP totaled $18.5 trillion in 2016.
Robert Reich: The Secret Republican Plan to Unravel Medicaid -- Bad enough that the Republican Senate bill would repeal much of the Affordable Care Act. Even worse, it unravels the Medicaid Act of 1965 – which, even before Obamacare, provided health insurance to millions of poor households and elderly. It’s done with a sleight-of-hand intended to elude not only the public but also the Congressional Budget Office. Here’s how the Senate Republican bill does it. The bill sets a per-person cap on Medicaid spending in each state. That cap looks innocent enough because it rises every year with inflation. But there’s a catch. Starting 8 years from now, in 2025, the Senate bill switches its measure of inflation – from how rapidly medical costs are rising, to how rapidly overall costs in the economy are rising. Yet medical costs are rising faster than overall costs. They’ll almost surely continue to do so – as America’s elderly population grows, and as new medical devices, technologies, and drugs prolong life. Which means that after 2025, Medicaid will cover less and less of the costs of health care for the poor and elderly. Over time, that gap becomes huge. The nonpartisan Urban Institute estimates that just between 2025 and 2035, about $467 billion less will be spent on Medicaid than would be spent than if Medicaid funding were to keep up with the expected rise in medical costs. So millions of Americans will lose the Medicaid coverage they would have received under the 1965 Medicaid act. Over the long term, Medicaid will unravel. […] Next week the Congressional Budget Office will publish its analysis of the bill. CBO reports on major bills like this are widely disseminated in the media. The CBO’s belated conclusion that the House’s bill to repeal and replace the Affordable Care Act would cause 23 million Americans to lose their health care prompted even Donald Trump to call it “mean, mean, mean.” But because the CBO’s estimates of the consequences of bills are typically limited to 10 years (in this case, 2018 to 2028), the CBO’s analysis of the Senate Republican bill will dramatically underestimate how many people will be knocked off Medicaid over the long term. Which is exactly what Mitch McConnell has planned. This way, the public won’t be tipped off to the Medicaid unraveling hidden inside the bill.
Healthcare bill 'not the last step' to repealing ObamaCare, Republican says | TheHill: Sen. Pat Toomey (R-Pa.) on Sunday said Senate Republicans’ plan to repeal and replace ObamaCare is only a first step, telling conservative lawmakers that there will be additional legislation. During an appearance on CBS’s “Face the Nation,” Toomey said he is “sympathetic” to the reforms conservative lawmakers are seeking. “But I see this bill as a first step,” Toomey told host John Dickerson. “A first important in the direction of repealing those portions of ObamaCare that we can — stabilizing the individual market, which is collapsing, and making important reforms to Medicaid. It’s not the last step.” Conservative lawmakers, including Sens. Rand Paul (R-Ky.) and Ted Cruz (R-Texas), have said they will not vote for the legislation, arguing it does not do enough to repeal provisions in ObamaCare.
Senate Republicans skeptical Obamacare repeal can pass this week - POLITICO: Senate Republicans are casting doubt on their leaders’ plans to vote this week on repealing Obamacare, with lawmakers from all wings of the party so far withholding support from the massive reshaping of the health care law that they campaigned on for seven years. Majority Leader Mitch McConnell of Kentucky faces problems from seemingly every corner of his conference, and — from wary moderates to conservatives and even leadership allies — few Republicans were willing Sunday to predict the Senate repeal bill could pass this week, before lawmakers leave Washington for a weeklong July 4 recess. Sen. Susan Collins (R-Maine) outlined “very serious concerns” about GOP leaders’ bill on ABC’s “This Week,” saying that “it's certainly going to be very difficult” for McConnell to win the 50 votes he needs to pass it on such a tight time frame. Collins said her biggest problems with the Republican Obamacare repeal bill are its steep Medicaid cuts and effects on older Americans’ premiums. The draft would let insurers charge older people more for plans than Obamacare does. On the other ideological end of the GOP Conference, conservatives were also flashing yellow lights.“There's no way we should be voting on this” before the recess, Sen. Ron Johnson (R-Wis.) told NBC’s “Meet the Press,” urging his party’s leaders to “not rush this process.” Senate Majority Whip John Cornyn, speaking to reporters at the Koch Brothers’ donor conference in Colorado Springs, said he was unsure if Republicans would be able to round up the votes. He said the party needed to move quickly, and things were on schedule for a vote this week. “We don’t have the luxury of waiting around. It’s not going to get easier,” Cornyn said, identifying Aug. 1 as a “drop-dead line.”
Gov. Kasich doesn't like GOP health-care bill, says 'fix it' — Ohio Gov. John Kasich said Sunday he is “against” the Senate Republican leadership’s health-care bill as written, although he said he is “encouraging” lawmakers to “fix it” and not “rush” into passing the measure this week. In an interview on CNN’s “State of the Union,” Kasich said the GOP bill does not include enough money to provide care for the “mentally ill, the drug-addicted, the chronically ill” who receive health coverage through federal dollars made available through the 2010 health law known as Obamacare. Kasich said he does not believe “the bill’s adequate now,” adding that “unless it gets fixed ... I’m against it.” “And I’m not against it just because I want to be against it,” Kasich said. “There’s some things in this bill ... that are an improvement” over Obamacare. “So I’m not saying just kill the bill. Let’s get something that is going to work,” such as “stabilizing all these issues around insurance and coverage, and then get to the heart of the matter, which is the rising costs of health care, frankly, which this bill doesn’t begin to even do.” House Republicans approved a bill last month that was aimed at scrapping large sections of Obamacare, such as ending in 2020 an expansion of Medicaid. The joint federal and state program dating from 1965 — allowed Kasich to provide health coverage to more than 700,000 low-income people in Ohio. The Senate bill modifies the House version by gradually scaling back through 2024 the federal dollars used to expand Medicaid. That still eventually would force Ohio to find hundreds of millions of dollars to continue covering those low-income people; they include a family of four earning as much as $34,000 a year. Kasich, who cannot seek re-election in 2018, urged Republicans across the country to withstand pressure from organizations supporting President Donald Trump and work to improve the bill.
Under the Senate healthcare bill, an oil crash could eventually influence poor Americans’ healthcare - While the BCRA and the AHCA would phase out the Medicaid expansion established by the Affordable Care Act — which extended the program to those making 100% to 138% of the federal poverty limit — both proposals call for a fundamental change in how Medicaid operates. While states fund a big portion of their individual Medicaid programs, the federal government matches up to a certain percentage, with bigger matches for poorer states. Both bills would change Medicaid to a program where funding would be set on a per-capita basis — meaning the federal government would send states a fixed amount of money per Medicaid enrollee, regardless of whether that would cover needs or care — and then peg funding growth to a rate related to inflation. "It's no longer an open-ended matching program," Richard Frank, a professor at Harvard Medical School professor, told Business Insider in May. He added that changing funding to per-capita cap grants "fundamentally changes the kind of contract that exists between the states and the federal government."The BCRA would take it a step further.The AHCA called for growing funding by consumer price index for medical care (CPI-M), generally a figure between 2% and 5% each year. The Senate's bill, meanwhile would grow the figure initially by CPI-M before switching to the CPI for all goods (CPI-U)— a significantly lower level of growth — in 2025.The switch from CPI-M to CPI-U would mean far more restrictive growth for Medicaid funding. The CPI-U is subject to more economic movements than CPI-M as well, most of which have nothing to do with the cost of healthcare. In September 2015, the year-over-year CPI-U was -0.008%. If the BCRA had been in effect then, funding would have actually gone down. And the CPI-U was below zero due in no small part to a major oil crash that was holding down inflation at the time. The CPI-M in September 2015 was 2.44%.It's no stretch to think that, if the BCRA passes, future decisions made by OPEC or major conglomerates c ould have a major effect on the quality of healthcare for impoverished Americans.
Senate GOP expected to add new penalties for the uninsured into their health bill - Sarah Kliff - Senate Republicans are expected to revise their health bill early next week, adding in a provision that could lock Americans out of the individual market for six months if they fail to maintain continuous insurance coverage. Health insurance industry sources familiar with the plan say the change could be announced as early as Monday. The six-month waiting period would fill a big policy gap in the current Better Care Act, which requires health plans to accept all patients — but doesn’t require all Americans to purchase coverage, as the Affordable Care Act does. Experts expect that this would cause a death spiral, where only the sickest patients purchase coverage and premiums skyrocket. But the six-month waiting period could also complicate the Senate Republicans’ repeal efforts, because it may run afoul of the chamber’s complex reconciliation rules. Republicans are using what’s called “budget reconciliation” to pass their health care bill with a bare majority of 50 votes and avoid a Democratic filibuster. But the rules governing reconciliation restrict what policies the GOP can include in their bill — the waiting period is one of the provisions thought to be in doubt. All health insurance markets need healthy enrollees and sick enrollees to keep premiums affordable. The healthy people end up subsidizing the high medical bills of the sick people — and also purchase protection against financial ruin should they become one of the sick people themselves.The Affordable Care Act required all insurance companies to accept all Americans regardless of pre-existing conditions. It also required all Americans to purchase coverage or pay a penalty, a way to push healthy people into the marketplace. The individual mandate is the least popular provision of the Affordable Care Act and Republicans have promised for years to repeal it. But policy experts agree that they need some other policy to replace it — or else risk sending the individual insurance market into collapse.
Premiums and Tax Credits under the Affordable Care Act vs. the Senate Better Care Reconciliation Act: Interactive Maps -- This map compares county-level projections of premiums and tax credits for marketplace enrollees under the Affordable Care Act (ACA) in 2020 with estimates for the Better Care Reconciliation Act (BCRA) as unveiled June 22 by Senate Republicans. Our maps comparing premiums and tax credits under the ACA and the American Health Care Act (AHCA) passed through the House are here. This map includes premium and tax credit estimates by county for current ACA marketplace enrollees at age 27, 40, or 60 with an annual income of $20,000, $30,000, $40,000, $50,000, $60,000, $75,000, $100,000, or 351% of the federal poverty level (which is just above the cutoff for tax credits under the BCRA). The map includes estimates for premiums, tax credits, and premiums after tax credits for bronze and silver plans in each county in 2020.Most current Healthcare.gov enrollees have lower incomes:
- About 66% of enrollees have incomes at or below 250% of poverty (approximately $31,250 for a single individual in 2020), with the bulk (44% of all enrollees) having incomes at or below 150% of poverty (approximately $18,750 in 2020).
- About 36% of enrollees are under age 35, 37% are age 35 to 54, and 27% are 55 or older.
Both the ACA and the Better Care Reconciliation Act include tax credits that take into account family income, local cost of insurance, and age. Eligible enrollees are expected to pay a certain percentage of income towards the cost of a benchmark plan, with tax credits covering the remainder of the premium. The premium caps as a percentage of income grow over time. Under the ACA, people with incomes from 100% to 400% of the poverty level are eligible for tax credits. Premium caps in 2020 will vary from 2.4% of income for a household at the poverty level to 10.2% at 400% of poverty ($50,000), according to Kaiser projections. The caps do not vary by age. The benchmark plan under the ACA is a silver plan with an actuarial value of 70%, meaning enrollees pay for an average of 30% of their health care expenses through cost-sharing. Under the BCRA, people with incomes up to 350% of the poverty level are eligible for tax credits (including people with incomes below poverty). Under the BCRA, premium caps vary by age and will range in 2020 from 2.4% of income for a household below the poverty level (<$12,500 in 2020), to 17.4% of income for a 60 year old at 350% of poverty ($43,750). The benchmark plan under the Senate bill is a plan with an actuarial value of 58%, meaning enrollees pay for an average of 42% of their health care expenses through cost-sharing.
Pro-Trump group’s health care offensive warns GOP senators to get in line - A new campaign by top White House allies targeting the GOP’s most vulnerable senator over health care sends a loud message to those resistant to the Trump agenda: We’re coming after you. America First Policies, a White House-backed outside group led by the president’s top campaign advisers, has launched a $1 million attack against Sen. Dean Heller of Nevada, who on Friday announced that he opposed the Senate’s recently unveiled Obamacare repeal plan. That included a Twitter and digital ad campaign targeting the senator, including a video that accuses him of “standing with” House Minority Leader Nancy Pelosi, a reviled figure in conservative circles. “Unacceptable,” the video says. “If you’re opposed to this bill, we’re opposed to you.” America First Policies is set to expand its campaign early this week with TV ads that will go after the Nevada senator. The offensive aims both to punish Heller and to sway his vote, and it is a stunning act of political retaliation against a member of the president’s own party — one who faces a perilous path to reelection in 2018. Senior Republicans, many of whom are deeply worried about Heller’s political standing and increasingly nervous about the midterms, were shocked and spent the weekend measuring the possible fallout. Those close to the White House say the attack is an outgrowth of President Donald Trump’s mounting frustration over his stymied legislative agenda and anger at Capitol Hill Republicans whom he sees as unhelpful. In a Saturday tweet, Trump hinted at his displeasure after multiple senators expressed concerns with the bill: “I cannot imagine that these very fine Republican Senators would allow the American people to suffer a broken ObamaCare any longer!” By targeting Heller, America First Policies is telegraphing to recalcitrant Republican lawmakers — even those trying to navigate treacherous political waters at home — that they will be punished if they don’t go along with the Trump agenda. Other Republicans could soon face similar attacks.
Health Law Repeal Leaves Nevada Republican Torn Between Lawmakers - NYT — Senator Dean Heller, Republican of Nevada, is the man everyone wants. This has not been a good thing for him. Brian Sandoval, the governor of Mr. Heller’s home state, is a Republican, but he is counting on Mr. Heller to provide what could be a crucial vote to maintain President Barack Obama’s health care law, which has been a boon for the working poor in Nevada. Senator Mitch McConnell, the majority leader who this week will be rounding up votes to fulfill his party’s biggest promise of the last decade — repealing the Affordable Care Act — is trying to prevent Mr. Heller from undermining that goal. Democrats also want Mr. Heller, but in the form of an unemployed senator. As the only Republican who is up for re-election next year in a state that Hillary Clinton won, he may be their only shot at picking up a seat. Democrats and health care interest groups have been unloading on Mr. Heller all spring with no end in sight. Far-right Republicans in his state — who strongly support President Trump — also have their eyes on Mr. Heller to see if he will abandon the president. Already a group that Vice President Mike Pence has supported is preparing a seven-figure ad campaign against the senator. On Saturday afternoon, Mr. Trump posted on Twitter, venting about Mr. Heller and other Republicans who are not supporting the Senate bill. I cannot imagine that these very fine Republican Senators would allow the American people to suffer a broken ObamaCare any longer! — Donald J. Trump (@realDonaldTrump) June 24, 2017 On Friday, Mr. Sandoval acknowledged the obvious. “He’s in the eye of the storm here,” Mr. Sandoval said at a news conference in Nevada as Mr. Heller stood next to him, looking vaguely miserable as Mr. Sandoval announced his opposition to the Senate bill. The legislation could affect 210,000 Nevada residents insured through the health care law’s expansion of Medicaid.
Lee Camp: Here’s Why There Is No Legitimate Healthcare Debate In This Country -- I find it hard to get involved with the healthcare debate in this country because I believe there is no healthcare debate in this country. I don’t believe it exists. The debate SHOULD be “Is our country wealthy enough to cover the healthcare of every man, woman, and child without causing extraordinary harm to other citizens?” If the answer is yes, then the answer is do it. (And the answer is yes.) The other side of the debate should be, “Let ‘em die.” …I admit the second side of the argument is a bit terse, but not without merit –especially if the dying patient happens to be the man who gave a young Michael Bay his first camcorder, thereby putting us all on an inescapable, calamitous path to a future involving at least 7 and as many as 36 “Transformers” movies. (I mean, a small car turns into a 5-story-tall robot with heavy artillery, and hundreds of millions of viewers are just FINE with that?? It doesn’t even adhere to the law of conservation of mass! …And THAT gaping plot hole is then followed by two hours of meaningless metal pieces flying at your face in a vomit-inducing tornado of suck. God help you if that suck is in 3D!) So if that camcorder-distributing man were to get a rare lung infection generally only found in lemurs in the deep corners of the Amazon, I could quite easily be talked into joining the “let ‘em die” camp.Point being, in the “healthcare-vs-let-em-die” debate, there would be two legitimate sides. But in our current healthcare debate, we first have Obamacare: a pro-corporate system designed to enrich an industry made of slimy parasites who spend their days trying to figure out how to make sure people either owe them lots of money or die quickly. Then we have Trumpcare: a pro-corporate system designed to enrich an industry made of slimy parasites who spend their days trying to figure out how to make sure people either owe them lots of money or die quickly. …BUT with one of those options there are no pre-existing conditions. (Except for the pre-existing condition of national psychosis which acts like this is a genuine debate.)
Revised Senate health-care bill penalizes consumers who have gaps in coverage: U.S. Senate Republicans on Monday released changes to their healthcare bill to replace Obamacare, adding a measure that would penalize those who let their insurance coverage lapse for an extended period, following criticism that the original bill would result in a sicker — and more expensive — insurance pool. President Donald Trump and his fellow Republicans in Congress have been pushing to repeal and replace Obamacare, Democratic former President Barack Obama's signature domestic legislation. The Senate bill unveiled last week was immediately criticized by both conservatives and moderates in the party, casting doubt over whether Republicans could win passage. They have only a 52-seat majority in the 100-seat Senate. There were no signs yet if the revisions to the bill would sway any Republicans who had opposed the original measure. Senate leaders want to hold a vote on the bill before the July 4 recess that starts at the end of this week. But in another blow to the bill, the American Medical Association (AMA), the country's largest association of physicians, announced Monday that it opposed the legislation.The original Senate bill had dropped the Obamacare penalty on those who do not have insurance. Experts had warned that canceling the fine could lead to a sicker insurance pool because young and healthy people would not face consequences for failing to purchase insurance. The revised bill imposes a six-month waiting period for anyone who lets their health insurance lapse for over 63 days and then wants to re-enroll in a plan. The version of a healthcare bill passed by the Republican-majority House of Representatives last month includes a provision also aimed at those who let their insurance lapse for more than 63 days, allowing insurers to charge a 30 percent penalty over their premium for one year.
Senate Republican healthcare bill would cause 22 million to lose insurance - Twenty-two million Americans would lose insurance over the next decade under the healthcare bill drafted by U.S. Senate Republicans, a nonpartisan congressional office said on Monday, likely making it more difficult for the already-fraught legislation to win support for speedy passage. Senate Majority Leader Mitch McConnell is trying to reconcile the demands of moderate Republicans concerned about people losing their insurance with those of conservative senators who say the bill does not do enough to repeal Obamacare. The assessment by the Congressional Budget Office (CBO) that an additional 15 million people would be uninsured by 2018 likely complicates McConnell's goal of scheduling a vote on the bill before the July 4 recess that starts at the end of this week. Republicans have a 52-seat majority in the 100-seat Senate and Democrats are united in opposition. McConnell can lose just two Republican senators, relying on Vice President Mike Pence to cast a tie-breaking vote. "If you are on the fence ... this CBO score didn't help you, so I think it's going to be harder to get to 50, not easier,” Republican Senator Lindsey Graham said of the bill's prospects. The CBO score is also likely to amplify criticism from industry groups such as the American Hospital Association and American Medical Association, which said earlier on Monday that the Senate's bill violated the doctors' precept of "first, do no harm." The CBO is only able to assess the impact of legislation within a 10-year window, but it said that insurance losses are expected to grow beyond 22 million due to deep cuts to the Medicaid insurance program for the poor and disabled that are not scheduled to go into effect until 2025 under the bill.
White House Shrugs Off "Consistently Inaccurate" CBO Score - The White House has released its official statement with regard the CBO score, noting their"consistently inaccurate" and pointing out that "we know the facts." Following a Tweet right after the release of CBO's official score of the House Healthcare Bill... The White House issued a full statement on CBO Healthcare Report The CBO has consistently proven it cannot accurately predict how healthcare legislation will impact insurance coverage.This history of inaccuracy, as demonstrated by its flawed report on coverage, premiums, and predicted deficit arising out of Obanuteare. reminds us that its analysis must not be trusted blindly. In 2013, the CBO estimated that 24 million people would have coverage under Obamacare by 2016. It was off by an astounding 13 million people — more than half—as less than 11 million were actually covered. Then, CBO estimated that 30 million fewer people would be uninsured in 2016, but then it had to reduce its estimate to 22 million, further illustrating its inability to present reliable healthcare predictions.We know the facts. To date, we have seen average individual market premiums more than double and insurers across the country opting out of healthcare exchanges. As more and more people continue to lose coverage and face fewer healthcare choices. President Trump is committed to repealing and replacing Obam acare, which has failed the American people for far too long.
The Senate Health Care Bill (the BCRA) and Its Appeal to Voters -- naked capitalism by Lambert Strether - There’s been a lot of wonkish analysis about how bad this Republican health care bill is — they called it Better Care Reconciliation Act (BCRA), if you can believe it — and it is bad, but there’s been very little analysis about why the Senate bill is structured as it is, other than Republicans are mean. Before moving on, let me dispose of the partisan conflict by reposting Matt Bruenig’s chart and interpretation: Under AHCA, nearly 540,000 people will die in the next decade because of lack of health insurance coverage. For Obamacare, it is a more respectable 320,000 deaths. In other words, what we have in this week’s battle is a struggle between the two major parties about how efficiently to implement Rule 2 of Neoliberalism. I’m waiting for the liberal Democrat explanation of why 540,000 deaths are bad, but 320,000 deaths are jake with the angels, when there’s a 0-deaths alternative available. Until we get one, liberal Democrats have no standing for virtue signaling whatever.[1] All the liberal Democrats want to do is hit you with a softer hammer. On to the politics of it (after I caveat that the Senate bill is a moving target, not least because the waverers have to be bought off have their concerns addressed, and so constituencies served, or dis-served, may need to be recalibrated as we go along.). So, what are the constituencies (or potential constituencies) that the Republicans are taking “care” of with the BCRA? Let’s follow the money! First — and I know this will come as a shock to you, if only because it’s crassly overt — the wealthy end up with more money. Obama wrote on Facebook: The Senate bill, unveiled today, is not a health care bill. It’s a massive transfer of wealth from middle-class and poor families to the richest people in America. It hands enormous tax cuts to the rich and to the drug and insurance industries, paid for by cutting health care for everybody else. Of course, the BCRA isn’t a literal transfer of wealth, since Federal taxes don’t fund Federal spending, but the wealthy as a class (along with Obama and the political class) believe that it is. Now in what follows, I’m going to make use of the handy interactive map that Kaiser just published: This map compares county-level projections of premiums and tax credits for marketplace enrollees under the Affordable Care Act (ACA) in 2020 with estimates for the Better Care Reconciliation Act (BCRA) as unveiled June 22 by Senate Republicans. I’m going to move through the age cohorts, and set Kaiser’s income dropdown to the median for each cohort. Basically, orange means that you get money from the Republicans (you pay less) and blue means the Republicans take money away from you (you may more).
Medicaid Cuts May Force Retirees Out of Nursing Homes - — Alice Jacobs, 90, once owned a factory and horses. She has raised four children and buried two husbands. But years in an assisted living center drained her savings, and now she relies on Medicaid to pay for her care at Dogwood Village, a nonprofit, county-owned nursing home here. “You think you’ve got enough money to last all your life, and here I am,” Ms. Jacobs said. Medicaid pays for most of the 1.4 million people in nursing homes, like Ms. Jacobs. It covers 20 percent of all Americans and 40 percent of poor adults. On Thursday, Senate Republicans joined their House colleagues in proposing steep cuts to Medicaid, part of the effort to repeal the Affordable Care Act. Conservatives hope to roll back what they see as an expanding and costly entitlement. But little has been said about what would happen to older Americans in nursing homes if the cuts took effect. Under federal law, state Medicaid programs are required to cover nursing home care. But state officials decide how much to pay facilities, and states under budgetary pressure could decrease the amount they are willing to pay or restrict eligibility for coverage. “The states are going to make it harder to qualify medically for needing nursing home care,” predicted Toby S. Edelman, a senior policy attorney at the Center for Medicare Advocacy. “They’d have to be more disabled before they qualify for Medicaid assistance.” States might allow nursing homes to require residents’ families to pay for a portion of their care, she added. Officials could also limit the types of services and days of nursing home care they pay for, as Medicare already does. A combination of longer life spans and spiraling health care costs has left an estimated 64 percent of the Americans in nursing homes dependent on Medicaid. In Alaska, Mississippi and West Virginia, Medicaid was the primary payer for three-quarters or more of nursing home residents in 2015, according to the Kaiser Family Foundation. “People are simply outliving their relatives and their resources, and fortunately, Medicaid has been there,”
Obamacare repeal: Why Democrats can’t break through - POLITICO: Even before Senate Republicans released their Obamacare repeal plan last week, a call went out from liberal activists: Head to the airport and greet departing senators with a furious protest. About five dozen demonstrators showed up at Reagan National Airport, chanting loudly and hoisting signs that read “Don’t Take Away Our Health Care” and “Resist.” Organizers hailed the turnout given the short notice, but the contrast with the thousands of people who flocked to the last airport protests — against President Donald Trump’s travel ban — was inescapable. And compared with the tea party fervor aimed at Democrats when they worked to pass Obamacare seven years ago, this year’s liberal defense of the law hasn't mustered the same energy to seize, and stay in command of, the nation's attention. For weeks now, liberal activists and Democratic senators have struggled to capture the public’s focus in their campaign to halt Senate Majority Leader Mitch McConnell’s momentum to repeal Obamacare. Now that the GOP bill is public, its expected coverage losses are likely to make it as deeply unpopular as the House’s plan — yet the left is facing a perilously narrow window to pick off wavering Republican senators and sink the bill before this week’s vote.That messaging crisis is not for lack of trying. But progressives have been stymied by Republicans’ strategy of keeping the bill behind closed doors as well as a crowded media landscape fixated more on Trump’s tweets and Russia scandal than on the intricacies of Medicaid spending. And then there's money: Democrats have been vastly outspent by Republicans in ad wars over Obamacare repeal. Even if they break through the clutter this week by flooding the GOP with public anger, they may be too late to save Obamacare.
CBO: Senate Bill Would Raise Premiums, Deductibles, or Both for Most Marketplace Consumers | Center on Budget and Policy Priorities: Hoping to deflect concerns about the Congressional Budget Office’s (CBO) estimate that the Senate’s Better Care Reconciliation Act (BCRA) would cause 22 million people to lose health coverage, its defenders are arguing — as they did with the House-passed health bill — that CBO has at least shown the bill would reduce marketplace premiums. For example, Majority Leader Mitch McConnell released a statement saying that CBO “confirmed” the bill would “reduce the growth in premiums under Obamacare.” In making these claims, the bill’s defenders are either mischaracterizing or misunderstanding what CBO says — which is that most marketplace consumers would pay more in premiums, deductibles, or both, with older consumers facing the highest cost increases. And in many cases, they’d be buying insurance that covered fewer benefits and offered fewer protections. CBO shows that a typical, middle-aged marketplace consumer would face either higher premiums or higher deductibles. CBO offers the example of a 40-year-old with an annual income of $26,500 — in other words, someone at about the middle of the income and age distribution for someone buying marketplace coverage. Under the Affordable Care Act (ACA), CBO estimates that individual would face “sticker price” premiums of about $6,500 for a so-called “silver plan,” which (with the benefit of cost-sharing subsidies) would have annual deductibles of about $800. After tax credits, that person would pay only $1,700 in net premiums.Under the BCRA, that person would have a choice:
- Continue to buy a silver plan — in which case the sticker price premium would drop by $100, but their tax credit would fall by $1,400. In total, they would pay $1,300 more in premiums to stay in a silver plan — and their deductible would still rise by $2,800 due to the elimination of cost-sharing subsidies.
- Buy a skimpier “bronze” plan — in which case the sticker price premium would fall by $1,500 but their tax credit would fall by $1,400, for net premium savings of just $100. And in return, they would face a much higher deductible of $6,000 a year.
So technically, the sticker price premium numbers would fall in either case. But in reality, this consumer would pay $1,300 more in premiums and see their deductible spike by $2,800, or they would pay about the same in premiums and see their deductible spike by $5,200.
Senate AHCA Version – Premium Increases and Subsidy Reductions - CBPP has this pictorial analysis of the increased premiums resulting from the Senate version of the AHCA for a 60 year old at 350% FPL with an ACA Silver plan. “For a 60-year-old with income of 350 percent of the poverty level (about $42 ,000 today) facing the average premium on HealthCare.gov, out-of-pocket premiums would jump by an estimated $4,994. Premiums would rise by $ 2,022 for a 45-year-old at this income level, and fall by $75 for a 30-year-old. Premiums would rise by $2,694 for a 60-year old with income of 300 percent of the poverty line, and by $1,903 for a 60-year old with income of 150 percent of the poverty line.” A sixty year old slightly above 350% FPL would face the loss of thousands of dollars in tax credits. Presently, the ACA covers up to 400% FPL and limits how much can be charged for age to 300%. The AHCA goes to 500% and reduces the subsidy coverage to 350% FPL. Senate AHCA eliminates subsidies (difference between total cost of the plan and a percentage of income) for those between 350% and 400% FPL resulting in $thousand of dollars in cost for those in the Individuals Market. Tax-credit subsidies would cover only 58 percent of health care costs, rather than 70 percent as under current law a decrease in actuarial value. People in higher healthcare cost states would have to pay more as depicted in the CBPP chart. Under either Republican Plan, higher premiums and deductibles would force people into lower level plans covering less at greater cost. Why do this and incite anger amongst constituents when you can just keep on doing what you have done in the past and undermine the ACA with blocking the Risk Corridor program and cut deductible subsidies by killing the CSR? I believe McConnell is thinking along these lines and can shift the blame of the resulting ACA failure to Dems. Dems would take the blame as no one would understand how it came to be and little would be explained by the press. via: Senate Bill Still Cuts Tax Credits, Increases Premiums and Deductibles for Marketplace Consumers CBPP
Better Care Reconciliation Act of 2017 Scored -- Menzie Chinn - Or, the GOP plan to eliminate the surplus population. From CBO: CBO and JCT estimate that enacting this legislation would reduce the cumulative federal deficit over the 2017-2026 period by $321 billion. That amount is $202 billion more than the estimated net savings for the version of H.R. 1628 that was passed by the House of Representatives. The Senate bill would increase the number of people who are uninsured by 22 million in 2026 relative to the number under current law, slightly fewer than the increase in the number of uninsured estimated for the House-passed legislation. By 2026, an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law. Here is a time series plot of the number of uncovered under the Senate bill (the Better Care Reconciliation Act of 2017), the House Bill, and current Law. A substantial component of the entire plan involves reducing spending for Medicaid relative to current law baseline (which :By 2026, among people under age 65, enrollment in Medicaid would fall by about 16 percent and an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.One way to think about the overall project is that Medicaid spending (which benefits primarily lower income households) is slashed by $772 billion in order to finance $541 billion of tax cuts, the bulk of which will go to high income households. In this sense, the plan is entirely consistent with Republican policy measures proposed in recent years, so kudos for consistency of goals. The redistribution is illustrated in CBO Figure 1. Given the reduction in coverage of non-elderly adults by 2026 is 22 million, we can use the estimates provided by Center for American Progress to judge that mortalities will be elevated by about 207.5 thousand (cumulative) over the next decade, and deaths in 2026 elevated by about 26,500. In this context, the title of the Senate “Better Care Reconciliation Act” (I think “bitter” is more apt) is truly Orwellian.
Reading the CBO Report on the Better Health Care Reconcilation Act (BCRA) -- naked capitalism by Lambert Strether - The non-partisan CBO report on the Senate replacement (the BCRA) for the House’s health care bill (the AHCA) and ObamaCare (the ACA) came out yesterday, to excitement predictable because waiting for the CBO “score” on a health care bill is an important Beltway ritual and source of hot takes[1]. Equally predictable was that the press would initially focus on the “headline number,” which occurs in paragraph 2 of the cover letter: The Senate bill would increase the number of people who are uninsured by 22 million in 2026 relative to the number under current law, slightly fewer than the increase in the number of uninsured estimated for the House-passed legislation. By 2026, an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law. (Here is the CBO page for the report; here is a link to the report in PDF). Considered as a work product, the report is a “cost estimate,” as explained by the CBO: [….] A CBO “cost estimate,” therefore, is limited to spending and revenues within the scope of the Federal government[2]. Further, a cost estimate is produced by technocrats at the JTC from both parties, so even if the CBO estimates can be off, as some Republicans huffing and puffing for the gallery (indeed correctly) claim, the best and brightest Republican technocrats are fully implicated; these estimates are, in short, the best we have or are likely to get. Finally, “informal, preliminary estimates” implies that there’s a good deal of back and forth between CBO and Congress as bills are developed; this was certainly true for ObamaCare, and the Democrats went so far as to make programmatic changes to game the estimates. Informal estimates were unlikely to have been done for the AHCA (indeed, the House passed the bill without a cost estimate for revisions) and almost certainly not for the BCRA, given the speed and secrecy of the process. With that context, I think what’s important about the CBO report can be boiled down to two tables: Figure 1 (“Net Effects of the Better Care Reconciliation Act on the Budget Deficit”), and Table 4 (“EFFECTS OF H.R. 1628, THE BETTER CARE RECONCILIATION ACT of 2017, ON HEALTH INSURANCE COVERAGE FOR PEOPLE UNDER AGE 65”). So far as I can tell, and I do try to keep track, these tables encapsulate the content that’s driving all the media coverage beyond the headline number. I’ll present each of these tables, and then take a quick look at CBO methodology.
Republican Healthcare Plan Fails The "Jimmy Kimmel Test" - by Ron Paul -This week the Senate Republican leadership unveiled its Obamacare replacement plan. Like its House counterpart, the misnamed Senate plan retains most of Obamacare’s core features.Both the House and Senate plans allow states to obtain waivers providing relief from some Obamacare mandates, although the waivers in both bills are too restrictive to be of much value. For example, the Senate's bill does not allow states to have waived two of Obamacare’s most destructive mandates — guaranteed issue and community ratings.The healthcare debate is dominated by emotional rhetoric about how government-run healthcare is necessary to protect the vulnerable. For example, in May, Jimmy Kimmel Live host Jimmy Kimmel delivered a touching monologue about his newborn son’s open-heart surgery. Mr. Kimmel ended his monologue with a plea to retain Obamacare so all children can obtain life-saving treatment. After the monologue became a national sensation, many suggested that any Obamacare replacement plan be judged by a "Jimmy Kimmel test.”Every decent human being supports a healthcare system that ensures children have access to medical care. However, this does not mean every decent person should support government-run healthcare. In fact decent people should oppose all forms of nationalized medicine. Government intervention in healthcare distorts the marketplace with mandates, subsidies, and price controls. As is the case with any goods or services, price controls in healthcare result in shortages and even price increases as providers look for ways to offset their losses caused by the controls. This is why many Americans have seen their health insurance premiums skyrocket under Obamacare.
Follow the Money: Non-Profit Hospital CEOs Quietly Collect Their Millions While US Health Care Reform Battle Rages -- In Washington, DC the health care policy wars continue, with a few Republican senators working behind closed doors on a bill to “repeal and replace” Obamacare, aka the Affordable Care Act, and Democrats decrying their secrecy. Just as during the era in which Obamacare was enacted, there is constant discussion of how US health care costs continually rise, driving up insurance premiums, and how access to health insurance is continually in peril. However, while the current Republican process to write new legislation seems strikingly opaque, in neither era has there been a frank discussion of why US health care costs are so amazingly high, and disproportionate to our mediocre health care outcomes. In particular, there has hardly been any discussion of just who benefits from the rising costs, and how their growing wealth may impede any real cost-cutting measures. An obvious example is the gravity defying pay given to top health care managers, particularly the top managers of non-profit hospital systems. Such systems provide much of the hospital care to Americans, and most have declared their missions to be providing the best possible care to all patients, or words to that effect. Many explicitly include care of the poor, unfortunate and vulnerable as a major part of their missions. As non-profit organizations, their devotion of mission provides some rationale to their freedom from responsibility for federal taxes. As we last discussed in detail in May, 2016, we have suggested that the ability of top managers to command ever increasing pay uncorrelated with their organizations’ contributions to patients’ or the public’s health, and often despite major organizational shortcomings indicates fundamental structural problems with US health, and provides perverse incentives for these managers to defend the current system, no matter how bad its dysfunction. In particular, we have written a series of posts about the lack of logical justification for huge executive compensation by non-profit hospitals and hospital systems. When journalists inquire why the pay of a particular leader is so high, the leader, his or her public relations spokespeople, or hospital trustees can be relied on to cite the same now hackneyed talking points.
Senate healthcare bill costs 15 million their health insurance next year, 22 million by 2026 -- One consequence of electing the popular vote loser is that the official winners act as if they have a mandate for the most extreme version of their policies. Thus, we have proposed legislation, the misleadingly titled Better Care Reconciliation Act, that will not only roll back Obamacare’s expansion of Medicaid, but impose further large cuts on the program in addition. In total, the Medicaid cuts will come to $772 billion through 2026. As a result primarily of ending the individual mandate, the Congressional Budget Office (CBO) estimates that 15 million fewer people will be insured in 2018 than would be the case with current law. As healthier people remove themselves from the individual market, this will cause increases in insurance premiums and the likelihood of further collapse of the market. As Tierney Sneed points out, there will be some premium reductions in the individual market, but this will be due to the plans being much less generous and having higher out-of-pocket costs. Tellingly, the CBO report judges that low-income people will not buy insurance under these circumstances. As a result, by 2026 there will be 22 million fewer people without insurance. On the revenue side, of course, the Republican bill cuts taxes on the rich by $541 billion. It’s hard to know where to begin. The chutzpah of such a gigantic transfer from the poor to the rich staggers the imagination. As with everything surrounding Trump, this is completely surreal. The good news is that it’s not a done deal. Three Republican Senators (Collins, Paul, and Heller), one more than McConnell can afford to lose, are currently opposed to the bill in the Senate. Republican governors who have expanded Medicaid (Sandoval of Nevada and Kasich of Ohio), plus Baker of Massachusetts (which expanded Medicaid under former Governor Deval Patrick) have also come out against the bill. It’s no secret, then, what to do. Keep the pressure on your Republican Senators. If there is no vote this week, you’ll have the opportunity to see them over the July 4th recess as well. The stakes have never been higher.
GOP Bill Would Slash Medicaid Over Next Two Decades, CBO Finds - A long-term analysis of Senate Republicans’ health-care legislation found that the bill would slash spending on Medicaid by about 35 percent over the next 20 years, according to the Congressional Budget Office. The CBO estimated that the bill, called the Better Care Reconciliation Act, will reduce Medicaid spending to 1.6 percent of gross domestic product in 2036, from 2 percent of GDP this year. The nonpartisan agency attributed the cuts to the bill’s cap on per-person spending and the phase-out of funding for Obamacare’s expansion of the program. “A large gap would grow between Medicaid spending under current law and under this bill,” CBO said in the new analysis. “States would continue to need to arrive at more efficient methods for delivering services and to decide whether to commit more of their own resources, cut payments to health-care providers and health plans, eliminate optional services, restrict eligibility for enrollment, or adopt some combination of those approaches.” The analysis follows a 10-year look by the agency released earlier this week. The new CBO estimate doesn’t include a projection of how many people would be covered under the Republican bill. The CBO estimate shows that states would be forced to make trade-offs in how to allocate their far more limited funds. Trump and other administration officials, meanwhile, have said the bill doesn’t cut spending. Trump on Wednesday tweeted a chart showing Medicaid spending under the bill going up by $69 billion in 2026, compared to 2017. “Democrats purposely misstated Medicaid under new Senate bill - actually goes up,” he wrote. Trump’s tweet followed a similar post from Health and Human Services Secretary Tom Price on Tuesday. Under current law, spending would be much higher to cover more of states’ costs for the shared program. With the GOP bill, CBO estimates that spending in 2026 would be $160 billion lower compared with projections under current law.
Trump Wants Health Care Bill by August Recess - President Donald Trump would like Congress to send him a final health care measure by the time lawmakers depart for their annual August recess — but he is not, for now, taking a position on whether the Senate has to vote on its version this week.White House Press Secretary Sean Spicer announced the president’s desired timeline at his Monday briefing, which was held with the television cameras turned off, as is becoming the norm. But Spicer did not take a position on Trump’s behalf when asked if the president wants the Senate to vote on its health bill this week no matter what.Spicer dropped the August recess demand in response to a question about whether Trump agrees with Senate Majority Whip John Cornyn of Texas, who tweeted earlier Monday that he believes the Senate must vote this week. Cornyn took to Twitter to say he is “closing the door” on the notion that the Senate could put off a vote on the GOP leadership-crafted health measure following the July Fourth recess that will start late this week and last until July 12. “We need to do it this week before double digit premium increases are announced for next year,” Cornyn tweeted
The 9 GOP senators who will decide the fate of the Republican healthcare bill -- The GOP healthcare bill faces an uncertain future in the Senate this week after its long-anticipated introduction.Even though Senate Majority Leader Mitch McConnell wants to vote on the Better Care Reconciliation Act (BCRA) by the end of the week, many Republican senators have not embraced the bill with open arms.Some more conservative senators want the bill to go further in its repeal of the Affordable Care Act, or Obamacare, and four members released a statement on Thursday saying they would vote against the bill along those lines.Some moderates, on the other hand, think the bill goes too far and want to keep some of the more popular parts of the ACA intact. Here are the nine GOP senators likely to shape the fight over the BCRA — and what they might want in terms of changes.
- Rand Paul of Kentucky. What he wants: Paul wants to roll back much of the regulations set up by the ACA and eliminate much of the funding to provide insurance subsidies. He said during the legislation's drafting of the bill that he doesn't want to create "a new entitlement" by solidifying the tax credits into law under the plan. Basically he wants less of everything: funding, regulation, and taxes.
- Susan Collins of Maine - What she wants: While Collins' state has not expanded Medicaid, the slower growth caps for the program could be enough to push her away from the bill. Additionally, Collins opposes defunding Planned Parenthood, which the Senate bill would do for one year. Collins' term is up in 2020.
- Ted Cruz of Texas What he wants: Cruz had a litany of demands in his statement, including some provisions that would not be admissible in the bill under the budget reconciliation process Republicans are using to try to pass it. What can be included is a full repeal of so-called essential health benefits, which Cruz called for, along with a desire to do more to lower premiums. Cruz is up for reelection in 2018.
- Dean Heller of Nevada. What he wants: Heller took issue with the proposed phaseout of the Medicaid expansion and the funding growth-rate formula.
- Lisa Murkowski of Alaska. What she wants: Murkowski also supports continuing the expansion of Medicaid and keeping funding for Planned Parenthood. Additionally, Alaska's premiums are much higher than the rest of the country, so Murkowski may push for more generous tax credits. Murkowski was reelected in 2016.
- Mike Lee of Utah. What he wants: Lee wants to see a quicker phaseout of the Medicaid expansion and repeal of various insurance market regulations. Lee was reelected in 2016.
- Rob Portman of Ohio. What he wants: Ohio was one of the states to expand Medicaid under Obamacare, so a slower phaseout will likely be on his list of asks. Additionally, the bill supplies only $2 billion to combat the opioid crisis, less than the House's legislation. More funds to fight the crisis, one of Portman's core issues in a state hit especially hard by it, could be on his list of proposed alterations. Portman won reelection in 2016.
- Shelley Moore Capito of West Virginia. What she wants: West Virginia has a large Medicaid population and expanded the program under the ACA. Capito expressed desire for a seven-year phase out of the expansion. The discussion draft proposes to phase it out over four years. Capito also wants more money to fight the opioid crisis. Capito is up for reelection in 2020.
- Ron Johnson of Wisconsin. What he wants: A more complete repeal of Obamacare, much like Cruz, Lee, and Paul.
While those nine are the most likely to raise objections, there are few other Republicans who could come into play depending on how the negotiations proceed. Some lawmakers in states that expanded Medicaid, like Sens. Jeff Flake of Arizona and Tom Cotton of Arkansas, have so far been noncommittal. Other Republicans like Sen. Pat Toomey of Pennsylvania could raise objections to tax credits.
Collins, King won’t support Senate bill to replace Obamacare — Senate Republicans’ bill to erase major parts of the Affordable Care Act would cause an estimated 22 million more Americans to be uninsured in the coming decade – about 1 million fewer than similar legislation recently passed by the House, according to the Congressional Budget Office. The forecast issued Monday by Congress’ nonpartisan budget scorekeepers also estimates that the Senate measure, drafted in secret mainly by Majority Leader Mitch McConnell and aides, would reduce federal spending by $321 billion by 2026 – compared with $119 billion for the House’s version. Republican U.S. Sen. Susan Collins said Monday evening she would vote against a motion to proceed on the bill, saying the bill “doesn’t fix ACA problems for rural Maine.”
- I want to work w/ my GOP & Dem colleagues to fix the flaws in ACA. CBO analysis shows Senate bill won't do it. I will vote no on mtp. 1/3
- CBO says 22 million people lose insurance; Medicaid cuts hurt most vulnerable Americans; access to healthcare in rural areas threatened. 2/3
- Senate bill doesn't fix ACA problems for rural Maine. Our hospitals are already struggling. 1 in 5 Mainers are on Medicaid. 3/3
— Sen. Susan Collins (@SenatorCollins) June 26, 2017
U.S. Senator Angus King, I-Maine, called the score “further proof that this bill will do more harm than good.” “This bill will drastically increase the cost of coverage for older, working-class Maine people; put health insurance out of reach altogether for many others; and significantly gut Medicaid, forcing states to choose between serving the elderly or the disabled – all to give tax breaks to the wealthiest Americans. Simply put, this proposal is wrong for the country and this score should be just another reason on the long list of many for why we should abandon this bill and, instead, make meaningful improvements to the Affordable Care Act,” King said.
Senate Obamacare repeal on brink of defeat - POLITICO: Senate Republicans’ Obamacare repeal effort is on track to blow up before it even gets started. The GOP is well short of the votes needed to bring its bill to the floor, and party leaders and President Donald Trump are kicking into overdrive to save their imperiled health care overhaul. At least four Republican senators, Susan Collins of Maine, Rand Paul of Kentucky, Dean Heller of Nevada and Ron Johnson of Wisconsin, have signaled they could oppose a key procedural vote that will occur either Tuesday afternoon or Wednesday. A number of other senators, like Shelley Moore Capito of West Virginia and Marco Rubio of Florida, are undecided. Senate Majority Leader Mitch McConnell (R-Ky.) and his team are working furiously to round up 50 of the caucus’s 52 senators to even bring the bill to the floor, let alone pass it by week’s end. GOP leaders said ultimately that even lawmakers who oppose the bill in its current form could be persuaded to allow the debate over the party’s long-sought Obamacare rollback to begin. “I would hope … our members would at least let us get on it,” said Sen. John Thune (R-S.D.), the No. 3 GOP leader. “Everybody wants to exert whatever leverage that they can, where they can get the most leverage, but I would expect we’d be able to get on the bill.” “I think we’re going to be in a good place,” added Senate Majority Whip John Cornyn (R-Texas), the party’s chief vote counter.
GOP Faces Key "Do-Or-Die" Procedural Vote On Obamacare Repeal --At some point, either today or tomorrow, Senate Republicans must hold a procedural vote on Obamacare if they have prayer of passing the legislation before the July 4th recess, a stated goal of Senate Majority Lead Mitch McConnell. The procedural vote will kick off 20 hours of required debate and flurry of amendments so if it slips beyond tomorrow then the whole repeal process will almost certainly slip as well. According to The Hill, at least four Republican Senators are currently opposed to the motion to proceed:At least four Republicans say they may vote against their party on the motion to proceed, underscoring the opposition to McConnell’s bill.The defectors include centrist Sen. Susan Collins (Maine), who panned the bill on Twitter Monday evening; fellow moderate Sen. Dean Heller (R-Nev.); and two conservatives, Sens. Rand Paul (R-Ky.) and Ron Johnson (R-Wis.).McConnell can only afford two defections. A loss on the procedural vote would certainly end work on the measure this week, and it could be a brutal blow to getting the legislation through the Senate on a later timeframe.
Vote Delayed as G.O.P. Struggles to Marshal Support for Health Care Bill — Facing intransigent Republican opposition, the Senate majority leader, Mitch McConnell, on Tuesday delayed a vote on legislation to repeal the Affordable Care Act, dealing another setback to Republicans’ seven-year effort to dismantle the health law and setting up a long, heated summer of health care battles.Mr. McConnell faced resistance from across his conference, not only from the most moderate and conservative senators but from others as well. Had he pressed forward this week, he almost surely would have lacked the votes even to begin debate on the bill.“We will not be on the bill this week, but we’re still working toward getting at least 50 people in a comfortable place,” said Mr. McConnell, who is known as a canny strategist but was forced to acknowledge on Tuesday that he had more work to do.The delay pushes Senate consideration of the bill until after a planned recess for the Fourth of July, but it does not guarantee that Republican senators will come together. Opponents of the bill, including patient advocacy groups and medical organizations, plan to lobby senators in their home states next week. Senators are likely to be dogged by demonstrators. Democrats vowed to keep up the pressure, and some Republican senators have suggested that their votes will be difficult to win.After meeting with President Trump at the White House, Mr. McConnell told reporters that if Republicans could not come to an agreement, they would be forced to negotiate a deal with Senator Chuck Schumer of New York, the Democratic leader. “The status quo is simply unsustainable,” Mr. McConnell said. “It’ll be dealt with in one of two ways: Either Republicans will agree and change the status quo, or the markets will continue to collapse, and we’ll have to sit down with Senator Schumer. And my suspicion is that any negotiation with the Democrats would include none of the reforms that we would like to make.”
Senate GOP delays ObamaCare repeal vote past recess | TheHill: Senate Republicans are delaying their effort to vote on legislation repealing ObamaCare until after the July 4 recess after a number of members said they opposed the current bill. Senate Majority Leader Mitch McConnell told members of the decision on Tuesday at a closed-door meeting. "He simply said I think we need more time to work on it, we don't have the votes right now," Sen. Mike Rounds (R-S.D.) told reporters after the meeting. A Congressional Budget Office score on the measure found the Senate bill would leave 22 million more people without insurance compared to present law over the next decade. The analysis also found that the Senate bill would cause premiums to rise over the next two years, undercutting a GOP argument for the bill. Premiums would decrease starting in 2020, but it is unclear if that was enough for conservatives.After the analysis was reached, a number of GOP senators said they would not back a procedural motion on the bill that had been set for Wednesday. Rounds indicated the CBO score played a critical role in the decision to punt on a vote, saying changes would be made and the GOP would get a new CBO score. "We will not be on the bill this week," McConnell (R-Ky.) told dozens of reporters later on Tuesday. "We're going to continue the discussions in our conference" The House pulled back on a vote on its own ObamaCare repeal bill in March amid widespread defections. After more deal-making, a new bill was brought to the floor and passed. Senate GOP leaders will be hoping for a similar situation next month, though they also risk opposition to the bill rising over the July 4 recess.
Mitch McConnell delays Senate health care vote | McClatchy - Mitch McConnell suffered a rare, stinging defeat Tuesday. But he’s wily enough to recover. The Senate Majority Leader was forced to postpone a vote on a bill to repeal and replace Obamacare after failing to secure enough votes for Senate Republicans to deliver on their persistent campaign promise. But Senate observers say the veteran lawmaker, respected by friends and foes for his tactical savvy, knows how to survive politically. McConnell lacks support from both ends of the Republican ideological spectrum, and he now has to figure out how to assuage the conservatives who believe the bill doesn’t go far enough and also mollify the moderates who fear it cuts too deeply Don’t count out the possibility that McConnell will thread the health care needle, said Scott Jennings, a Republican political consultant in Kentucky who has worked for McConnell. “There is a sliver where all these circles overlap and if anyone can find it, McConnell can find it,” Jennings said. “He listens and is capable of sorting out what is possible, what is not possible and he’s built up enough trust that his caucus trusts his instincts and judgment.” McConnell’s political judgment now, Jennings suggested, is that “failing to fulfill that promise is not a road the Republican party wants to go down.”
Senate Democrats: ObamaCare repeal fight isn't over yet | TheHill: Senate Democrats are warning supporters that the fight to repeal and replace ObamaCare isn't over, even after Republicans delayed a vote on their bill until next month. "Over the next couple of weeks, we know that Leader [Mitch] McConnell will try to use a slush fund to buy off Republicans, cut back-room deals, to try and get this thing done," Senate Minority Leader Charles Schumer (D-N.Y.) told reporters on Tuesday. He added that Democrats aren't "resting on any laurels, nor, do we feel any sense yet of accomplishment, other than we are making progress." Schumer's remarks were echoed across his 48-member caucus, with Democratic members unanimously opposed to the GOP bill. They warned that while they scored a win with Senate Republicans delaying their healthcare legislation until after the July 4 recess, they don't believe the GOP move to repeal ObamaCare is dead yet. "Just like the House of Representatives did after their initial failure, I take Majority Leader McConnell at his word that he will bring the bill back to the floor," said Sen. Kirsten Gillibrand(D-N.Y.).
When Cutting Access to Health Care, There’s a Price to Pay - Senators, the United States is a sick country. Four years ago, a panel of experts convened by the Institute of Medicine and the National Research Council set out to assess the nation’s health compared with that of 16 other rich nations. Americans, they found, had the second-highest mortality from noncommunicable conditions — like diabetes, heart disease or violence — and the fourth highest from infectious disease. In terms of infant and maternal mortality, Americans are the worst off.From adolescence to adulthood to old age, the chances of dying an early death are higher in the United States than in any of the other 16 countries. A 15-year-old American girl has a 1 in 25 chance of dying before she turns 50, twice the risk found in the comparison group.And early death is hardly surprising, since Americans lead a pretty sickly life. Teenagers and young adults report higher rates of obesity, chronic illness, sexually transmitted infections, mental illness and injuries than in peer countries, according to the report. Americans in their 50s have higher rates of heart disease, stroke, diabetes, hypertension and obesity.The figures also reflect a toll in the workplace. The United States ranks in the bottom fourth among the 30 industrialized nations in the Organization for Economic Cooperation and Development in terms of days lost to disability: Women will lose 362 days between birth and their 60th birthday; men about 336. Mental health problems like depression will account for most. And the American deficit has been getting worse. “Each year, other high-income countries are improving their health at a much faster rate than the United States, and the United States currently ranks lowest on a variety of health measures,” the report by the Institute of Medicine and the National Research Council noted.
Why the Medicaid Cap is the Most Horrid Part of the Better Care Reconciliation Act (BCRA) - naked capitalism by Lambert Strether - Most of the liberal Democrat opposition to TrumpCare, both in its House and Senate manifestations, has focused on how many people would be thrown off the rolls. In this post, I want to take a less analytically impoverished approach by looking at the BCRA’s Medicaid caps[2]. Medicaid caps will permanently crapify the program, and hence are far worse than one-time cuts in the rolls, bad as those are. Here is an explanation of how Medicaid caps will “work” under the BCRA. From an important post in Health Affairs, “The Downstream Consequences Of Per Capita Spending Caps In Medicaid“: Recent federal reform proposals from House and Senate republicans would change the current financing system by setting a per capita cap on federal payments to a state. With the Congressional Budget Office estimating that the Medicaid proposals in the AHCA will cut federal Medicaid spending by 25 percent by 2026, much attention has been given to the effects of such cuts on decreasing the number of individuals enrolled in Medicaid and increasing state budgets. Much less attention, however, has been given to a related but critical question: How do the reforms affect who enrolls in and gets care under Medicaid? From the lens of economics, we draw an analogy to per capita payments in health insurance markets and explain how the currently proposed reforms threaten the core programmatic purpose of Medicaid by incentivizing states to limit care and coverage to the states’ most vulnerable residents. And: Without federal funding, one might expect a classic “race to the bottom” among states to reduce state spending (and the accompanying taxes) by weakening their Medicaid programs. Federal policy for Medicaid prevents the race to the bottom by conditioning funding on both state spending and on the fulfilment of certain safety-net requirements, such as eligibility for statutory categories of individuals and benefit and access requirements.
Emboldened industry lobbyists try to scale back Medicaid cuts - Hospitals, doctors and nursing homes have one last chance to shape a Republican bill to repeal and replace Obamacare they say will hurt millions of old, poor and sick Americans — and their own bottom lines. After being on the sidelines for much of the repeal debate, the groups see an opening in the meltdown of the Senate health care bill. They’re particularly worried about the legislation’s proposed deep cuts to Medicaid, the country’s largest insurance program, which covers 74 million people. Medicaid “was established to prevent our country’s most vulnerable citizens from being left behind, and it’s truly become a lifeline for millions of Americans,” said Rick Pollack, CEO of the American Hospital Association, during a call with reporters on Tuesday. “Even Republican senators are sounding alarm bells over the harm these deep cuts would cause for vulnerable patients in their states.” A coalition of the nation’s largest provider groups is airing ads across 12 states this week linking the Senate bill to worse care for millions, including children, the disabled and the elderly. Health care lobbyists are targeting shaky senators both in D.C. and in their home states, hammering home the idea that Medicaid cuts could skyrocket charity care and force hundreds of small and rural hospitals out of business. And on Monday, the trade group representing nearly 14,000 nursing homes broke its silence to deliver a scorching indictment of Senate Republicans’ bid to remake Medicaid. “We genuinely believe that if the senators had any idea of the extent of the impact on [nursing homes] in the country that they’d never be proposing this,” American Health Care Association President Mark Parkinson said. “If they adopt this bill, the future of long-term care as we know it will be very different.”
Yet Another Form of Crapification: Stranded Money - Yves Smith - Any time you pay in advance, you run the risk that the provider will underdeliver, leaving you in a weak position to argue about what you actually got, or will go out of business and not be able to complete his part of the deal. In some areas of life, the powers that be have taken steps to protect hapless citizens, or at least ones with enough means to matter. For instance, New York passed a law in 1999 to protect health club members against the loss of pre-paid memberships. The health clubs must post a performance bond which is used to compensate members in the event the gym closes or is sold. However, in most walks of life, in our wonderful world of neoliberal markets, consumers are on their own and are supposed to be able to make informed decisions about who to trust when. But in addition to facing routine credit risk, consumers who use prepaid services are also exposed to the risk of the provider setting up their services so as to increase the odds that they get to keep your money without providing the actual service in full or on a timely basis. In other words, the prepayment is set up to be gamed against the buyer. […] But there are examples where stranding the customers’ money seems to be more central to the product design, to the degree that the hassle seems like a scheme to make the service difficult and therefore deter use. Consider this mini-rant by Josh Barro in Business Insider, in a story about why the GOP’s healthcare reform is probably doomed: One of the stupidest aspects of Republican healthcare rhetoric is the idea that consumers want to take charge of their own care by paying routine expenses from special, tax-advantaged accounts. These accounts have been gradually foisted on Americans over the decades. Your employer most likely asks you whether you want a health savings account or a flexible spending account. I’ve resisted using one because they are such a pain, but I broke down and set up an FSA this year through Business Insider because I decided it was stupid to forgo the tax savings. So I put $2,600 in the account and ADP sent me a debit card. I started using it at the doctor’s office, at the pharmacy, at the physical therapist. Then, after a few months, I got a letter in the mail from ADP saying it needed my receipts. Receipts? I thought ADP got those straight from the providers. It seems it does get them from CVS, but not from the medical providers. I was supposed to be uploading those receipts through a website. Instead, I threw them away. If I had to upload the receipts, then what was the point of the debit card? If the system requires that much paperwork, I might as well be submitting claim forms and getting checks in the mail. Anyway, now I have to call those providers’ offices and get duplicate receipts and upload them and allow seven to 10 days for processing. Until I do that, I have been cut off from access to the money in the account — my own money — that got in the account only because Congress chose to offer a tax preference that I could get only by using such an account. Who wants to deal with this crap?
Mitch McConnell Isn’t Playing 13-Dimensional Chess - The Senate’s version of the GOP health care bill, which Majority Leader Mitch McConnell unveiled last week, hasn’t had the smoothest rollout. Some 22 million more people would go uninsured under the Better Care Reconciliation Act by 2026, the CBO announced on Monday, essentially unchanged from the House’s version of the bill. The bill has been criticized both by conservative Republicans, such as Kentucky’s Rand Paul and Utah’s Mike Lee, and by relatively moderate ones, such as Maine’s Susan Collins and Nevada’s Dean Heller. Local newspapers have given it negative coverage. The American Medical Association opposes the bill, as does the AARP, while private insurers have had a mixed reaction. All of this has cut against McConnell’s reputation as a strategic genius — to the point where some reporters and commentators have suggested that McConnell intentionally drafted a poor piece of legislation. The New York Times’ Jennifer Steinhauer, for instance, hypothesized that McConnell was hoping for the bill to fail so he could move on to tax reform and other priorities. Balkinization’s David Super argued that McConnell began with a bill he knew “pretty much everyone” would hate so that changes to the bill would make it look better by comparison. I’d posit a simpler idea: This bill is exactly what McConnell wants because it’s right in line with his long-term goals. As Bloomberg’s Francis Wilkinson points out, the BCRA “will transfer hundreds of millions of dollars from poor and middle-class people, in the form of health care, to rich people in the form of tax cuts.” To be more specific, the bill would cut Medicaid spending by $772 billion over 10 years, according to the CBO, and reduce health care tax credits by about $408 billion. It would also reduce taxes and penalties by more than $700 billion, mostly in the form of “repealing or modifying tax provisions in the ACA that are not directly related to health insurance coverage, including repealing a surtax on net investment income and repealing annual fees imposed on health insurers.” To put it another way, the BCRA is less a health care bill than a tax cut (that will mostly benefit the wealthy), coupled with a trillion-dollar-plus reduction in federal government spending on health care (that mostly benefited the poor and the sick). Those goals — lowering taxes on the wealthy, trimming the welfare state and reducing the size of government — are at the core of Ronald Reagan’s philosophy of movement conservatism, and they’ve been the primary axis of political conflict between Democrats and Republicans for most of the past several decades.
GOP infighting erupts over healthcare bill | TheHill: Senate Republicans are struggling mightily to find a path forward for their ObamaCare repeal bill, with infighting between moderates and conservatives threatening to create an impasse heading into the July Fourth recess. GOP leaders say they want to have an agreement on changes to the legislation by Friday, but senators said they made virtually no progress at a lunch meeting on Wednesday. In fact, the two sides appeared to grow further apart. Conservatives represented by Sen. Ted Cruz squared off against moderates led by Sen. Susan Collins over lunch, according to lawmakers who attended.They battled over Cruz’s “Consumer Freedom” proposal, which would allow companies to sell health insurance plans that don’t meet the requirements of the Affordable Care Act. Collins and other moderates expressed strong opposition to the plan, fearing that it would lead to sicker Americans becoming segregated in the insurance markets. Sen. Ron Johnson (R-Wis.), meanwhile, continued to chastise leadership for not running a more open process in drafting the legislation and ignoring many ideas from rank-and-file colleagues — criticisms he has voiced over the past few weeks. One senator described the talks as “running in circles.” Cruz, leaving the lunch, told reporters that most of the discussion was about proposed market reforms to “reduce premiums to make health insurance more affordable for families who are struggling.” Collins, who is worried about projections that millions of people will lose coverage under the Senate bill, said she remains concerned with “a number of aspects such as coverage, the Medicaid cuts.” “Tinkering around the edges, adding a bit more money isn’t going to be the answer,” she said.
Senate Republicans struggle to salvage healthcare effort | Reuters: The top U.S. Senate Republican struggled on Wednesday to salvage major healthcare legislation sought by President Donald Trump, meeting privately with a parade of skeptical senators as critics within the party urged substantial changes. Republican leaders hope to agree on changes to the legislation by Friday so lawmakers can take it up after next week's Independence Day recess.. Senate Majority Leader Mitch McConnell on Tuesday abandoned plans to seek passage of it this week because Republicans did not have 50 votes to pass the bill. For seven years, Republicans have led a quest to undo the 2010 law known as Obamacare, Democratic former President Barack Obama's signature legislative achievement. Trump made dismantling it a top campaign promise during last year's presidential campaign but policy differences within the party have raised doubts Republicans can achieve a repeal. Democrats have unified against the bill and Republicans control the Senate by a slim 52-48 margin, which means McConnell can afford to lose only two Republicans. So far at least 10 - including moderates and hard-line conservatives - have expressed opposition to the current bill, although some indicated they would vote for it with certain changes. McConnell, with his reputation as a strategist on the line, met with a procession of Republican senators in his office on Wednesday. John Cornyn, the No. 2 Senate Republican, said party leaders will talk to every Republican senator who has concerns about the bill or is undecided. The House of Representatives passed its healthcare bill last month, only after striking a balance between the center of the party and the right wing. Now McConnell must find a similar sweet spot.
GOP scrambles to win centrist votes on ObamaCare repeal | TheHill: Senate Republican leaders are focused on winning over centrists as they try to revive their legislation repealing and replacing ObamaCare. Their strategy is to win over moderates who balked at their earlier bill, and then hope that the pressure to take action on the GOP’s promise to repeal former President Barack Obama’s signature legislation will be enough to get conservative senators to back the bill. GOP leaders can only afford to lose two votes, giving them little room for error. The most notable sign of their strategy on Thursday was a willingness to scrap cutting the capital gains tax rate on wealthy individuals and families from 23.8 percent to 20 percent, according to several GOP senators. GOP leaders would use the savings to provide more money for low-income Americans who might not be able to afford health insurance — a goal of centrist Republican opponents of the healthcare bill. “Leaving the burden on the low-income and at the same time repealing that 3.8 percent is not an appropriate way going about dealing with this issue, and leadership is attempting to address that. I'm actually very confident that's going to be addressed,” Sen. Bob Corker (R-Tenn.) told reporters Thursday afternoon. Scrapping language cutting the capital gains tax would provide hundreds of billions of dollars in additional revenue to increase tax credits for low-income families, beef up the stabilization fund and enhance Medicaid payments. Many Republican senators said they are open to the change, but some conservatives objected. “We pledged that we would repeal ObamaCare,” Sen. Pat Toomey (R-Pa.) told reporters. “I don't remember anybody going around saying, 'Oh except for these job-killing tax increases.’”
Dazed GOP bolts Washington in health care disarray - POLITICO: Senate Republicans skipped town on Thursday afternoon facing stiff internal opposition to their health care proposal and a Fourth of July recess in which critics will pummel their effort to repeal Obamacare. Though the Senate whirred to life with deal-making between Senate Majority Leader Mitch McConnell and his members, senators were dazed by the up-and-down week and nowhere near a plan that could get 50 votes. The GOP is planning to write new language to be analyzed by Friday, but were far from reaching a broad agreement as senators had hoped. “In some ways, we’re going around in circles, but I think we’re getting closer on some elements,” said Sen. Jeff Flake (R-Ariz.). “This is complex.” And there’s no guarantee that time back home will make things better. “Our members seem to have too much information and are almost in mental lockdown,” said one Republican senator, who was perplexed at where the party goes from here. “I can’t imagine going home for 10 days is helpful.” The best party leaders could hope for was to send a collection of new proposals to the Congressional Budget Office to analyze over the recess that would likely include maintaining Obamacare’s so-called net investment income tax that levels a surcharge on some high-income earners. The money would then be used to help low-income people afford health care. Other sweeteners likely to be assessed: Allowing pre-tax health savings accounts to pay for insurance premiums, an ask by Sen. Ted Cruz of Texas, and pouring $45 billion into fighting opioids, preferred by Rust Belt senators whose states are wracked by drug epidemics.
Trump: Repeal ObamaCare now, replace it later | TheHill: President Trump appeared Friday to express impatience with GOP senators negotiating ObamaCare repeal legislation. In an early morning tweet, Trump said if the Senate is “unable to pass what they are working on now,” then lawmakers should repeal ObamaCare outright and replace it later. The call for action comes days after GOP Senate leadership postponed a procedural vote on their healthcare overhaul in the face of sinking support. Republicans plan to reexamine their repeal-and-replace efforts after the July 4th recess. Trump's call for separate repeal and replace efforts might be applauded by conservatives who think the current GOP bill doesn't go far enough, but it's likely a non-starter for moderates who fear leaving too many without coverage.
Does Trump Know The 1st Thing About Health Care? Aide: ‘He Understands Winning.’ -- On Wednesday morning, the president woke up and then began angrily tweetstorming about his allegedly deep knowledge of the American health care system. “Some of the Fake News Media likes to say that I am not totally engaged in health care,” Donald Trump tweeted from his personal @realDonaldTrump account. “Wrong, I know the subject well & want victory for U.S.” The president’s close aides and political advisers, six of whom spoke to The Daily Beast on the condition of anonymity in order to speak freely, would beg to differ. Some of them simply laughed at the very suggestion that the president knows much, or even cares, about health care policy in this country. Trump’s Wednesday hate-tweets came the morning after a story was published at The New York Times that stated that one Republican senator who supports the Senate’s Trumpcare legislation exited a Tuesday meeting with President Trump at the White House with the strong impression that “the president did not have a grasp of some basic elements of the Senate plan.” Furthermore, Trump appeared “especially confused when a moderate Republican complained that opponents of the bill would cast it as a massive tax break for the wealthy,” according to the Times’ account. This report, and the unnamed senator’s suggestion of Trump’s ignorance and policy confusion, irked the president and, according to one White House official speaking to The Daily Beast, made him noticeably “furious again” in his ongoing, obsessive feud with various media outlets, which he habitually knocks as “failing” and “FAKE NEWS.” Multiple senior administration and White House officials all independently described Trump as either detached from or barely interested in the complicated details and tricky politics of subsidies, Obamacare markets and taxes, the Medicaid expansion, and the safety net.
Imagine…ACA Repeal and Delay -- Menzie Chinn -- Following Senator Sasse’s suggestion to implement HR 3762, the President tweeted in support of some version of repeal and delay. What would happen? We don’t have to wonder too long; CBO has estimates: CBO and JCT estimate that enacting [H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015, which would repeal portions of the Affordable Care Act (ACA) eliminating, in two steps, the law’s mandate penalties and subsidies but leaving the ACA’s insurance market reforms in place] would affect insurance coverage and premiums primarily in these ways:
- The number of people who are uninsured would increase by 18 million in the first new plan year following enactment of the bill. Later, after the elimination of the ACA’s expansion of Medicaid eligibility and of subsidies for insurance purchased through the ACA marketplaces, that number would increase to 27 million, and then to 32 million in 2026.
- Premiums in the nongroup market (for individual policies purchased through the marketplaces or directly from insurers) would increase by 20 percent to 25 percent—relative to projections under current law—in the first new plan year following enactment. The increase would reach about 50 percent in the year following the elimination of the Medicaid expansion and the marketplace subsidies, and premiums would about double by 2026.
Expect the attacks on the CBO from the usual suspects (e.g., Newt Gingrich, Sean Spicer — if they let him out of the back room –, Mick Mulvaney, etc.).
Senate GOP Leaders Said to Aim for New Health Plan in Two Weeks - Senate Republican leaders trying to break a logjam on their proposed health-care legislation are working with congressional budget officials to examine the impact of various changes they’re considering, a process that could take about two weeks, according to a GOP aide.President Donald Trump complicated the delicate negotiations led by Senate Majority Leader Mitch McConnell early Friday, tweeting that if Republican senators can’t strike a deal on their health bill, they should immediately repeal Obamacare and replace it later. That’s a reversal of the president’s earlier position, and it comes as McConnell is trying to gain support from conservative senators, some of whom have wanted a full repeal all along. If Republican Senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date!— Donald J. Trump (@realDonaldTrump) June 30, 2017 McConnell of Kentucky is still trying to find a way to win enough support for legislation that repeals Obamacare and replaces it at the same time -- after a measure he proposed last week failed to win enough support among Republican senators. For the bill to clear the Senate, Republicans can only afford to lose two GOP votes amid unanimous Democratic opposition. Republican leaders are asking the non-partisan Congressional Budget Office to review conceptual changes to the legislation, beginning a two-week process of balancing the costs and policy outcomes of possible changes, said the Republican aide who asked for anonymity to discuss the matter. The budget office will provide estimates of the legislation’s impact on the federal budget and number of Americans who will lose coverage under a revised plan. McConnell is planning to add $45 billion in spending to address the opioid epidemic, according to the aide, a top demand of moderate Republicans, including Senator Rob Portman of Ohio and Shelley Moore Capito of West Virginia.
Support for Senate healthcare bill at 17 percent in NPR poll | TheHill: Support for the Senate GOP’s healthcare legislation stands at just 17 percent in a new NPR poll. Slightly more than half of all respondents, 55 percent, disapprove of the legislation to repeal and replace ObamaCare. Pollsters also found that 46 percent of Americans want ObamaCare to be more far-reaching, while only 7 percent want it to do less. The NPR/PBS NewsHour/Marist poll, which surveyed 1,205 adults between June 21-25, has a margin error of 2.8 percentage points.Senate GOP leadership on Tuesday decided to delay a vote to advance the legislation until after the July 4 recess. As of Tuesday, nine GOP senators had announced their opposition to the bill. But Republicans can only afford to lose two votes, assuming no Democrats support the bill. If Congress is unable to repeal and replace ObamaCare, the NPR poll notes just 6 percent of Republicans surveyed would blame Trump. Half said they would blame congressional Democrats and 20 percent would blame GOP lawmakers.
Goldman No Longer Believes Republicans Can Repeal Obamacare: Here's Why - One month after Goldman gave up on Trump being able to pass any major (or minor) tax package in 2017, overnight - in the aftermath of Senate GOP's deplorable failure to find the needed 51 votes to " repeal and replace" Obamacare- Goldman's Washington analyst Alec Phillips throws up his hands, and no longer believes that passage of Obamacare is possible. In a note that looks at the current state of health legislation, titled appropriately enough "Nearing the End", Goldman summarizes that Senate Republican leaders have postponed the vote on health legislation that had been tentatively scheduled this week. A vote is possible in two weeks, but further delays are possible. Phillips does note that there are still some arguments in favor of eventual enactment: Republicans will be under pressure to follow through on a long-standing political commitment, and the estimated deficit reduction and tax cuts in the health bill could be useful in passing tax legislation later. Fixing the existing program for the coming year will also be necessary.However, he is skeptical and says that "these factors are likely to be outweighed by the political obstacles. Estimates of the potential increase in the uninsured population seem unlikely to improve substantially even after revisions to the bill. Public support for the effort is also weak, and intraparty divisions appear to pose too many obstacles. At this point, enactment of broad health legislation like the House passed or the Senate is contemplating seems unlikely."
Public support for ‘single payer’ health coverage grows, driven by Democrats -- Pew Research -- A majority of Americans say it is the federal government’s responsibility to make sure all Americans have health care coverage. And a growing share now supports a “single payer” approach to health insurance, according to a new national survey by Pew Research Center. Currently, 60% say the federal government is responsible for ensuring health care coverage for all Americans, while 39% say this is not the government’s responsibility. These views are unchanged from January, but the share saying health coverage is a government responsibility remains at its highest level in nearly a decade. Among those who see a government responsibility to provide health coverage for all, more now say it should be provided through a single health insurance system run by the government, rather than through a mix of private companies and government programs. Overall, 33% of the public now favors such a “single payer” approach to health insurance, up 5 percentage points since January and 12 points since 2014. Democrats – especially liberal Democrats – are much more supportive of this approach than they were even at the start of this year. Even among those who say the federal government is not responsible for ensuring Americans have health care coverage, there is little public appetite for government withdrawing entirely from involvement in health care coverage. Among the public, 33% say that health care coverage is not the government’s responsibility, but that programs like Medicare and Medicaid should be continued; just 5% of Americans say the government should not be involved at all in providing health insurance.
Warren Buffett Makes The Case For Single-Payer Health Care | HuffPost: Billionaire investor Warren Buffett expressed support for adopting a single-payer health care system on Monday, arguing that it would likely do a better job of controlling runaway costs.In an interview on “PBS NewsHour,” host Judy Woodruff asked Buffett, a longtime Democratic donor, how the United States should address the Affordable Care Act, commonly known as Obamacare.Buffett qualified his comments by claiming that health care policy was “way outside [his] circle of competence.”“With my limited knowledge, I think that [single payer] probably is the best system,” Buffett said. Buffett’s support for a single-payer health care system, in which one government insurer covers the entire country, was based on the current system’s failure to keep rising health care costs in check. He noted that health care costs have risen exponentially as a share of the economy in the past four decades, holding back the competitiveness of U.S. businesses far more than taxes have.“In almost every field of American business, it pays to bring down costs,” he said. “There’s an awful lot of people involved in the medical, the whole ― just the way the ecosystem works ― that there is no incentive to bring down costs.”A single-payer system would likely “be more effective” at reducing those costs, he concluded.There is abundant evidence to back up Buffett’s argument. Medicare, a single-payer system for America’s seniors and disabled workers, has a far better record of containing costs than do private insurers. Among other reasons, that’s because Medicare does not need a fund a marketing budget or compensate shareholders and executives.
Warren Buffett: "House Health-Care Bill Would've Cut My Taxes By 17%" ---America’s favorite homespun billionaire Warren Buffett stepped up his criticisms of President Donald Trump's agenda in part two of an interview with PBS Newshour's Judy Woodruff, suggesting that Republicans should change the name of the American Health Care Act to the “Relief for the Rich” act after walking a reporter through how the House version of the bill would’ve impacted his tax rate. Buffett, who took the unusual (and hilarious) step of bringing a copy of his most recent tax return to the interview, claimed that if the version of the bill that passed the House with 217 votes had been effect this year, he would’ve saved $679,999, or over 17% of his tax bill.A quick point of clarification: Buffett’s annual taxable income is roughly $19.5 million, leaving him to pay an effective tax rate of about 16% - equivalent to what a couple making $138,000 a year would pay. More than 99% of his wealth is tied up in Berkshire Hathaway stock – and “every share of that stock has been pledged to charity.”“There’s nothing ambiguous about that. I will be given a 17 percent tax cut. And the people it’s directed at are couples with $250,000 or more of income.You could entitle this, you know, Relief for the Rich Act or something, because it — I have got friends where it would have saved them as much as — it gets into the $10-million-and-up figure.” I think members of the Senate and the House get $174,000 a year. But most of them have — if you look at the disclosures, they have substantial other income. If they get to higher than $250,000, as a married couple, or $200,000 as a single person, they have given themselves a big, big tax cut, if they — if they voted for this.
The emerging class struggle over health care in the US -- Following the announcement on Tuesday that the Republicans would be putting off a Senate vote on their health care bill until after the July 4 congressional recess, the Democrats and Republicans continued their stage-managed debate over measures that will have devastating consequences for millions of Americans.The media’s presentation of a bitter feud over the direction of health care policy is a political fiction. The newspapers and television networks report on the statements of one or another lawmaker and his or her attitude to the plan recently unveiled by Senate Republicans as if this will have any real impact on the trajectory of ruling class policy.The more decisive verdict was delivered on Tuesday by Wall Street, which saw its biggest one-day drop in six weeks after Republican Majority Leader Mitch McConnell put off a Senate vote this week. The message was clear: the corporate and financial elite wants its money, and it wants it now. The health care measure includes a $700 billion tax cut for the rich—a down payment on the money to be freed up by depriving the elderly and poor of their health and even their lives.The American ruling class is engaged in a form of social arson no less criminal or deadly than the policies that led to the Grenfell Tower fire in London.McConnell responded on Wednesday by promising that a new version of the bill will be ready by Friday for a vote sometime in July.Charles Schumer, the Democratic Senate Minority Leader from New York, reacted to the summons of the market by reiterating his call for a “bipartisan” solution, a mantra repeated by virtually all congressional Democrats. “Democrats are genuinely interested in finding a place where our two parties can come together on health care,” Schumer said. That Schumer gets more campaign money from the hedge funds and banks than any other senator, Democratic or Republican, is sufficient to demonstrate what type of child will issue from such a union.
Pro-Trump groups take no prisoners in rush to help an embattled president | Reuters: Flush with cash, political groups outside the White House are aggressively coming to President Donald Trump's aid as he battles low public approval numbers, questions about his election campaign's ties to Russia and a stalled legislative agenda. Through television attack ads and online campaigns normally seen only during the tumult of an election, the groups are helping Trump to strike back against his perceived enemies and boost his agenda, adding to the firepower of his Twitter account and the bully pulpit of the White House. On Tuesday, one of the groups, America First Policies, launched an attack ad against a senator from Trump's own Republican Party who had balked at a Senate plan to overhaul healthcare that would leave millions more Americans uninsured. The attack angered Senate leader Mitch McConnell, who is struggling to rustle up the votes for the plan. It is the first time that a U.S. president has had Super PACs - political action committees that can raise unlimited amounts of money and typically operate during elections - or political non-profits, which do not have to disclose their donors or where they spend their money, actively working to support him after the dust of campaigning has cleared. The pro-Trump groups are prohibited from coordinating with the White House, which declined to comment for this story. The New York Times reported that McConnell had complained to White House chief of staff Reince Priebus about America First Policies' ad. The group later pulled the ad. America First Policies and the other pro-Trump groups were set up to promote Trump and his legislative agenda - healthcare reform, building a wall along the Mexican border, and pushing for lower taxation and deregulation. They are not allied to the Republican Party, which can pose a problem for Republican leaders as Tuesday's attack ad showed.
Trump's infrastructure agenda: Approving private projects, including those of his allies - - Just four days after he was inaugurated, President Donald Trump delivered a clear message that he would use his office to help industry friends and political allies. He signed a Jan. 24 executive order that assured completion of the Dakota Access pipeline, which will transport oil fracked by various companies, including one owned by Oklahoma oilman Harold Hamm, his longtime friend and energy adviser. At one point, Trump was considering Hamm — a major campaign donor and pioneer in extracting oil from shale rock in North Dakota — to serve as his energy secretary. When Hamm backed out, Trump appointed former Texas Gov. Rick Perry, who had to resign from the board of Energy Transfer Partners — the company developing the Dakota Access pipeline — to take the Energy Department job. EPA, Interior and Energy all have influence over infrastructure, but possibly the most influential agency is one that many Americans have never heard of — the Federal Energy Regulatory Commission. FERC has licensing authority over transmission lines, hydro-power projects and cross-state gas and oil pipelines. Dozens of these private projects are in the works, raising concerns about use of eminent domain to build them. These appointments, and Trump’s public statements, have emboldened energy company CEOs, some of whom have publicly urged the president to intervene on their behalf. One of these is Armstrong, the CEO of Williams, one of the nation’s largest developers of natural gas pipelines. Last year, Williams suffered a setback when New York regulators, pressured by the state’s anti-fracking activists, declined to act on a needed water quality permit for the company’s Constitution Pipeline. The decision effectively stymied the 125-mile pipeline, which would ship natural gas from northeast Pennsylvania to lucrative markets in New York. In a recent interview with Bloomberg, Williams CEO Armstrong said he has been urging the Trump administration to override the New York decision by assuming permitting authority for the project, which he says the Army Corps of Engineers could do on its own. “The issue has been purely political,” he said. “That’s exactly when, for interstate commerce, the federal government should use their authority.” Union groups and some members of Congress are also urging the administration to act. Williams is the longtime owner of Transco — a 10,000-mile network of pipelines that stretches from the Gulf of Mexico to New York City. As such, it exercises significant clout in Congress. Since 2010, Williams has spent more than $16 million lobbying Congress and federal agencies, and contributed another $2.4 million to federal candidates, mostly Republicans, according to the Center for Responsive Politics.
Supreme Court breathes new life into Trump's travel ban - The U.S. Supreme Court on Monday handed a victory to President Donald Trump by reviving parts of a travel ban on people from six Muslim-majority countries that he said is needed for national security but that opponents decry as discriminatory. The justices narrowed the scope of lower court rulings that had completely blocked key parts of a March 6 executive order that Trump had said was needed to prevent terrorism attacks, allowing his temporary ban to go into effect for people with no strong ties to the United States. [tmsnrt.rs/2seb3bb] The court issued its order on the last day of its current term and agreed to hear oral arguments during its next term starting in October so it can decide finally whether the ban is lawful in a major test of presidential powers. In a statement, Trump called the high court's action "a clear victory for our national security," saying the justices allowed the travel suspension to become largely effective. "As president, I cannot allow people into our country who want to do us harm. I want people who can love the United States and all of its citizens, and who will be hardworking and productive," Trump added. Trump's March 6 order called for a blanket 90-day ban on people from Iran, Libya, Somalia, Sudan, Syria and Yemen and a 120-day ban on all refugees while the government implemented stronger vetting procedures. The court allowed a limited version of the refugee ban, which had also been blocked by courts, to go into effect.
Justices agree to weigh in on travel ban, allow parts of it to go into effect - SCOTUSblog - Today the Supreme Court agreed to review rulings by two lower courts blocking the implementation of President Donald Trump’s March 6 executive order, popularly known as the “travel ban.” Citing national-security concerns, the order imposed a freeze on new visas from six Muslim-majority countries (Iran, Libya, Somalia, Sudan, Syria and Yemen). But the full U.S. Court of Appeals for the 4th Circuit had put the order on hold last month, concluding that – although it did not specifically say so – the order likely violated the Constitution because the president intended to discriminate against Muslim travelers. Earlier this month, a three-judge panel of the U.S. Court of Appeals for the 9th Circuit also blocked the order, but on a different ground: It concluded that the order exceeds the authority that Congress has given the president to regulate immigration. The court’s announcement today means that the justices will review both of those decisions. The justices also granted the Trump administration’s request to allow the ban to go into effect, at least for would-be travelers who don’t already have some connection to the United States. The announcement came in a brief, unsigned opinion issued by the justices when they took the bench this morning to release opinions in cases argued on the merits earlier this term. The court’s opinion focused primarily on the government’s request to reinstate the ban while the cases are before the Supreme Court. Emphasizing that the purpose of temporary relief like this is “to balance the equities as the litigation moves forward,” the court made clear that it had the authority to “tailor” its ruling so that it applied to some, but not all, of those affected. That is precisely what it did.
The Supreme Court might have just turned a symbolic Trump victory into a real one Vox -- For someone who once promised Americans he’d win so much they’d be tired of winning, President Donald Trump hasn’t really had a lot of victories in the first several months of his administration. But on Monday, he got one of the biggest wins he’s had so far. The Supreme Court handed Trump a victory on his travel ban — arguably Trump’s most identifiable policy proposal — when it partially lifted lower courts’ stays on the ban, allowing the administration to ban certain people from entering the US over the summer before the court takes the case up in full in the fall. The travel ban originated with Trump, first as a “Muslim ban”; featured frequently in his speeches (even as the particulars evolved); and was the subject of a high-profile signing ceremony to close out the last week of his term. In policy terms — expressed as a matter of how many individuals will be prevented from entering the US this summer who wouldn’t have been banned before Monday — we simply don’t yet know what the scope of the victory is. It’s pretty clear that the ban will have a limited impact on most temporary visa holders, it’s a lot less clear what it’s going to mean for refugees — the Trump administration will have a lot of leeway to interpret the court’s ruling. But on some level, the “travel ban” itself was always more of a symbolic gesture than a real one. The changes that President Trump’s executive order threatens to make to visa and refugee admissions are huge — with the temporary bans providing a cover for a permanent shift in how the US decides who gets to come here. The reason the “ban” part matters is that it’s what President Trump wanted all along. Now, he’s gotten what he wanted, and the whole world knows it. It’s hard to see that as anything other than a win. And it’s harder still to dismiss the idea that the symbolic victory will itself have real-world effects.
Some would-be immigrants left in limbo after Supreme Court travel ban order | Reuters: Without close family in the United States, Elly and her husband had few options for getting permission to immigrate to America from Iran. So when they won a U.S. government lottery last September for a so-called "diversity visa" allowing them to resettle in the United States, the couple was thrilled.But the visa, which they still hope to get, is still being processed. Their attorney provided Reuters email documentation of their application to verify some of their account. Elly and her husband are two of the many people who fall into gray areas created by Monday's U.S. Supreme Court order allowing parts of Donald Trump's travel ban to take effect. While the court said it would exempt travelers from the ban who have "bona fide relationships" with Americans, the ruling did not specify exactly what that means, leaving would-be travelers from the six countries affected by the ban uncertain whether they will be allowed to enter the United States. In its ruling, the Supreme Court said Trump's blanket 90-day ban on travelers from Iran, Libya, Somalia, Sudan, Syria and Yemen could proceed, but only for foreigners with no "bona fide relationship" with an American person or entity. The court gave examples of what might qualify some travelers for exemptions from the ban, including close family ties in the United States, admittance to a U.S. university, or offers of employment from an American company. Many advocates for immigrants say they are hopeful that the vast majority of people from the six targeted countries applying for U.S. visas will qualify for such exemptions. But the ruling leaves some things vague, and has led to confusion and anxiety for those like Elly and her husband, who had hoped to come to the United States but do not fall into one of the clear exemptions laid out in the ruling.
State Department Issues Clarifications As Travel Ban Set To Take Effect, Lawyers Stand Ready Now that the Supreme Court has approved a “narrower” version of President Donald Trump’s travel ban, the measure is set to go into effect for the first time since late January, when it sparked chaos and protests at airports across the country.The revised ban, which the court ruled must allow the admittance of individuals who have a "credible claim of bona fide relationship" in the country, will take affect at 8 p.m. Eastern on Thursday, according to the Hill. Under the court’s new standard, an individual must have a close US family relationship or formal ties to a US entity like an employer or academic institution to be admitted to the United States under guidance distributed by the US State Department on Wednesday, according to the Hill.Otherwise, they are temporarily banned for 90 days or 120 days if they're a refugee coming from any country in the world. In preparation for the ban to take effect, the State Department issued a cable adding a few clarifications to the Supreme Court ruling, advising that close family "does not include grandparents, grandchildren, aunts, uncles, nieces, nephews, cousins, brothers-laws and sisters-in-law, fiancés, and any other 'extended' family members,” according to Reuters. The cable also specified that any relationship with a US entity "must be formal, documented, and formed in the ordinary course, rather than for the purpose of evading the E.O.," a reference to U President Donald Trump's March 6 executive order barring most US travel by citizens of the six nations for 90 days.It also provided a narrower definition of what constitutes a “bona fide” relations, explaining that visiting lecturers and student-visa applications would be welcome, but individuals who had simply made a hotel room reservation would not. However, many important issues - like whether the State Department's own dealings with refugees constitutes a "bona fide" relationship - remain unresolved. And there's also the question of whether courts could issue their own guidance that would supersede the State Department's.Here’s Reuters:The cable provides advice to US consular officers on how to interpret Monday's Supreme Court ruling that allowed parts of the executive order, which had been blocked by the courts, to be implemented while the highest U.S. court considers the matter.The countries covered by order include Iran, Libya, Somalia, Sudan, Syria, and Yemen, after the administration removed Iraq from the list in its updated ban. The cable's language closely mirrored the Supreme Court's order on the travel ban, though it appeared to interpret it in a narrow manner, notably in its definition of close family.
Trump Travel Ban Goes Into Effect Even as Hawaii Files Challenge - The Trump administration’s revised travel ban faced a new court challenge as soon as it took effect Thursday after the president’s signature immigration policy already weathered months of protests, legal wrangling and delays.A new set of restrictions on refugees and immigrants from six predominantly Muslim countries took effect at 8 p.m. EDT. The administration said the rules should help prevent the chaotic airport scenes witnessed when President Donald Trump’s initial order was abruptly imposed in January.But a half-hour before the ban took effect, Hawaii asked a judge to clarify whether the government violated instructions from the U.S. Supreme Court in defining who’s covered by the ban and who’s excluded. The U.S. Justice Department declined to comment.If implemented as intended, the travel restrictions would allow Trump to declare partial victory on his campaign promise to stem the flow of refugees and travelers from nations he deems a security risk. Lower court decisions to block two of his proposed travel bans were early, public defeats for the administration in its initial weeks. To minimize disruptions this time, the State Department, Homeland Security Department and Justice Department coordinated in advance to establish clearer guidelines for thousands of consular officers, airlines and travelers. And unlike in January, when hundreds of travelers arriving in the U.S. were turned back or detained at airports, those already holding a valid visa will be let in.
Trump Travel Ban to Allow Step Family, Not Grandparents, Cable Says - The Trump administration’s revised travel ban faced a new court challenge as soon as it took effect Thursday after the president’s signature immigration policy already weathered months of protests, legal wrangling and delays. A new set of restrictions on refugees and immigrants from six predominantly Muslim countries took effect at 8 p.m. EDT. The administration said the rules should help prevent the chaotic airport scenes witnessed when President Donald Trump’s initial order was abruptly imposed in January. But a half-hour before the ban took effect, Hawaii asked a judge to clarify whether the government violated instructions from the U.S. Supreme Court in defining who’s covered by the ban and who’s excluded. The U.S. Justice Department declined to comment. If implemented as intended, the travel restrictions would allow Trump to declare partial victory on his campaign promise to stem the flow of refugees and travelers from nations he deems a security risk. Lower court decisions to block two of his proposed travel bans were early, public defeats for the administration in its initial weeks. To minimize disruptions this time, the State Department, Homeland Security Department and Justice Department coordinated in advance to establish clearer guidelines for thousands of consular officers, airlines and travelers. And unlike in January, when hundreds of travelers arriving in the U.S. were turned back or detained at airports, those already holding a valid visa will be let in.
Mayors to Trump: immigration orders meddle with cities — Mayors are warning President Donald Trump that toughening immigration enforcement meddles with U.S. cities' affairs. More than 250 mayors are meeting at the U.S. Conference of Mayors in Miami Beach to take a stance on issues from climate change to the federal budget and health care. They are reviewing resolutions that would strongly oppose Trump's crack down on illegal immigration. Mayors were struck a blow in January, when Trump ordered to cut funding to jurisdictions that deny in some way cooperation with federal immigration agents. Most cities have defied the order, and a federal judge blocked it in April, at least temporarily. "Some of us are proud to be places of sanctuary, to protect immigrants, but this idea that we're in violation of something, I think is a big charade," said Los Angeles Mayor Eric Garcetti. Garcetti argued that all he wants from immigration officials is that they conduct enforcement in a "lawful, constitutional, court-ordered way," referring to policies where sanctuary cities demand warrants to turn over suspects to the U.S. Immigration and Customs Enforcement. "Police officers in Los Angeles do 20,000 to 30,000 requests for warrants from judges every year in the middle of the night when the judges are probably in their pajamas," Garcetti said. "The idea that ICE can't do the same thing seems ridiculous."
House passes Kate’s Law, as part of illegal immigrant crackdown | Fox News: House Republicans took action Thursday to crack down on illegal immigrants and the cities that shelter them. One bill passed by the House would deny federal grants to sanctuary cities and another, Kate’s Law, would increase the penalties for deported aliens who try to return to the United States. Kate's Law, which would increase the penalties for deported aliens who try to return to the United States and caught, passed with a vote of 257 to 157, with one Republican voting no and 24 Democrats voting yes. Kate's Law is named for Kate Steinle, a San Francisco woman killed by an illegal immigrant who was in the U.S. despite multiple deportations. The two-year anniversary of her death is on Saturday. President Trump called the bill's passage "good news" in a tweet, adding "House just passed #KatesLaw. Hopefully Senate will follow." Good news, House just passed #KatesLaw. Hopefully Senate will follow. — Donald J. Trump (@realDonaldTrump) June 29, 2017 “He should not have been here, and she should not have died,” House Speaker Paul Ryan said Thursday, in a final push for Kate’s Law, an earlier version of which was blocked in the Senate last year. The other bill, which would deny federal grants to sanctuary cities, passed with a vote of 228-195 with 3 Democrats voting yes and 7 Republicans voting no.
Immigrants Boost Wages for Everyone - Not long ago, prominent Democratic leaders like former President Barack Obama and progressive pundits like Paul Krugman publicly questioned what unskilled, low-paid immigrant laborers meant for American workers and the U.S. economy. Today, however, Democrats are almost totally unified in their support of open borders. That’s the basis of Peter Beinart’s argument in The Atlantic that Democrats have lost their way on immigration. Beinart cites much-debated research that suggests low-skill immigrants depress the wages of less-skilled Americans, and he questions other findings that immigrants of all skill groups benefit U.S. cities and the American economy as a whole. As I’ve written here before, turning away the talented people who immigrate to the United States would be a foolish, self-inflicted wound to the American economy. But it’s not just high-skilled immigrants who give the country a leg up: a diverse population of immigrants improves the economy, for everyone. That’s what a new study in the Journal of Economic Geography concludes in the closest look yet at the effects of immigration on U.S. workers, cities, and the economy. The study by Thomas Kemeny of the University of Southampton and Abigail Cooke of the University of Buffalo looks not only at the overall effects of immigration broadly, but at the specific effects of immigrants with different levels of education, wages, and skills—both high-skill and low-skill immigrants—on the labor market, metropolitan areas, and the nation as a whole. Their findings confirm immigration’s economic benefit to the U.S. and even counter misconceptions about its drawbacks.
Trump quietly puts teeth into his ‘extreme vetting’ policy | TheHill: The Trump administration for months has been quietly beefing up “extreme vetting” procedures for people seeking visas to enter the United States. President Trump signed a little-noticed executive order last week that rescinded an Obama-era goal to speed up visa processing. The brief directive strikes part of a 2012 order signed by former President Obama that instructed the State Department to “ensure that 80 percent of nonimmigrant visa applicants are interviewed within three weeks of receipt of application.” White House officials frame the decision as an effort to strengthen security. While the change could significantly extend wait times for people seeking to travel to the U.S., they say it doesn’t make sense to rush a visa process that could prevent a terrorist from entering the country. “This is a very straightforward step that removes an arbitrary requirement and ensures the State Department has the needed discretion to make real-world security determinations,” said White House spokesman Michael Short. “The president expects careful, accurate vetting of visa applicants, not a rushed process to accommodate an arbitrary deadline.” But the moves have prompted concern among business groups and immigration lawyers that foreign travelers might shy away from visiting the U.S. due to the new rules. “Especially as we ramp up for summer travel, there will be an increase in demand for travel [visas],” said Patricia Rojas-Ungár, vice president of public affairs at the U.S. Travel Association. “When you add backlogs, demand is impacted,” she added. “People have options for where they travel. Needless delays hurt the process and it hurts people’s interests.”
US denies visas to Afghanistan’s all-girl robotics team -- Six teenage girls from Afghanistan planned to come to the US to compete in the First Global Challenge robotics competition this month, but those plans were canceled after they were denied visas to enter the country. Forbes reports that the girls traveled 500 miles to Kabul for their visa interviews, and that their robot’s supplies were held in customs for months. This kit, which the competition organizers issued to every participating team, included different components, like brackets, extrusions, fastening hardware, hardware adaptors, bearings, wheels of different sizes, gears, pulleys, motors, servos, and sprockets. The State Department feared ISIS might try to use these parts on the battlefield, which is why they delayed sending them to the girls. Still, the team built a ball-sorting robot on a shortened timeline; their kit only arrived three weeks ago. More than 100 other teams have entered the competition, including participants from Iraq, Iran, and Sudan. The girls’ robot will still compete, but the team will only be able to watch over a video call from their homes in Herat, Afghanistan.
U.S. judge halts deportation of Iraqis nationwide | Reuters: A federal judge halted late on Monday the deportation of all Iraqi nationals detained during immigration sweeps across the United States this month until at least July 10, expanding a stay he imposed last week. The stay had initially only protected 114 detainees from the Detroit area. U.S. District Judge Mark Goldsmith sided with lawyers from the American Civil Liberties Union who filed an amended complaint on Saturday seeking to prevent Immigration and Customs Enforcement (ICE) from deporting Iraqis from anywhere in the United States. The ACLU argued those being deported could face persecution, torture, or death because many were Chaldean Catholics, Sunni Muslims, or Iraqi Kurds and that the groups were recognized as targets of ill-treatment in Iraq. Goldsmith agreed with the ACLU on the grave consequences deportees may face, writing in his seven-page opinion and order that: "Such harm far outweighs any interest the Government may have in proceeding with the removals immediately." On Thursday, Goldsmith ordered a stay in the Michigan Iraqis' deportation for at least two weeks while he decided whether he had jurisdiction over the merits of deporting immigrants who could face physical danger in their countries of origin. He expanded his stay on Monday to the broader class of Iraqi nationals nationwide, saying it applies to the removal of all Iraqi nationals in the United States with final orders of removal who have been or will be detained by ICE. There are 1,444 Iraqi nationals who have final deportation orders against them, although only 199 of them were detained as part of a nationwide sweep by immigration authorities, federal prosecutors said in court on Monday. Those detained had convictions for serious crimes, including rape and kidnapping, ICE said.
US Backs Away from Blanket Laptop Ban, Imposes New Airline Security Regime Instead --naked capitalism by Jerri-lynn Scofield - The United States Department of Homeland Security (DHS) backed away yesterday from imposing a wider airline laptop ban, and instead announced new security measures, both seen and unseen, that will be implemented at last-point-of-departure airports in 105 countries around the world for flights to the United States.The measures will cover 280 airports, affect an average of 2100 flights daily, and apply to an average of 325,000 passengers daily, according to this DHS fact sheet.In March, the United States banned laptops, tablets, and other electronics devices larger than a standard smartphone from cabin baggage on flights from 10 Middle Eastern airports. The United Kingdom followed with a similar– but not identical– measure covering six countries and fourteen carriers.Many, including Moon of Alabama (see here), saw the US ban as a form of protectionism targeting leading government-backed Middle Eastern airlines Emirates, Qatar Airways, and Etihad Airways, thus fulfilling a pledge Trump had made to CEOs from three US airlines, as I discussed in this post, Airline Cabin Laptop Ban: More Security Theater?That rationale, however, doesn’t convincingly explain the UK’s ban, which doesn’t cover the three Middle Eastern airlines, and in fact, also applies to some British Airlines flights.Both the US and UK bans were also heavily criticised for requiring passengers to check their devices in the hold, with security experts warning that this practice would increase the risk that fires that might start in lithium batteries embedded in the devices would be difficult to control. That fire risk was considered by many to be more real and serious than the terrorism risk that the ban purported to address. In addition, businesses and individuals objected to surrendering control over their devices, concerned about possible theft either of the devices themselves or of confidential data stored therein. Since the ban was imposed, there has been a drop in demand for the targeted flights (see, for example, this account in The National Emirates cuts flights to US over laptop ban).
Does US have right to data on overseas servers? We’re about to find out -- The Justice Department on Friday petitioned the US Supreme Court to step into an international legal thicket, one that asks whether US search warrants extend to data stored on foreign servers. The US government says it has the legal right, with a valid court warrant, to reach into the world's servers with the assistance of the tech sector, no matter where the data is stored. The request for Supreme Court intervention concerns a 4-year-old legal battle between Microsoft and the US government over data stored on Dublin, Ireland servers. The US government has a valid warrant for the e-mail as part of a drug investigation. Microsoft balked at the warrant, and convinced a federal appeals court that US law does not apply to foreign data.The government on Friday told the justices that US law allows it to get overseas data, and national security was at risk."This Court should grant review to restore the government’s ability to require providers to disclose electronic communications—which are, in this day and age, often the only or the most critical evidence of terrorism and crime," the government wrote. (PDF)The outcome has huge privacy ramifications for consumers and for the tech sector, which is caught between a rock and a hard place. The sector is being asked by the US government to comply with court orders that sometimes conflict with the laws of where the data is stored. To remedy that, Congress is trying to hash out legislation that would allow the US government to enter into reciprocity agreements with other countries so that each side has the right to access data on foreign servers—with a valid warrant.
Can Ivanka Trump Stop Pop From Cutting US Aid? -- To say Donald Trump hates poor foreigners is an understatement. He's definitely bigoted, but apparently it matters less if you're a Muslim [a] from a wealthy nation with [b] Trump-linked business interests. After all, the 9/11 attackers were mostly from Saudi Arabia and the UAE, but they go off scot-free in a world where, well, money talks. Although the world is fixated on the fate of his travel ban on folks from Iran, Libya, Somalia, Sudan, Syria and Yemen (countries which account for a grand total of zero terrorist fatalities in the US) less is said about the ongoing famines in many of these countries and their near-neighbors. You see, the Trump administration has been mulling drastic cuts to US foreign aid going to all these poor, ungrateful, Trump-hating coloreds (or is their hatred partly due to the US planning to cut so much aid?) to spend on things like a multi-billion military expansion and a Great Wall of Trump on the US-Mexico border. However, note that Congress ultimately decides what to spend on the US federal budget and not the president. Meanwhile, some hope that his moderate[-ish] daughter/adviser Ivanka Trump will persuade The Donald to not make such drastic aid cuts--at least that's what some aid agency officials think in the face of massive ongoing famines elsewhere:The head of the UN World Food Programme has said he is hopeful Ivanka Trump will lobby her father into a U-turn on cuts to humanitarian aid in the face of an urgent cash crisis that is imperilling hundreds of thousands of lives. David Beasley, a former Republican governor of South Carolina who supported Donald Trump’s campaign for the presidency, said Congress and the Senate had already defied the new president to ringfence $980m (£764m) for famine relief this year. Beasley said he believed Trump would now rethink his policy of stripping down funding of peacekeeping and humanitarian aid for 2018, due in part to the president’s “savvy” daughter, with whom he posed for photographs following a meeting earlier this month. What does Trump care? More to the point, why would Trump care about colored people unable to afford Trump-branded gold courses or hotels who hate his guts? My guess is that aid proponents are wasting their time lobbying Trump. Besides, Trump can propose the most vicious cuts to US foreign aid, but it's ultimately the congress that decides how much to allocate in the federal budget. Given that fact, I'd be lobbying congresspersons instead of this guy. It's a waste of time IMHO.
Dead Man Talking: Comey Finally Delivers – Part Two - Nina Illingworth (part one). Please bear with me for a moment here because if you want to understand the problems with James Comey’s testimony about Russian cyber attacks, you have to remember where we started as well as how the story has now shifted and that isn’t going to be easy because the people pushing the “Russiagate” conspiracy theory have a vested interest in keeping you from realizing just how much the accusations that comprise the core of the conspiracy theory have now changed:
- The accusation Russia “hacked” the election has now become Russia “influenced” the election with chat bots, Facebook posts and negative (but largely unread) stories about Hillary Clinton based on “hacked” emails released by Wikileaks; emails that were themselves completely authentic. In other words, credible members of the United States government are now arguing that Russia influenced the election in favor of Donald Trump by exposing American voters to the truth; I couldn’t make this shit up if I tried folks.
- Keeping in mind that literally nobody has been able to successfully question the veracity of the leaks, there are also a number of serious problems with the assertion that Russia was definitely behind a “hack” that might not even have occurred in the first place ; not the least of which is that all of the technical data used to prove Russia was to blame has come from a single firm (Crowdstrike) the DNC itself hired with the intention of blaming the hack on Russia – incredibly the FBI has never been allowed to examine the “hacked” servers or made any additional efforts to verify Crowdstrike’s claim.
- There is also a separate story about “Russian hackers” infiltrating voter registration systems in twenty-one states, but even this is a tempest in a teapot being used to keep a dead conspiracy theory alive as virtually every single person involved (including Comey) has admitted that absolutely no votes were changed in the election and it still remains unclear how the DHS is certain the source was the Russian government.
- The idea that Donald Trump was knowingly Putin’s puppet has become “people associated with the Trump government have potentially talked about money with people who might have ties to the Russian government” with a note that Trump himself might not be aware of this and was never actually under investigation for it. Indeed, what little evidence that has emerged actively seems to suggest that Trump isn’t working for Russia; why would Putin need to “influence” Trump through Mike Flynn if the swine emperor was already an asset and how exactly do you explain Trump’s openly hostile actions towards the government of Syria, a Russian ally?
It is important to remember that despite all of these obvious problems with the constantly-shifting “Kremlingate” narrative and the former FBI Director’s testimony that just meeting with Russians wasn’t all that abnormal, there remains little if any truth to Liar In Chief Donald Trump’s claim that Comey’s testimony exonerates the swine emperor. After all, Trump himself is definitely under investigation for obstruction of justice, his son-in-law (Jared Kushner) is almost certainly under investigation for money laundering, his former National Security Advisor (Michael Flynn) sure seems to have lied to the FBI and there’s a pretty good chance his Attorney General (Jeff Sessions) also lied while testifying under oath before the US Senate – the Trump administration is undeniably in serious trouble; but it’s almost entirely the result of self-inflicted wounds and not because Trump is a fucking Russian intelligence asset. It is absolutely vital to keep all of these things in the forefront of your mind when you consider the former FBI Director’s testimony about Russian interference in the 2016 election if you want to understand what he’s really saying. For example, when Comey states emphatically that he has no doubt Russia was trying to interfere in the election and was also behind the DNC “hack” he is admittedly basing that entirely on evidence from Crowdstrike that we already know isn’t particularly conclusive. Furthermore, proponents of the “Russiagate” conspiracy theory are pointedly ignoring the fact that Comey testified that the cyber attacks were part of an attempt to compromise up to 1,000 government or near government agencies and that these attacks weren’t exactly a new thing, so much as an escalation of longstanding Russian attempts to compromise US systems; statements that call into question how anyone can be certain the “hackers” were trying to rig the election for Donald Trump, especially in light of the fact that everyone keeps admitting that there’s no evidence anyone actually did successfully rig the election. Even Comey’s sly implication that there might be some truth to accusations contained within the Steele dossier is being overplayed by the media because one would naturally expect a document that began it’s life as Republican opposition research would have some truth to it; just not necessarily the parts about Russian intelligence blackmailing Trump with a piss tape.
Seymour Hersh Blasts Media for Uncritically Promoting Russian Hacking Story - Pulitzer Prize-winning journalist Seymour Hersh said in an interview that he does not believe the U.S. intelligence community proved its case that President Vladimir Putin directed a hacking campaign aimed at securing the election of Donald Trump. He blasted news organizations for lazily broadcasting the assertions of U.S. intelligence officials as established facts. Hersh denounced news organizations as “crazy town” for their uncritical promotion of the pronouncements of the director of national intelligence and the CIA, given their track records of lying and misleading the public.“The way they behaved on the Russia stuff was outrageous,” Hersh said when I sat down with him at his home in Washington, D.C., two days after Trump was inaugurated. “They were just so willing to believe stuff. And when the heads of intelligence give them that summary of the allegations, instead of attacking the CIA for doing that, which is what I would have done,” they reported it as fact. Hersh said most news organizations missed an important component of the story: “the extent to which the White House was going and permitting the agency to go public with the assessment.”Hersh said many media outlets failed to provide context when reporting on the intelligence assessment made public in the waning days of the Obama administration that was purported to put to rest any doubt that Russian President Vladimir Putin ordered the hacking of the DNC and Clinton campaign manager John Podesta’s emails.The declassified version of the report, which was released January 7 and dominated the news for days, charged that Putin “ordered an influence campaign in 2016 aimed at the U.S. presidential election” and “aspired to help President-elect Trump’s election chances when possible by discrediting Secretary Clinton and publicly contrasting her unfavorably to him.” According to the report, the NSA was said to have had a lower confidence level than James Clapper and the CIA about the conclusion that Russia intended to influence the election. Hersh characterized the report as full of assertions and thin on evidence. “It’s high camp stuff,” Hersh told The Intercept. “What does an assessment mean? It’s not a national intelligence estimate. If you had a real estimate, you would have five or six dissents. One time they said 17 agencies all agreed. Oh really? The Coast Guard and the Air Force — they all agreed on it? And it was outrageous and nobody did that story. An assessment is simply an opinion. If they had a fact, they’d give it to you. An assessment is just that. It’s a belief. And they’ve done it many times.”
Russia Said To Recall Ambassador At Center of Trump Controversy: Report -- According to BuzzFeed, which cites three anonymous sources, Russia is reportedly recalling Ambassador Sergey Kislyak, the man who dared to do his job and talk to US politicians and visible public figures, and who according to The Hill had "emerged as a focal point in the FBI probe into Russia’s election meddling." While the Kremlin has not confirmed the report, BuzzFeed adds that Kislyak is scheduled to leave Washington next month, following a July 11 going-away party at the St. Regis Hotel, two blocks away from the White House. Kislyak, 66, had been reported to be heading to New York to lead Russia's delegation at the United Nations. If confirmed, his return to Russia will mark the end of his 10-year tenure as Russia's leading diplomat to the United States and makes him another casualty of the growing controversy over the Russian activity. As readers are well aware, Kislyak has been a key figure in the growing investigation by a special counsel and multiple congressional committees into Russia's interference in the 2016 presidential election that put President Trump in the White House. Two key Trump administration officials, Attorney General Jeff Sessions and adviser Jared Kushner, had meetings with Kislyak last year that they failed to disclose to congressional and federal officials. Sessions recused himself in March from any Justice Department investigation into the Russian interference, in part because of his unreported contacts with Kislyak.Ironically, all Kislyak was doing was, well, his job which is to meet with people like Sessions, Kushner and yes, even Trump.In May, the Associated Press reported that Kushner and Kislyak tried to set up a secret back-channel communications line with Russia that would have used Russian equipment. On May 10, Trump met with Kislyak and Russian Foreign Minister Sergey Lavrov in the Oval Office. During that meeting, Ray Locker reminds us that Trump reportedly shared classified intelligence information with the Russians and bragged about firing FBI Director James Comey, whom he called a "nut job."
Evidence is mounting that Russia took 4 clear paths to meddle in the US election - It was September 2015 when the FBI first noticed that Russian hackers had infiltrated a computer system belonging to the Democratic National Committee. It was the first sign that Moscow was attempting to meddle in the presidential election. Nearly a year later, further reporting and testimony from current and former intelligence officials have painted a portrait of Russia’s election interference as a multifaceted, well-planned, and coordinated campaign aimed at undermining the backbone of American democracy: free and fair elections. Now, as FBI special counsel Robert Mueller and congressional intelligence committees continue to investigate Russia's election interference, evidence is emerging that the hacking and disinformation campaign waged at the direction of Russian President Vladimir Putin took at least four separate but related paths. The first involved establishing personal contact with Americans perceived as sympathetic to Moscow — such as former Defense Intelligence Agency chief Michael Flynn, former Trump campaign chairman Paul Manafort, and early Trump foreign-policy adviser Carter Page — and using them as a means to further Russia's foreign-policy goals. The second involved hacking the Democratic National Committee email servers and then giving the material to WikiLeaks, which leaked the emails in batches throughout the second half of 2016. The third was to amplify the propaganda value of the leaked emails with a disinformation campaign waged predominantly on Facebook and Twitter, in an effort to use automated bots to spread fake news and pro-Trump agitprop. And the fourth was to breach US voting systems in as many as 39 states leading up to the election, in an effort to steal registration data that officials say could be used to target and manipulate voters in future elections.
Feds won't release redacted intelligence report on Russian election meddling - POLITICO: The Trump administration is refusing to release a redacted version of a key report President Barack Obama received in January on alleged Russian interference in the 2016 presidential election, court filings show. Then-Director of National Intelligence James Clapper made public an unclassified version of that report, but the Electronic Privacy Information Center brought a Freedom of Information Act lawsuit demanding a copy of the classified report given to Obama at the same time. EPIC said the unclassified version omitted "critical technical evidence" that could help the public assess U.S. intelligence agencies' claims that Russia did make efforts to affect the outcome of the 2016 race. However, a top official in the Office of the Director of National Intelligence said in a court declaration filed Monday that releasing the original report with classified information blacked out would be a field day for foreign intelligence operatives, including the very Russians the report accuses of undertaking the interference. "Release of a redacted report would be of particular assistance to Russian intelligence, which, armed with both the declassified report and a redacted copy of the classified report, would be able to discern the volume of intelligence the U.S. currently possesses with respect to Russian attempts to influence the 2016 election," Deputy Director of National Intelligence for Intelligence Integration Edward Gistaro wrote. "This would reveal the maturity of the U.S. intelligence efforts and expose information about the [intelligence community's] capabilities (including sources and methods) that could reasonably be expected to cause serious or exceptionally grave danger to U.S. national security."
Conaway, Schiff threaten to subpoena White House over Comey tapes - POLITICO: The leaders of the House investigation into Russia’s election meddling are threatening to subpoena the White House for records of President Donald Trump’s conversations with former FBI Director James Comey, saying a Tweet from the president isn’t enough to clear things up. Reps. Mike Conaway (R-Texas) and Adam Schiff (D-Calif.) said in a joint statement the White House needs to clarify whether it has “recordings, memoranda, or other documents” — adding that they will consider using a “compulsory process” to ensure a satisfactory response. The two lawmakers had requested the White House turn over the tapes by last Friday, prompting a Tweet from Trump in which he said he had no idea “whether there are ‘tapes’ or recordings of my conversations with James Comey, but I did not make, and do not have, any such recordings.” The White House later sent Conaway and Schiff a letter referring them to Trump’s Tweet. But the two lawmakers now say that’s not enough. They want to know whether the White House has — or had — any records, including tapes or written documents, memorializing Trump’s conversations with Comey. The pair said in their joint statement they have sent the White House a letter asking that it “fully comply” with their request. “By only referring to the President’s statement, the White House’s letter stops short of clarifying for the Committee whether the White House has any responsive recordings, memoranda, or other documents,” they said.
Trump Campaign Chief’s Firm Got $17 Million From Pro-Russia Party -- Paul Manafort, who was forced out as President Trump’s campaign chairman last summer after five months of infighting and criticism about his business dealings with pro-Russian interests, disclosed Tuesday that his consulting firm had received more than $17 million over two years from a Ukrainian political party with links to the Kremlin. The filing serves as a retroactive admission that Mr. Manafort performed work in the United States on behalf of a foreign power — Ukraine’s Party of Regions — without disclosing it at the time, as required by law. The Party of Regions is the political base of former President Viktor F. Yanukovych, who fled to Russia during a popular uprising in 2014. The disclosure hints at the vast fortunes available to top American political consultants plying their trade in other countries. It was not immediately clear if Mr. Manafort would be required to pay any fines for the late filing. He has maintained that a majority of his work for Mr. Yanukovych was political consulting in Ukraine, where his firm, Davis Manafort International, operated an office at the time. The Party of Regions employed Mr. Manafort to help rebrand Mr. Yanukovych and his party, which was long known as tilting toward Russia, as modernizers favoring closer ties to the European Union. All the work disclosed by Mr. Manafort on Tuesday predated Mr. Trump’s presidential campaign.
Russian hackers reportedly discussed how to steal Clinton's emails and transfer them to Michael Flynn : Hackers believed to be Russian discussed how to steal Hillary Clinton's emails from her private server and transfer them to Michael Flynn via an intermediary, The Wall Street Journal reported Thursday, citing reports compiled by US intelligence agencies investigating Russia's interference in the 2016 election. One of those intermediaries, according to The Journal, may have been a GOP operative named Peter Smith — an 80-year-old opposition researcher who assembled a team of technology experts, lawyers and a Russian-speaking investigator in September to track down hacking groups with access to the 33,000 emails Clinton deleted from her private server that she said were personal in nature. Smith cited a working relationship with Flynn's consulting firm, Flynn Intel Group, when trying to recruit new team members, The Journal reported. And he told Eric York, an expert on computer security from Atlanta who searched the hacker forums on his behalf, that he was "talking to Michael Flynn" about the project and to let him know if he found anything, according to The Journal. Flynn's lawyer, Robert Kelner, did not respond to request for comment. Smith told The Journal that the hacking groups that claimed to have the deleted Clinton emails — which he could not verify and therefore did not publish — were probably Russian. There is no evidence the hackers infiltrated Clinton's server. Special counsel Robert Mueller is leading the FBI's investigation into whether any of Trump's associates colluded with Russia to undermine Clinton during the election.Roger Stone, a longtime Trump adviser, is also being scrutinized over his conversations with a hacker linked to Russian military intelligence, Guccifer 2.0. Stone exchanged private messages with the self-described hacker in August, and his tweets in the days after raised questions about whether he knew in advance that emails from Clinton's campaign chairman, John Podesta, would be imminently published by WikiLeaks.
McCabe's Revenge: Circa Suggests Flynn Investigation Was Launched As Pure Retaliation -- Andrew McCabe has long been a controversial figure at the FBI. His position as Deputy Director of the FBI came under intense scrutiny during the Clinton email investigation after it came to light that his wife, Jill McCabe, took nearly $500,000 from Virginia Governor Terry McAuliffe to fund her Senate campaign. Of course, Terry McAuliffe is a long-time confidant of the Clinton family and was rumored as a potential running mate for Hillary. But sure, no reason to be wary the McCabe was put in charge of supervising that particular investigation. But now, at least according to a new report from Circa, McCabe may have other conflicts, including a personal vendetta against former National Security Advisor Michael Flynn, that have not yet been disclosed. According to Circa, Flynn apparently enraged McCabe a few years back after he intervened on behalf of an FBI Special Agent, Robyn Gritz, who had accused McCabe and other top FBI officials of sexual discrimination. The FBI launched a criminal probe against former Trump National Security Adviser Michael Flynn two years after the retired Army general roiled the bureau’s leadership by intervening on behalf of a decorated counterterrorism agent who accused now-Deputy FBI Director Andrew McCabe and other top officials of sexual discrimination, according to documents and interviews. Flynn’s intervention on behalf of Supervisory Special Agent Robyn Gritz was highly unusual, and included a letter in 2014 on his official Pentagon stationary, a public interview in 2015 supporting Gritz’s case and an offer to testify on her behalf. His offer put him as a hostile witness in a case against McCabe, who was soaring through the bureau’s leadership ranks. The FBI sought to block Flynn’s support for the agent, asking a federal administrative law judge in May 2014 to keep Flynn and others from becoming a witness in her Equal Employment Opportunity Commission (EEOC) case, memos obtained by Circa show. Two years later, the FBI opened its inquiry of Flynn.The EEOC case, which is still pending, was serious enough to require McCabe to submit to a sworn statement to investigators, the documents show.
FBI Director McCabe Subject Of Three Separate Federal Inquiries Into Alleged Misconduct: Report -- A couple of days ago we noted that, according to a report from Circa, Acting FBI Director Andrew McCabe may have made a serious error by refusing to recuse himself from the Michael Flynn investigation. As it turns out, per court documents reviewed by Circa, McCabe may have harbored a personal vendetta against Flynn after he intervening on behalf of an FBI Special Agent, Robyn Gritz, who had accused McCabe and other top FBI officials of sexual discrimination. Apparently the lack of inter-agency camaraderie didn't sit well with McCabe as other FBI agents subsequently confirmed that his complete disdain for Fylnn was readily apparent. But, according to the U.S. Office of Special Counsel (OSC), McCabe's apparent conflict of interest in the Flynn investigation may not be his only issue these days as he's also the subject of an ongoing investigation for an alleged violation of the Hatch Act for illegally campaigning in his wife's Virginia Senate race. Per Circa: Gritz also filed a complaint against McCabe with the main federal whistleblower agency in April, alleging social media photos she found show he campaigned for his wife’s Virginia state senate race in violation of the Hatch Act.FBI employees are held to a higher standard than other federal workers under the Hatch Act and may not “endorse or oppose a candidate for partisan political office or a candidate for political party office in a political advertisement, broadcast, campaign literature, or similar material if such endorsement or opposition is done in concert with a candidate, political party, or partisan political group.” The OSC told Circa that complaint is still being actively investigated.
Acting FBI boss Andrew McCabe faces pressure, probes, uncertain future | Fox News: Acting FBI Director Andrew McCabe is under mounting scrutiny and increasing calls for him to step aside amid allegations of politicized leadership, conflicts of interest and significant investigative missteps at the nation’s top law enforcement agency. McCabe’s close alliance with Trump nemesis and former director James Comey, the well-chronicled fact his wife took a huge campaign donation from Virginia Gov. Terry McAuliffe and a general suspicion of the Obama intelligence community brass are all leading to pressure on FBI Director-Nominee Christopher Wray to not keep him around, according to former FBI insiders. “McCabe is vicious to anyone who either stands up to him or is a threat to his ‘power’ and [he] is a screamer,” said former Supervisory Special Agent Robyn Gritz, who lost her job after 16 years with the FBI investigating some of the most high profile terrorist incidents in recent history, after getting tangled up with her superiors, who pushed her out and pulled her security clearance. The latest challenge is coming from a former FBI agent who told Fox News that McCabe has created an overly politicized environment at the bureau, and her career suffered because of it. One of those superiors was McCabe. “He saw me as a real threat to his climb because I knew my stuff and had been close to John Pistole, the prior deputy director. Andy resented that big time,” Gritz told Fox News. According to Circa News, Gritz's sexual discrimination and retaliation complaint is one of three such administrative inquiries faced by McCabe.
Kushner Adds Prominent Lawyer Abbe Lowell to Defense Team -- Jared Kushner, President Trump’s son-in-law and adviser, has added to his legal team one of the nation’s most prominent trial lawyers, Abbe D. Lowell, his lawyers said on Monday.Mr. Kushner was already represented by Jamie S. Gorelick, a former deputy attorney general who is known for steering clients — often behind the scenes — through complicated Washington investigations. Mr. Lowell is a trial lawyer who has represented figures from both parties in high-profile cases. His clients have included the former Democratic vice-presidential nominee John Edwards and the disgraced former Republican lobbyist Jack Abramoff. He is currently defending Senator Robert Menendez, Democrat of New Jersey, against federal corruption charges.The Justice Department special counsel, Robert S. Mueller III, is investigating whether any of Mr. Trump’s advisers worked with the Russian government to meddle in the 2016 presidential election. As one part of that broad inquiry, Mr. Mueller is scrutinizing Mr. Kushner’s actions, particularly his meetings with the Russian ambassador and a Russian banker. But there is no evidence that Mr. Kushner is the target of an investigation. Mr. Kushner has pledged to cooperate. Mr. Lowell’s hiring was set in motion with Mr. Mueller’s appointment. He and Ms. Gorelick worked at the same firm, WilmerHale.
Podesta Meets With House Intelligence Panel Behind Closed Doors - The House Intelligence Committee met behind closed doors Tuesday with John Podesta, Hillary Clinton’s 2016 campaign chairman, amid complaints by President Donald Trump that the Obama administration didn’t do enough to counter Russian interference in the U.S. election. Podesta’s email account was hacked, as was the Democratic National Committee’s. Many of those emails were then leaked, producing a steady, negative and sometimes embarrassing stream of news about Clinton’s campaign. But the Democrats didn’t cooperate fully with U.S. investigators. “The president and the entire administration were dealing with an unprecedented incidence of the weaponization” of Russian cyberactivity, Podesta told reporters after emerging from the hearing room. He said they were dealing with the attacks as best as they could "on behalf of the American people." Asked if he’d be coming back before the House or Senate intelligence committees, Podesta said, "Hope not." He wouldn’t answer when asked if the committee pressed him about the Obama administration’s response to the hacking. But even Democrats said beforehand that they had some tough questions planned for him.
Susan Rice Agrees To Testify Before House Intel Panel In Closed Session: Report -- Just one day after John Podesta appeared before a closed session of the House Intelligence Committee to offer his thoughts on "Russian meddling", CNN's anonymous sources are apparently telling them that Obama's former National Security Advisor, Susan Rice, will also appear before a closed session of the committee next month. Here is more from CNN:The House intelligence committee plans to interview Susan Rice next month as part of its investigation into Russia meddling in the US election last year, a high-profile target for Republicans who accuse President Barack Obama's former national security adviser of improperly handling classified intelligence reports, according to sources familiar with the private talks.Rice has vehemently denied doing anything wrong. But she has yet to answer questions from lawmakers, including declining a request to appear before a Senate judiciary subcommittee in May. And now, she has agreed to appear in a closed-door session that is expected to take place before the House departs for its August recess."Ambassador Rice is cooperating with bipartisan Russia investigations conducted by the Intelligence Committees as she said she would," said Erin Pelton, a spokesperson for Rice, who served as national security adviser and the US ambassador to the United Nations under Obama. Rice has denied that her unmasking of Michael Flynn in numerous foreign intelligence documents was in any way wrong and/or intended solely as a means to exact political retribution for an election that went horribly wrong for her party.
Gaius Publius: An Investigation in Search of a Crime --naked capitalism - Yves here. Gaius quotes Matt Taibbi’s line of thought that the relentless Trump investigations will eventually turn up something, most likely money laundering. However, it’s not clear that that can be pinned on Trump. For real estate transactions, it is the bank, not the property owner, that is responsible for anti-money-laundering checks. So unless Trump was accepting cash or other payment outside the banking system, it’s going to be hard to make that stick. The one area where he could be vulnerable is his casinos. However, if I read this history of his casinos correctly, Trump could have been pretty much out of that business since 1995via putting the casinos in a public entity (although he could have continued to collect fees as a manager). Wikipedia hedges its bets and says Trump has been out of the picture since at least 2011. He only gets licensing fees and has nada to do with management and operations. So even if Trump got dirty money, and in particular dirty Russian money, it’s hard to see how that begins to translate into influence over his Presidency, particularly since any such shady activity took place before Trump was even semi-seriously considering a Presidential bid.
NYT Finally Retracts Russia-gate Canard - The New York Times has finally admitted that one of the favorite Russia-gate canards – that all 17 U.S. intelligence agencies concurred on the assessment of Russian hacking of Democratic emails – is false. On Thursday, the Times appended a correction to a June 25 article that had repeated the false claim, which has been used by Democrats and the mainstream media for months to brush aside any doubts about the foundation of the Russia-gate scandal and portray President Trump as delusional for doubting what all 17 intelligence agencies supposedly knew to be true.In the Times’ White House Memo of June 25, correspondent Maggie Haberman mocked Trump for “still refus[ing] to acknowledge a basic fact agreed upon by 17 American intelligence agencies that he now oversees: Russia orchestrated the attacks, and did it to help get him elected.”However, on Thursday, the Times – while leaving most of Haberman’s ridicule of Trump in place – noted in a correction that the relevant intelligence “assessment was made by four intelligence agencies — the Office of the Director of National Intelligence, the Central Intelligence Agency, the Federal Bureau of Investigation and the National Security Agency. The assessment was not approved by all 17 organizations in the American intelligence community.” The Times’ grudging correction was vindication for some Russia-gate skeptics who had questioned the claim of a full-scale intelligence assessment, which would usually take the form of a National Intelligence Estimate (or NIE), a product that seeks out the views of the entire Intelligence Community and includes dissents.
CNN Deletes 'Fake News' Story About Russian Investment Ties To Trump --Thursday afternoon, CNN posted a story claiming that "Congress was investigating a Russian investment fund with ties to Trump officials." The story was perfect fodder for 'The Left' as it provided yet more 'confirmation' that sources 'confirmed' Trump and his team were up to something nefarious with The Russians...Highlights included...Congress is investigating a little-known Russian investment fund...The fund CEO met in January with a member of the Trump transition team...A fund spokeswoman says there was no discussion about lifting sanctions...Scaramucci's comments alarmed Democratic Senators Elizabeth Warren of Massachusetts and Ben Cardin of Maryland, who asked Mnuchin investigate whether Scaramucci sought to "facilitate prohibited transactions" or promised to waive or lift sanctions against Russia. Sounds great right? Well, despite the 'facts' they reported, 36 hours later (quietly late on a Friday night), CNN decided to delete the story and issue a retraction, apologizing to Mr. Scaramucci (presumably for lying?) On June 22, 2017, CNN.com published a story connecting Anthony Scaramucci with investigations into the Russian Direct Investment Fund. That story did not meet CNN's editorial standards and has been retracted. Links to the story have been disabled. CNN apologizes to Mr. Scaramucci. However, despite their deletion of the story, thanks to The Wayback-Machine, we can see what the original story said...
Three CNN Employees 'Resign' Over 'Russia Collusion' Fake News Retraction --A few days ago we noted that CNN was forced to retract one of their bombshell 'Russian collusion' stories when it was apparently revealed that the whole thing was nothing more than their latest, anonymously-sourced fake news debacle. Like most CNN stories on the topic, this one carried a salacious title ("Congress was investigating a Russian investment fund with ties to Trump officials") which implied some nefarious plot by the Trump administration to stage a coup in the United States. Within 36 hours, however, CNN was forced to retract the story and issue an apology to Anthony Scaramucci (presumably for the whole libel thing). That story did not meet CNN's editorial standards and has been retracted. Links to the story have been disabled. CNN apologizes to Mr. Scaramucci. Now, according to a new report from the Washington Post, the fake story has resulted in the 'resignation' of three CNN 'journalists, including the Pulitzer Prize winner, Thomas FrankNow for the consequences. CNN announced on Monday afternoon that three network officials are leaving their jobs over the incident: Frank, the reporter on the story; Eric Lichtblau, a recent CNN addition from the New York Times who edited the piece; and Lex Haris, the executive editor of “CNN Investigates.” The moves follow an investigation carried out by CNN executives over the weekend, with the conclusion that longstanding network procedures for publishing stories weren’t properly followed. “There was a significant breakdown in process,” says a CNN source. “There were editorial checks and balances within the organization that weren’t met.”The official CNN statement: “In the aftermath of the retraction of a story published on CNN.com, CNN has accepted the resignations of the employees involved in the story’s publication.”
CNN Executive Editor Demands To Review All Future Russia-Related Stories..."No Exceptions" After another in a string of embarrassing screw-ups, CNN is reportedly implementing a policy change to strengthen oversight of stories involving Russia, according to a Buzzfeed News report. Buzzfeed obtained an email sent by CNNMoney executive editor Rich Barbieri outlining the network's new rules. The email, which went out at 11:21 a.m. on Saturday said "No one should publish any content involving Russia without coming to me and Jason," a CNN vice president."This applied to social, video, editorial, and MoneyStream. No exceptions," the email added. "I will lay out a workflow Monday." The new restrictions also apply to other areas of the network — not just CNNMoney, which wasn't involved with the article that was deleted and retracted. Buzzfeed said CNN didn't immediately return a request for comment or answer questions about what the previous workflow was. The initial story, written by none other than Pulitzer-Prize-winning reporter Thomas Frank,claimed that "Congress was investigating a Russian investment fund with ties to Trump officials."
Trump on CNN retraction: 'What about all the other phony stories they do?' | TheHill: President Trump blasted CNN early Tuesday after the network retracted a story published last week tying a top Trump ally to a Russian investment bank. "Wow, CNN had to retract big story on 'Russia,' with 3 employees forced to resign," Trump tweeted. "What about all the other phony stories they do? FAKE NEWS!" The president's comments come after three CNN staffers resigned following the network's retraction. Thomas Frank, the author of the story, Eric Lichtblau, an editor in the CNN investigative unit that ran the story, and Lex Haris, who oversaw the unit, have all left CNN, the network reported Monday. The retracted story connected Anthony Scaramucci, a top proponent of Trump, to a Russian investment fund run by a bank controlled by the Kremlin.
Kushner company received $285M loan from Deutsche Bank shortly before election: report | TheHill: Jared Kushner’s real estate company received a $285 million loan a month before Election Day from a German bank that has lent millions to President Trump in the past, The Washington Post reported Sunday. Kushner was acting as both an adviser to the Trump campaign and working at his real estate company when his firm received the loan from Deutsche Bank. The White House told The Post that Kushner “will recuse from any particular matter involving specific parties in which Deutsche Bank is a party.” Kushner and Deutsche Bank declined to comment to The Post on Sunday. Kushner also reportedly made a personal guarantee on the loan, which he did not reveal on his financial disclosure form with the Office of Government Ethics. A lawyer representing Kushner told the Post in a statement that Kushner was not required to disclose the loan because of guidance from the ethics office that “clearly states that filers do not have to disclose as a liability a loan on which they have made a guarantee unless they have a present obligation to repay the loan.” A former ethics official told The Post that he would have recommended Kushner include the loan on the disclosure because of how large it is and the implications of being the guarantor of the loan. Deutsche Bank has also been tied into the investigation into possible Russian interference in the 2016 election. Kushner is reportedly under scrutiny for meetings with Russian officials.
"Please Just Stop": Republicans Slam Trump's Attack On Mika -- With his latest two tweets, in which he attacked "Morning" Joe Scarborough and Mika Brzezinski, Trump may have finally crossed the line. At least that's the view of a group of Republicans who slammed Trump's over his tweets attacking MSNBC host Mika Brzezinski, saying the personal jabs about a woman’s looks were unworthy of the presidency.“Please just stop. This isn’t normal and it’s beneath the dignity of your office,” Republican Senator Ben Sasse of Nebraska said on Twitter Thursday. Republican Senator Lindsey Graham also slammed Trump tweeting. “Mr. President, your tweet was beneath the office and represents what is wrong with American politics, not the greatness of America,” As noted earlier, Trump prompted the latest bout of outrage this morning after calling Brzezinski “crazy” and said she had been “bleeding badly from a face-lift” when he refused to see her in December. Brzezinski hosts the MSNBC show “Morning Joe” with Joe Scarborough.“I heard poorly rated @Morning_Joe speaks badly of me (don’t watch anymore),” Trump said. “Then how come low I.Q. Crazy Mika, along with Psycho Joe, came to Mar-a-Lago 3 nights in a row around New Year’s Eve, and insisted on joining me. She was bleeding badly from a face-lift. I said no!”“This is not okay,” Republican Representative Lynn Jenkins of Kansas said on Twitter. “As a female in politics I am often criticized for my looks. We should be working to empower women.”
You’ll Never Believe This, but Republicans are Starting a Bernie Sanders Witch Hunt - If you’re unfamiliar with this newest GOP inquisition, you can read a story by Harry Jaffe on Politico that promotes the “scandal” as a byzantine, mysterious, and potentially sordid affair with no easy answers. However, I recommend that you do not read that story, because it’s godawful in its desperate attempt to paint this as something more than drummed-up political hackery. In fact, the outline of the real story is pretty damn simple. Here’s what’s happening:
- 1. In 2004, Jane Sanders, Bernie’s wife, became the president of Burlington College in Vermont. She orchestrated the purchase of lakefront property at a discount from a Roman Catholic diocese who were financially burdened by lawsuits. It was a bad move—she had to take out a bunch of loans from various quarters, and the anticipated financial benefits never materialized. The deal was finalized in 2010, and Sanders was forced out in 2011, partly because of financial matters, and partly because of personal conflicts. Burlington College closed in 2016. It seems fair to say that Jane Sanders was not the ideal leader for this institution.
- 2. Brady Toensing, a Republican apparatchik in Vermont who chaired Trump’s campaign in the state and has never liked Bernie Sanders, managed to get federal investigators involved, and soon introduced allegations (with absolutely no supporting evidence) that Bernie Sanders used his position as Senator to exert pressure on certain banks to approve the loans for the land deal. Toensing is famous for launching attacks on Democrats in the state, including the former Governor—he even tried to nail Bernie Sanders on a bogus campaign finance charge in 2016, and his mom was one of the Benghazi power players—but this is frivolous even by his standards, which we’ll see in a moment.
- 3. This, in turn, forced the Sanders’ to hire lawyers. Jaffe, or some editor, decided to title his article “Jane Sanders Lawyers Up,” as though hiring a lawyer is an implication of guilt.
- 4. If Trump really wanted to stick it to Sanders, he could appoint someone like Toensing as U.S. Attorney for Vermont, and Toensing could go full Benghazi with this thing.
Bernie Sanders: FBI inquiry into 2010 bank loan will clear wife - WaPo — Sen. Bernie Sanders (I-Vt.), who has retained counsel as the FBI investigates whether his wife, Jane Sanders, committed fraud to acquire a 2010 loan for a now-shuttered Vermont college, predicted Saturday night that the probe would be a political fizzle.“This was a story that just, amazingly enough, came out in the middle of my presidential campaign, initiated by Donald Trump’s campaign manager in Vermont,” Sanders said in an interview, between rallies in Pennsylvania and Ohio organized to defeat Senate Republicans’ health-care bill. “That’s about it. I don’t think it’ll be a distraction.”Sen. Bernie Sanders (I-Vt.) stopped in Pittsburgh to kick of a three-state tour to rally against the Senate Republican health-care bill. (Reuters)Last week, longtime Sanders reporter Harry Jaffe reported that Bernie and Jane Sanders had retained attorneys Rich Cassidy and Larry Robbins to represent them in a long-running investigation into the collapse of Burlington College, which Jane Sanders led from 2004 to 2011. The investigation began in January 2016, when attorney and Vermont GOP vice chair Brady Toensing urged the FBI to probe whether Jane Sanders had committed bank fraud to acquire a new campus for the college. But Jaffe’s reporting sparked new interest in the story; on Saturday night, anyone in the audience of Sanders’s Pittsburgh speech who checked Twitter saw that the largest trending “Moment” was about the Burlington College probe. In July 2014, Toensing requested documents from the Vermont Educational and Health Buildings Finance Agency about the college’s purchase of land from a Catholic diocese. Jane Sanders had claimed $2.6 million in pledges, helping the college secure a loan to pay for the land; the college had received less than $1 million in donations, with other pledges (including a yet-to-be-paid $1 million bequest) being counted to reach the total.
Bernie Sanders Says FBI Probe Is "Pathetic" Attempt At Political Retribution - After refusing to discuss the FBI investigation into whether his wife submitted a fraudulent loan application during her time as president of the now-defunct Burlington College, Sen. Bernie Sanders has chosen to say a few choice words on the matter during an interview with noted fake news purveyor CNN. When CNN’s Erin Burnett repeatedly pressed Sanders to confirm the probe, the Senator demurred, but then decided he’d like to say a few words about the investigation. Echoing remarks made to a local reporter in May – before the existence of a federal investigation was known to the public – Senators launched into a diatribe about how the investigation is nothing more than a political attack perpetrated by Republicans. “My wife is about the most honest person I know. When she came to that college it was failing financially and academically when she left it, it was in the best shape it’d ever been. Five years later, coincidentally no doubt, when I am a candidate for president of United States Donald Trump’s campaign manager – vice chairman of the Republican party of Vermont – launched this investigation.
Lawyers Representing Bernie Sanders Supporters Fear for their Life -- Pam Martens --Jared Beck is one of the lead lawyers representing supporters of Senator Bernie Sanders in a Federal lawsuit that charges that the Democratic National Committee (DNC) and its former Chair, Debbie Wasserman Schultz, engaged in overt acts to undermine the Sanders’ presidential primary campaign while boosting the prospects of Hillary Clinton as the Democratic Presidential nominee. The lawsuit makes charges of fraud, negligent misrepresentation, deceptive conduct, unjust enrichment, breach of fiduciary duty, and negligence. Under the DNC’s bylaws, it must act in a fair and impartial manner to all Democratic candidates during the primaries. The lawsuit on behalf of Sanders’ supporters was filed on June 28, 2016. In less than two months, two young men who were potential witnesses in the case were dead. Seth Rich was a 27-year old DNC employee who was shot to death in Washington D.C. on July 10, 2016. Police continue to work on the theory that the murder was a botched robbery, despite the fact that nothing was taken from Rich’s body. Less than a month after Rich was found dead in the street, Shawn Lucas, the 38-year old who was the process server of the DNC lawsuit, was found dead on his bathroom floor on August 2, 2016. Lucas would have been called as a witness because the attorneys for the defendants claimed his service of the lawsuit had been “insufficient service of process.” Three months after his death, the Chief Medical Examiner’s office determined the cause of death to be: “Combined adverse effects of fentanyl, cyclobenzaprine, and mitragynine.” The manner of death was listed as an “Accident.” See our report on the findings here. Now Beck and his legal team have told the court they have concerns for the safety of their plaintiffs and themselves. On June 13, the lawyers filed a request with the Federal court for court-ordered protection for the plaintiffs and their families, themselves and their employees, and potential witnesses in the case. The lawyers outlined a series of threatening events that have occurred since June 1 and provided detailed exhibits and sealed documents.
Why Not Have a Randomly Selected Congress? --It is no secret that elected legislators are generally either inept or heinous. The data confirm that Congresspeople have a lower approval rating than marketing executives and bubonic plague. The only mystery, then, is why we keep them around. Part of the reason seems to be that we can’t seem to think of an alternative way of governing ourselves that isn’t far, far worse. Democracy is the worst thing in the world, so the saying goes, except for everything else in the world.But what if it isn’t? What if there is a better system of choosing our overlords? In fact, there is: sortition, or random selection. We could do as the Athenians once did, and select our legislators like we select our jurors: by picking citizens off a list, and asking them to govern. Instead of a legislature filled with the typical crop of ghouls, sleazes, and Small Business Owners, imagine one filled with schoolteachers, pipe-fitters, book-binders, typewriter repairmen, lifeguards, bellydancers, whaleboat captains, flight attendants, and strawberry-pickers. Yes, the occasional petty criminal or podcaster might be drawn by mistake. But such is the diversity of the nation. The randomly selected congress would display a full polychromatic cross-section of America’s extraordinary populace.
Media Focus on Trump Blindsides the Public from Rising Wall Street Risks -- Pam Martens - There are some very serious undercurrents at work in the U.S. financial markets but they are getting short shrift on the front pages of newspapers as the President’s travails dominate the news. That’s working out well for Wall Street, which wants to keep the public slumbering as long as possible in hopes of gutting more financial regulations. One of those serious undercurrents is the amount of risk being held by the biggest banks in the country. According to the Federal Reserve’s release of its Supervisory Stress Test, of the 34 Bank Holding Companies that are subject to its review, under a “severely adverse scenario,” meaning a deep recession, losses for the combined group are projected to be $493 billion. Not to put too fine a point on it but that’s just 34 banks out of a total of 5,856 FDIC insured banks in the U.S. according to the FDIC’s March 31, 2017 database. The federal deposit insurance fund as of March 31, 2017 has on hand only $84.9 billion to bail out all banks that go under. That means that if there is, once again, contagion among Wall Street mega banks because they’ve all crowded into toxic debt with derivatives written on top, the taxpayer will once again be dragged kicking and screaming by Wall Street cronies in Congress to bail out the reckless bad boys on Wall Street and their multi-million dollar bonuses — which are somehow sacrosanct even when the recipients have put the nation in financial crisis. The chart above from the Fed’s Supervisory Stress Test shows just how dangerous and irrational the U.S. financial system has become. The traditional role of banks to lend money to commerce and the consumer to keep the economy expanding and innovating and creating good jobs for Americans has been co-opted by Wall Street’s desire to trade and speculate and, eventually, blow itself up again. The numbers in the chart above represent billions of dollars of projected losses. The losses from trading events and counterparty losses on derivatives are projected at $86 billion versus $100 billion in projected losses on commercial and industrial loans – the core function of a bank. Unfortunately, the public cannot trust the projected trading and counterparty losses from the Fed. We know that from the experience of 2008 when the Fed turned out to be the dumb tourist when it came to anticipating the hundreds of billions of dollars in derivative losses hiding in the dark corners of Citigroup and AIG and Lehman Brothers — and Goldman Sachs had AIG not been bailed out. We also know from our previous reporting that the Fed is currently standing down when it comes to reining in derivative risks escalating at the biggest Wall Street banks. (See our related articles below.)
Federal Bill Attempts to Silence Investors - A broad coalition of state fiduciaries joined New York State Comptroller Thomas P. DiNapoli and New York City Comptroller Scott Stringer [on June 6, 2017] in issuing a Joint Statement on Defending Fundamental Shareowner Rights in strong support of the use of shareholder proposals as an essential tool in maintaining corporate transparency and accountability. The Statement is in response to provisions of the Financial CHOICE Act, legislation pending in the U.S. House of Representatives, which would effectively prohibit most investors from filing shareholder proposals.“This Act attempts to silence investors, large and small, who seek a vote on corporate action that could put our investments at risk and diminish corporate accountability,” DiNapoli said. “Publicly-owned companies are responsible to their shareholders, but this Act is trying to overturn that core principle by allowing only a select few of the largest investors to question corporate behavior.”“There is nothing about the CHOICE Act that provides ‘choice.’ It’s a deliberate attempt to undermine shareowner rights and erode accountability at companies big and small. This legislation was written by corporate executives, for corporate executives—at the expense of the rest of us,” Stringer said. “We’ve used shareowner proposals to protect our investments for decades by strengthening accountability, promoting diversity, and protecting human rights. But this law wouldn’t just undermine shareowners—it would also hurt everyday consumers by gutting the Consumer Finance Protection Bureau. The CHOICE Act undercuts accountability across the board. If Washington wants to make our economy less fair, this is the way to do it.”
World's Biggest Wealth Fund Refuses to Be Silenced - Investors are increasingly serious about their environmental, social and corporate governance duties, withholding investment from industries they deem to be damaging the planet or society and using their votes to steer companies onto better paths. But that only works if they have a say in the boardrooms of the companies they help to finance—a voice that the so-called tyranny of indexing threatens to silence. So Norway's $960 billion sovereign wealth fund, the world's biggest, is taking a stance against equity indexes including companies that aren't subject to shareholder control. The move opens a new front in the fund's efforts to use its considerable—and growing—clout to force companies to improve their ESG act. Two important decisions loom for those who compile the indexes that effectively decide which companies investors have to buy (or risk under-performing versus their benchmarks). Snap Inc., which sells a photo app, did a $3.4 billion initial public offering in March comprised solely of non-voting stock. If it wins equity-index status, fund managers will be forced to buy shares that don't carry any clout. A much bigger issue is the forthcoming flotation of Saudi Aramco, Saudi Arabia's state oil company. The company could be valued at more than $2 trillion, making it the biggest IPO ever. The planned sale, though, would deliver no more than 5 percent of the company into private hands, leaving 95 percent with the state—and investors with almost no say in how it operates. The Norwegian fund this week proposed scaling index weightings based on the voting power given to shareholders. Yngve Slyngstad, its chief executive officer, told my Bloomberg colleague Jonas Bergman: "Society benefits when companies are well run and asset owners take their ownership responsibility seriously. Voting is an important tool to secure good corporate governance and ensures that asset owners are able to make the board accountable and ensure long-term value creation."
Fed Chair Janet Yellen Seriously Misleads in London on U.S. Banking Reform -- Pam Martens -- Yesterday the Chair of the U.S. Federal Reserve, Janet Yellen, was in London for a wide-ranging financial markets discussion with Nicholas Stern, the President of the British Academy. Making headlines from that discussion was Yellen’s stated belief that there will not be another financial crisis in our lifetimes. While that remark has dominated the news, the more meaningful story is that Yellen either intentionally misled the British Academy and global financial media yesterday or is unaware of the systemic risk in derivatives still on the books of the largest insured depository banks in the U.S. In attempting to reassure global financial markets that the U.S. financial system is now much stronger and safer that at the time of the crisis in 2008, Yellen stated the following: “We have been very focused on making sure that the core of our financial system has enough capital that we can provide assurance that our major banks would be able to go on lending and providing credit to the economy even after a very severe shock. We do what are called stress tests and the Fed just completed the first half of these stress tests last week and we hit the major banks that we subjected to these stress tests with enormous shocks: unemployment increasing to 10 percent; huge declines in house prices, commercial real estate prices, enormous shocks. And publicized exactly how these firms would fare and what losses they would take in every portfolio, what their capital position would be at the end of that.“I think the public can see that the capital positions of the major banks are very much stronger at this point. This year all of the firms passed the quantitative part of the stress test…. On the matter of liquidity at the largest banks, Yellen had this to say: "having enough liquidity that you would be able to meet deposit outflows that could occur, let’s say over a 30-day period even if they were severe, we’ve put in place for systemic banks – internationally-active banks, liquidity requirements they hold in order of magnitude more liquid assets.” The problem with this concept is that the run on any of the major Wall Street banks would not be limited to depositors. Their derivative counterparties would attempt to grab capital ahead of the next guy, sending rumors flying and driving down the share price of the bank in the stock market, further intensifying the panic by wiping out billions of dollars of equity capital.
How to Ensure the Crisis Provision of Safe Assets - Cecchetti & Schoenholtz - Changes in financial regulation are having a profound impact on the demand for safe assets—assets with a fixed nominal value that may be converted at all times without loss into the means of payment. Not only is demand for safe assets on the rise, but the ability of the private sector to produce them is being constrained by new rules that limit the extent and nature of things like securitizations.Now, the relevant changes in regulation are varied, but their common goal is to make the financial system more resilient. For example, banks are now required to hold more liquid assets to back liabilities that can quickly take flight, while people who engage in derivative contracts are required to post cash or securities guarantees. These changes are a feature of the new system, not a bug. The increased demand for safe assets is largely an intended consequence of the reforms.So far, the fallout from increased demand and constrained supply looks reasonably benign. But for several years now, broad financial conditions have been very calm, with measures of financial volatility and stress at or near long-term lows. What will happen when the financial system comes under stress again? What if there is a drop in risk tolerance (or a surge in risk awareness) and a flight to safety that causes a jump in the demand for safe assets or a plunge in the supply? Or, as in 2008, what will happen if both materialize at the same time? We need to be ready. As we will explain in more detail, central banks in advanced economies can satisfy the heightened need for safe assets under stress (as well as the precautionary demand in normal times) by offering commercial banks committed lines of credit for a fee against collateral, as the central banks in Australia and South Africa currently do. In our view, this mechanism for ensuring sufficient supply of safe assets in a crisis has important advantages compared to one in which the central bank operates perpetually—in good times and bad—with a very large balance sheet.
Big banks on board with House beneficial ownership bill — Big banks have added their support to a bipartisan House bill that would require corporations and limited liability companies to provide beneficial ownership information to the states in which they are formed. The legislation would give financial institutions access to that data, essentially helping them with due diligence and identifying corporate beneficial owners of business customers, as required by anti-money-laundering regulations.
A committee of the world's biggest banks chose a new alternative to the scandal-ridden LIBOR rate - A body set up by the US government to investigate reforms of how banks lend to one another has decided on a new benchmark rate to replace LIBOR — the gauge which was the subject of a huge price rigging scandal in recent years. The Alternative Reference Rates Committee, or ARRC for short, on recommended on Thursday that banks start using a new broad Treasuries repo rate, which will work by reflecting how much it costs to borrow cash secured against US government debt, also known as Treasuries."At its meeting today, the Alternative Reference Rates Committee (ARRC) identified a broad Treasuries repo financing rate, which the Federal Reserve Bank of New York has proposed publishing in cooperation with the Office of Financial Research, as the rate that, in its consensus view, represents best practice for use in certain new U.S. dollar derivatives and other financial contracts," a statement from the ARRC said.The move was first suggested by regulators, who feared that the decline in short-term bank lending since the 2008 financial crisis had undermined faith in the use of LIBOR, and risked the future of trillions of dollars worth of US dollar denominated derivatives that were backed by LIBOR. "The ARRC today took an important step to strengthen the financial system by selecting a robust alternative reference interest rate," said Sandra O’Connor, chief regulatory affairs officer at JPMorgan and chair of the ARRC.
Death hoax involving Ethereum creator sparks panic cryptocurrency sell-off -- The beginning of the week brought another reminder that cryptocurrencies may be vulnerable to market manipulation—and may not be ready for prime time. False rumors of the death of Vitalik Buterin, the co-founder and public face of Ethereum, spread through social media on Sunday night, sparking a panic sell-off of ether, the network's digital token. In short order, $4 billion had been erased from the market capitalization of the world's second-biggest cryptocurrency.
IBM landed a big win in the race to sell blockchain to Wall Street - IBM has been selected to build a new blockchain-based international trading system for a consortium of global banks, a major win for the tech giant in the race to sell blockchain to Wall Street. Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit announced in January that they were banding together to build a "Digital Trade Chain (DTC)," a blockchain-based trade finance platform. International trade is currently a convoluted process where most involved can't see the whole process, instead only dealing with one other party in a complex supply chain. DTC will use the same technology that underpins digital currency bitcoin to connects all parties involved in international trade — buyers, sellers, transporters, banks financing the deals, and so on. The hope is that this leads to more financing for people lower down the chain as banks can be confident seeing the end buyer is good for the money. IBM announced on Tuesday that it has been selected by the consortium to build DTC, following what it calls "a global competitive bidding process." Marie Wieck, IBM Blockchain's general manager, says in a release: "In working with hundreds of clients around the world on a diverse range of blockchain projects, trade finance has emerged as one of the strongest use cases for the technology." The contract is a significant win for IBM as it means DTC will be built on IBM's blockchain platform of choice, Hyperledger Fabric. That likely means lucrative servicing contracts for IBM and may make banking execs more likely to commission more Hyperledger-based products and services once they're familiar with the system. Hyperledger is an open-source blockchain project set up by the Linux Foundation. IBM is one of more than a hundred companies who back the project and contribute code to it. Hyperledger Fabric is one of three main blockchain-based systems vying to become the next-generation "operating system" for financial services. R3, a startup set up by Wall Street veteran David Rutter, has developed blockchain-inspired platform Corda. Finance executives are also exploring the possibility of using open source blockchain Ethereum as a platform for products. JPMorgan, UBS, and Credit Suisse were all founding members of the Ethereum Enterprise Alliance (EEA), a group looking to develop best practice standards for building on Ethereum. Blockchain, also known as distributed ledger technology, is a form of shared database that is policed using complex cryptography to ensure that it can only be edited when the majority of participants on the network have approved. The technology was first developed to underpin digital currency bitcoin as it removes the need for a central bank or authority to police the currency.
Is your AI racist? A lawmaker wants to know -- The promise of fintech is that it might offer underbanked consumers access to financial products. But some are worried that relying on algorithms to make credit decisions could open up problems of its own. The question of whether an algorithm making underwriting decisions can be racially biased has long gnawed at lenders fearful of inadvertently running afoul of consumer protection laws. Now, the question has sparked interest from Congress. “Fintech has been accepted pretty much as a positive impact even by" the Consumer Financial Protection Bureau, Rep. Emanuel Cleaver II, D-Mo., said in an interview. But “if we're not careful, we will develop a system that almost institutionally ignores and maybe even hurts small and minority businesses.”
Wells is last big bank standing in overdraft litigation -- A federal appeals court is scheduled to hear oral arguments in August in a decade-old case against the San Francisco bank that could cost it hundreds of millions in penalties and restitution. Bank of America, JPMorgan Chase and other big banks have long ago settled class actions accusing them of improper clearing of checks and debits to maximize overdraft fees, but Wells Fargo is refusing to follow suit. A federal appeals court is scheduled to hear oral arguments in August in a decade-old case against the San Francisco bank. Although Wells was forced to pay $203 million to California customers last year in a similar case after the Supreme Court declined the bank's appeal, it is hoping it can force this case into arbitration.
Capital One Gets 'Conditional' Passing Grade on Fed Stress Test -- Fox Business: The Federal Reserve conditionally approved Capital One Financial Corp.'s capital plan in the regulator's annual "stress tests," saying the firm will have to resubmit its plan later this year to address shortcomings in its process. Capital One's plan was approved Wednesday after the Fed found the bank could keep lending in a severe economic downturn. The approval clears the way for the firm to reward investors by returning more capital. But the Fed didn't give Capital One a clean pass. Rather, the firm received a "conditional non-objection" after the Fed said Capital One "exhibited material weaknesses in its capital planning practices." Capital One must resubmit its plan by Dec. 28. If the revised plan doesn't satisfy the Fed, the regulator said that it may restrict the firm's capital distributions.However, Capital One was also one of just two firms to revise lower its capital-return request since results from the first round of stress tests were released last week. If it hadn't revised its request, its hypothetical common equity Tier 1 ratio would have fallen to 5.6%. It wasn't immediately clear why Capital One revised its request since its initial results didn't breach any of the Fed's required minimum capital ratios. The other firm to revise its request lower was American Express Co.
Banks Unleash Surprisingly Big Payouts After Fed’s Stress Tests -- The Federal Reserve told big banks they have more than enough capital, and they promptly announced a windfall for shareholders. JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. led U.S. firms in unveiling plans to boost dividends and stock buybacks more than analysts had projected, after every lender passed annual stress tests for the first time since the Fed began the reviews in the wake of the 2008 financial crisis. Shares across the industry rallied in early trading Thursday. Still, Capital One Financial Corp. slipped after it was the lone bank to stumble through the exam Wednesday, garnering conditional approval to make payouts while it fixes “material weaknesses” in planning. Lofty payouts made banks hot stocks until the financial crisis exposed many of them as too thinly capitalized. The companies unveiled plans Wednesday showing how they’re trying to generate investor interest -- even as many still struggle to meet profitability targets and a few languish below book value. “The sun is setting on the post-crisis balance sheet rehab,” Pri de Silva, an analyst at CreditSights Inc., said in a note. “These massive payouts and an improved earnings outlook reflecting higher rates should alleviate calls for breaking up the banks.” The Fed’s projections also show regulators may have more leeway to ease rules after years of forcing companies to curtail risk-taking and beef up internal controls --- demands that eroded revenue and fueled costs. The industry is counting on President Donald Trump to soften that oversight by appointing more business-friendly board members to the Fed, shifting the balance of power from regulators to shareholders. Earlier this month, Treasury Secretary Steven Mnuchin recommended that stress tests be performed every other year and that banks maintaining a sufficiently high level of capital be exempt from exams. “The highly positive report card puts more wind at the backs of the Trump administration and others who want to soften Dodd-Frank-era regulations,”
Don't be fooled by big banks' stress test results – Shelia Bair - A fair number of analysts are hawking bank stocks as the beneficiaries of a perfect storm of higher interest rates, deregulation and expectations that the Fed — with the departure of Gov. Dan Tarullo — will be more accommodative of shareholder payouts. This narrative was seemingly reinforced last week with the Fed’s announcement that all 34 banks subject to the Dodd-Frank Act Stress Test, or DFAST, would remain “well capitalized” in a severe recession. The DFAST is a prelude to the more important Comprehensive Capital Analysis and Review, or CCAR, which the Fed will announce later this week. The CCAR, run in tandem with DFAST, will determine whether those 34 banks have sufficiently strong capital plans to increase their capital distributions to shareholders. Amid all the ebullience in the media over the DFAST results, I was somewhat surprised when I actually dug into the numbers. True, the ever unreliable risk-based ratios — which allow banks to shrink their denominators if their assets are deemed “safe” by regulatory standards — looked pretty good, even in the Fed’s most adverse economic scenario. However, the more reliable (in my view) leverage ratios were unimpressive. The leverage ratios do not allow banks to boost their regulatory capital by lowering the risk weights of their assets. They are simpler metrics that compare equity capital to non-risk-adjusted, average total assets. This year, the Fed used a supplementary ratio that also includes some off-balance-sheet risks. Using this more stringent standard, several banks, to wit, Morgan Stanley, Goldman Sachs and State Street, were hovering around 4% — hardly a robust capital cushion during distressed economic times. And these ratios are calculated before any increased capital distributions planned by these institutions. That is, if the Fed approves increases at these banks next week, their leverage ratios in a stressed scenario would be even weaker.
Moody’s unveils own stress test based on public data — Moody’s Analytics is claiming it has developed its own stress test based on publicly available Federal Deposit Insurance Corp. data that more accurately examines bank performance in stress conditions than models overseen by the Federal Reserve. The research firm is set to release a report Tuesday that it says previews the results of the Fed’s 2017 Comprehensive Capital Analysis and Review stress test results — which are to be published Wednesday — by delivering the findings of its own stress test of 16 noncomplex superregional firms based on quarterly call report data published by the FDIC.
Simplifying the capital regime isn’t that complicated -- The Treasury Department’s sweeping report on regulatory reform includes the recommendation that the U.S. reduce its reliance on the advanced approach to large-bank capital requirements, favoring instead the standardized approach. Because this recommendation is included with a raft of other, often highly controversial proposals, many have overlooked its appeal.Backing away from the advanced approach for risk-weighting assets would mean moving on from a method that has had limited value; eliminating it has no downside risks. In fact, in our recent paper measuring the cost-benefit trade-off of the advanced approach, we found that demanding advanced models for risk — which is already well captured by the dozens of other capital rules — not only adds burden but also poses a lot of unintended risk. (The paper was funded by the Regional Bank Coalition, but reflects the views only of Federal Financial Analytics.) Our analysis started by counting all of the capital standards governing large, noncomplex U.S. regional banks and bank holding companies. Many of the capital requirements, including the advanced approach, originally stem from international Basel Committee accords. Suffice it to say that each bank must comply with over two dozen capital standards. One is tempted to say that the problem here isn’t so much that regulators don’t trust big banks, but rather that they don’t trust themselves or their fellow regulators — and have piled on the capital rules just in case someone misses something somewhere. Of course, so extreme an abundance of caution might seem warranted given the grave cost of the financial crisis. But the onslaught of cascading rules — imposing heavy burdens on banks to comply with each one — has its own risks. Indeed, when regulators try to assess the costs versus benefits of a particular rule, they do not sufficiently consider the impact of other rules.
Warren Buffett Is Now Bank Of America's Biggest Shareholder -- As we previewed exactly 24 hours ago, Buffett’s Berkshire Hathaway said it will exercise warrants to swap its preferred Bank of America shares for 700 million shares of BAC common stock, making Buffett the largest shareholder, surpassing BlackRock, Vanguard and State Street . Buffett is also the top shareholder at Wells Fargo.Buffett exercised his warrants, which were due to expire in 2021, to swap $5 billion in preferred stock worth about 6% of the company for common stock at $7.14 a share, less than a third of yesterday’s closing price of $24.32, effectively translating in a profit of $12 billion for the Omaha octogenarian. The decision was prompted by the latest Fed stress test, which allowed the bank to hike its dividend by 60%, from 30 cents to 48 cents. BofA also announced its plans for a record $12 billion stock buyback, almost immediately after the Federal Reserve gave it the green light on Wednesday, while also approving the capital-return plans of 32 other US banks that received the SIFI designation.As we noted yesterday, in his February letter, Buffett said that an increase in BAC’s dividend above 44 cents would likely prompt him to swap Berkshire's preferred shares in the second-largest bank into common shares now worth about $16.7 billion – more than tripling a $5 billion investment made fewer than six years ago. Buffett, the world’s fourth-richest man with a net worth of $76.1 billion, according to Forbes, bought $5 billion of Bank of America preferred stock with a 6 percent dividend, or $300 million annually, during a fire sale in August 2011 as the bank worried about its capital needs. The purchase included warrants to acquire 700 million common shares at $7.14 each, a 70% discount to Thursday's closing price.
U.S. banks are behind the global curve on gender pay equity -- Over the past three months, the nation’s four largest banks — Bank of America, Wells Fargo, Citigroup and JPMorgan Chase — as well as American Express have all rejected the same shareholder proposal asking for a report on their gender pay gap and their goals for reaching pay equity. Mastercard shareholders are scheduled to vote on the proposal Tuesday, but I am not optimistic about the outcome; the company’s board has recommended a no-vote.The refusal by top banks and credit card companies to respond to investor concerns about gender inequity is not an isolated incident in the U.S. financial services industry. What’s worse, the intransigence among U.S. banks to deal with equal pay puts them behind the curve globally. Last year, major U.K. firms — including HSBC, Barclays, Royal Bank of Scotland, Lloyds Banking Group and Lloyd’s of London insurance market — signed a landmark charter pledging to tackle their gaps in the treatment of men and women. And the Bank of England, Virgin Money and Schroders have taken the lead by publishing their gender pay gaps. By April 2018, all large U.K. companies will be required to publish their pay gaps.So why is there progress overseas and not here? The inaction by domestic banks can certainly not be explained by any claim that the U.S. lacks a gender pay gap problem. Finance is a heavily male-dominated field with a huge pay gap and another distinct gap related to female leadership. In fact, banking and finance has one of the highest disparities of all industries examined by Glassdoor. And female financial advisers face the widest pay gap of all occupations, at 61 cents on the dollar, according to data from the U.S. Bureau of Labor Statistics. Yet, despite clear evidence of pay disparities, the rejection of shareholder proposals urging action demonstrates that big banks feel no obligation to change. So, there is more work to so do to incentivize wage data transparency and 100% pay equity.
Nafta tensions creating new concerns for ag lenders -- Continuing tension over the North American Free Trade Agreement is causing headaches for many U.S. farmers and concerns for agricultural lenders. The Mexican government, which is looking for leverage in Nafta negotiations, cut back on imports of soybean meal, corn and chicken in the first four months of 2017, based on data from the Department of Agriculture. The pullback comes as U.S. farmers deal with other issues such as low commodities prices and overproduction in some segments.
Credit unions cleared to securitize loans, amplifying threat to banks - The National Credit Union Administration has made another decision that is sure to aggravate the banking industry. The agency’s lawyers have drafted a “safe harbor” opinion that paves the way for credit unions to securitize and sell loans. The seven-page opinion, announced Friday at the June meeting of the NCUA’s governing board, needs no proposal or comment period.
Credit-Consulting Firms Announce Settlement with Consumer Financial Protection Bureau - Three companies that formerly ran a Los Angeles-based credit-consulting service announced today that they and their two former principals reached a settlement with the Consumer Financial Protection Bureau, settling a CFPB civil investigation without admitting or denying the agency's allegations.Commercial Credit Consultants, IMC Capital LLC and Prime Credit LLC and their former principals, Blake Johnson and Eric Schlegel, agreed to pay $1.53 million in settlement. Their business was launched in 2010 and grew steadily, serving tens of thousands of consumers across the United States until 2014, when it was sold to a private equity group. During its four years of operation, the business generated scores of testimonials from satisfied customers, whose improved credit standing gave them renewed access to home mortgages and other kinds of credit that made their lives better.The companies issued the following statement:"We decided, with great reluctance, to settle this investigation in order to avoid the further time and expense of a legal battle over an enterprise that we sold several years ago. The investigation already had dragged on for more than two years. "When we decided to begin marketing our service to consumers, after several years of success with commercial customers, we wanted to follow not just the law, but industry best practices. To do so, we asked the California Department of Justice (the Office of the California Attorney General), which operates one of the world's largest and most respected consumer-protection units, to review our materials. During the years we operated the business, professionals with the California DOJ spent many hours redlining our consumer contracts and examining our operational policies in order to ensure our full compliance with the U.S. Credit Repair Organizations Act (CROA). At the time, the CFPB had not yet been created.”
What Happens to Accountability When Data Goes Dark? --- In 2007, then-Harvard Law professor Elizabeth Warren wrote an methodical condemnation of the state of the financial services industry, empathizing with the ill-equipped consumer trying to navigate a complex, if not incomprehensible, marketplace.. In 2010, after the passage of the Dodd-Frank Act, she was tapped by the Obama Administration and tasked to create the regulatory body she had called for. Shortly thereafter, the Consumer Financial Protection Bureau, or the CFPB, opened its doors.The complaints run a wide gamut, but a few categories rise to the top. Mortgages, debt collection, and credit reporting consistently remain the most heavily represented areas of complaints, with credit reporting overtaking mortgage-related complaints in 2016, according to the published CFPB data. Some of the complaints also include a narrative description of the consumer’s issue (when consent has been provided). It is difficult to miss the anger and frustration expressed in those complaints. Until the CFPB, there was no systematic way to listen to the challenges that ordinary Americans often face.Access to that world of data, however, should not be taken for granted. Last week, the U.S. House of Representatives passed a bill that seeks to bring significant change to how the CFPB functions. The bill, known as the Financial CHOICE Act, was introduced by Representative Jeb Hensarling (R-TX), the chairman of the House Financial Services Committee. Hensarling once described the CFPB as as “the most powerful and least accountable Washington bureau in American history.” The proposals in his bill reflect that sentiment. Amongst many changes is a particularly interesting proposal under a friendly title: “Homeowner Information Privacy Protection.” The bill proposes the suspension of data sharing requirements, charging the Comptroller of the United States with the task of determining whether such data sharing is necessary. This includes data related to the Home Mortgage Disclosure Act, which, as the title suggests, is literally about the disclosure of such data.
The downside of scaling back the CFPB complaint database -For U.S. financial institutions, a searchable government database that holds 1.2 million consumer complaints has mostly been a source of irritation. Banks and other lenders say they can be unfairly maligned by consumers whose grievances that have not been vetted for accuracy. Industry groups also chafe at how the Consumer Financial Protection Bureau cites numbers from the database without some of the relevant context. (paywalled)
New credit score models won't work if lenders ignore them -- When it comes to credit scores and credit reports, change isn’t on the horizon. It’s already here. This is fundamentally good news. But the changes won’t have much benefit if banks don’t implement them. Today’s credit scoring models are more inclusive than in years past, adding data sources such as rent, utility and cellphone bill payments. The new models also treat medical collection debt more fairly by ignoring settled delinquencies, and ignore paid collections accounts entirely. Credit file data is also changing for the better. In March, the Consumer Data Industry Association, a trade organization representing the three national credit bureaus and companies that collect and sell consumer information, announced stricter standards on including information from civil judgments and tax lien data, which will result in the removal of much of this information from consumers’ credit reports. Under the standards, consumers will have a 180-day grace period to settle insurance claims for medical bills. Undoubtedly, these changes are positive, but they will only have an impact when lenders put these scoring risk models into use. So far, lenders are continuing to rely on older credit models that are less predictive and penalize consumers for positive behaviors like paying off collection accounts. The unfortunate status quo across credit markets is that millions of underserved borrowers are locked out of the mainstream credit market, and other consumers should be receiving better terms and interest rates than do.
How money anxiety is affecting Americans' financial decisions - (podcast) Dr. Dan Geller, behavioral economist and author of the book Money Anxiety, explains why Americans are more stressed about their finances than ever before and how fear affects their decisions about financial products and banks.
U.S. Ruled by Executive, Legislative, Judicial Branches… and Richard Cordray -- The Consumer Finance Protection Bureau is something like a new branch of government, only former Solicitor General Ted Olson doesn’t call it the fourth branch. He says the administrative commissions invented during the New Deal represent the fourth branch, and that the CFPB is something even further from our original Constitutional order. Something close to the despotisms of old, I’d say.The CFPB’s defenders also have a point — the bureau isn’t all that different from the administrative commissions, mainly because those commissions already have too much power. The administrative state is not so much a fourth branch as it is a second government laid atop the three Constitutional branches. While the old offices squabble about legislation, their power divided, the bureaucrats have consolidated most of the real power — they write the rules, enforce them, and then adjudicate them in-house, upholding all that they have done. The CFPB has that character, of course, but it goes further. “The CFPB is the product of cherry-picking some the most democratically unaccountable and power-centralizing features of the federal government’s administrative agencies, and aggregating them into one massive and all-powerful body,” Olson told a Congressional committee. Worse, it vests all its power in a single director, Richard Cordray, who can only be fired “for cause,” such as malfeasance. Up until now, administrative agencies have either been run by commissions — to diffuse power — or by directors who serve at the president’s pleasure. Before Dodd-Frank, there were just two exceptions to that, for the heads of the Social Security Administration and the Office of Special Counsel. Last month, Olson made his case to the full D.C. Circuit Court of Appeals that Cordray’s independence undermined the Constitution. A three-judge panel of the court embraced that view last fall, but the issue isn’t yet settled.
Senators Considering Breaking Fannie-Freddie Into Pieces, Sources Say - Two U.S. senators working on a bipartisan overhaul of Fannie Mae and Freddie Mac are seriously considering a plan that would break up the mortgage-finance giants, according to people with knowledge of the matter.The proposal by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner would attempt to foster competition in the secondary mortgage market, where loans are packaged into bonds and sold off to investors, said the people.Corker and Warner’s push to develop a plan marks Congress’ latest attempt to figure out what to do with Fannie and Freddie, an issue that has vexed lawmakers ever since the government took control of the companies in 2008 as the housing market cratered. The lawmakers’ plan is still being developed, and a Senate aide who asked not to be named cautioned that no decisions had been made on any issues.The stakes of changing the housing-finance system are enormous. Fannie and Freddie underpin much of the mortgage market by buying loans from lenders, wrapping them into securities and providing guarantees in case borrowers default. Together, the companies back more than $4 trillion in securities.One long-stated desire for some politicians on both sides of the aisle has been to end Fannie and Freddie’s duopoly, partly due to concerns that their size encourages taxpayer rescues if they run into trouble. After seizing the companies nine years ago, the government injected $187.5 billion into them. To lower the barriers to entry, lawmakers and regulators have suggested letting private competitors use some of Fannie and Freddie’s infrastructure, such as the intellectual property the companies use to securitize mortgages or the data they rely on to determine whether one loan is riskier than another
Small lenders need to be in room where GSE debate happens -- As the Senate Banking Committee seeks to revive talks over reforming the government-sponsored enterprises, a central question is the extent to which it will take into account small, independent mortgage bankers. Will they creating an equal housing finance playing field, or instead create a system that favors “too big to fail” banks, thereby crushing smaller lenders? By all accounts, the financial crisis led to even further consolidation by the big banks. The bailouts infused Wall Street companies with billions of dollars of taxpayer funds, and mergers forced by the government made TBTF firms even bigger. Today, the systemic risk posed by these banks is arguably bigger than it was before the crisis. Thankfully, smaller firms are still competitive in the mortgage space, and this is largely due to the work of the Federal Housing Finance Agency. With Fannie Mae and Freddie Mac operating more like public utilities controlled by the government than private companies, the FHFA has done an excellent job during this period fostering competition. The agency virtually ended faulty practices like preferred pricing to large lenders, and opened up access to a broad range of companies — particularly community-based independent mortgage lenders — so consumers are better-served. The FHFA has also staked out a solid position on the GSEs’ capital situation. Last month, FHFA Director Mel Watt said he was open to taking steps unilaterally to rebuild Fannie and Freddie’s capital — to avoid a Treasury advance — if Congress is unable to enact a reform plan. His comments drew criticism from senators as well as Mortgage Bankers Association Chief Executive David Stevens, who was quoted as saying that Watt’s remarks were “tantamount to creating panic at a time that’s not needed.”I applaud Watt for taking a stand. Letting the GSEs’ capital fall to zero is not good for anyone.
GSE reform done right ensures a level playing field for all - A recent opinion piece by Bill Giambrone, "Small Lenders need to be in the room where GSE debate happens," shortchanges our segment of the mortgage industry and grossly mischaracterizes the Mortgage Bankers Association and the GSE reform plan offered by the MBA's Task Force on a Future Secondary Mortgage Market. I was on the task force, and as one of the approximately 650 MBA members who are independent mortgage banks, community banks, and credit unions, I can assure my industry colleagues that not only were small lenders and independent mortgage companies at the table, in many cases we were spearheading the reforms incorporated into the final proposal. GSE reform is the last piece of unfinished business from the financial crisis that rocked our industry and our economy. This is not some abstract economic policy debate for pundits to keep themselves busy; we all have a vested interest in the future structure of Fannie and Freddie. Why? Because the secondary mortgage market affects millions of American homebuyers and is the lifeblood of small, independent lenders. The MBA's plan breaks up the risk being consolidated in these two institutions, allowing secondary market guarantors, under strict rules of operation, to compete on innovation, product parameters, service, and other factors. This competition further benefits small lenders especially, and most importantly, it benefits our consumers. Fannie Mae and Freddie Mac have been under government conservatorship for nine years. The old structure served an initial purpose, but is not sustainable for the long term. While it's not sustainable, the ongoing federal commitment is a backstop which gives us time to finish the reform and end conservatorship. A small number of short-sighted folks, some heavily misled by predatory hedge fund investors, want to kick the can down the road and put off reform. Fortunately, members of Congress seem to be in bipartisan agreement that this arrangement requires modifying. Only Congress can make the necessary changes to the structure of the GSEs and the secondary market overall to avoid a rewind and repeat of the practices that marginalized small lenders and contributed to the housing market crash and the Great Recession.
Small lenders, consumer groups offer GSE reform alternative --A group of small and midsize mortgage lenders and affordable housing advocates called Wednesday for an end to the nine-year conservatorship of Fannie Mae and Freddie Mac, offering an alternative approach on housing finance reform The Main Street GSE Reform Coalition, made up of five disparate trade groups, outlined broad principles to counter a Senate plan that would eliminate Fannie and Freddie and replace them with private entities that would be given an explicit government guarantee in securitizing mortgages
Housing finance system needs updates, not overhaul - Housing finance reform will get its first major Capitol Hill close-up in years Thursday as the Senate Banking Committee resumes its discussion over what to do with Fannie Mae and Freddie Mac. With lawmakers bracing for a major policy undertaking, they can take comfort that they don’t need to start from scratch. The nation’s housing finance system is a fixer-upper — not a complete gut job. Reforming the GSEs is one of the most contentious issues in Washington and cuts across party lines. At stake is the health of a housing market that accounts for more than 20% of the U.S. gross domestic product. The two central entities at the heart of the market — Fannie and Freddie — support a global market for mortgage-backed securities that exceeds $5 trillion. As a result, policymakers must proceed cautiously. Any disruption or loss of investor confidence could send mortgage interest rates quickly rising, drying up liquidity and making it difficult for Americans to buy, sell or refinance their homes. Still, policymakers are under pressure to do something about a system now dominated by the federal government and vulnerable to future market failures. Fannie and Freddie are entering their ninth year of federal conservatorship, a period during which they have returned more than $265 billion to the U.S. Treasury — nearly $80 billion more than they received in federal assistance during the Great Recession.But a more pressing concern than their long-term future is their current financial position. While Fannie and Freddie have returned to profitability, worked through most of their defaulted loans and continued to provide housing-market liquidity under conservatorship, they will end 2017 without a dime in capital unless changes are made to their agreements with Treasury and the Federal Housing Finance Agency. Their continuing to sweep their earnings to the federal government — something no other entity that received federal assistance during the recession was forced to do — puts taxpayers at risk of a draw by one or both GSEs on their $258 billion line from the Treasury. FHFA Director Mel Watt has repeatedly said, most recently in congressional testimony, that he cannot risk the consequences of such a draw, which would lead to major market disruptions and a loss of confidence in the system. As the GSEs’ safety and soundness regulator, the FHFA would do everything in its power to prevent such an occurrence, he said.
Housing groups take aim at flood insurance bills — A key housing market group is objecting to a provision of a bill passed by the House Financial Services Committee that would impose a surcharge on National Flood Insurance Program policies for newly constructed homes if a state does not allow the sale of private flood insurance. While the National Association of Home Builders supports the development of a private flood insurance market, it says that taking a punitive approach is a bad idea. Instead, it is seeking a bill that would spur private insurers to enter the new-construction market.
CRA compliance gets pricey as mortgage market tightens - Affordable housing shortages and declining loan volumes are making it difficult for banks to originate enough mortgages to meet their Community Reinvestment Act obligations, which could make filling shortfalls with loans from nonbanks more expensive. It's a recurring challenge in the industry that resurfaced late last year and may even continue into 2018.
New affordable housing goals go easy on Fannie and Freddie - — The Federal Housing Finance Agency said Thursday it would leave the affordable housing goals for Fannie Mae and Freddie Mac largely the same as the previous goals. Freddie failed to meet its low-income and very-low-income housing purchase goals in 2013 and 2014 while both government-sponsored enterprises fell short in 2015.
US CMBS Delinquency Rate Jumps by Largest Amount in Over Five Years - Trepp, LLC, a leading provider of information, analytics, and technology to the structured finance, commercial real estate, and banking markets, released its June 2017 US CMBS Delinquency Report today. The full report can be found here: http://info.trepp.com/june-2017-us-cmbs-delinquency-report-press-release. The Trepp CMBS Delinquency Rate climbed by its highest amount in more than five years last month. The delinquency rate for US commercial real estate loans in CMBS is now 5.75%, an increase of 28 basis points from May. The jump in June's reading is the highest rate increase measured since March 2012. The June 2017 rate is now 115 basis points higher than the year-ago level. "After months of marginal increases, the ‘wall of maturities' finally took a meaningful toll on the CMBS delinquency rate," said Manus Clancy, Senior Managing Director at Trepp. "June's climb is well below the rate increases regularly seen in 2010, but the reading should still be anticipated to move somewhat higher through the rest of the summer as pre-crisis loans reach their maturity dates."A whopping $2.4 billion in CMBS loans became newly delinquent in June, with two-thirds of that total coming from notes that hit their balloon date and were not paid off. More than $400 million in loans were cured last month, which helped push delinquencies lower by 10 basis points. About $1.3 billion in CMBS loans that were previously delinquent were resolved with a loss or at par in June, and that pushed the rate down by 31 basis points. Delinquency readings for all five major property types increased last month. June's largest increase belonged to the multifamily sector, as that rate shot up 110 basis points to 3.92%. As a result, the multifamily segment is no longer the best performing major property type. The office delinquency rate jumped 21 basis points last month to 7.46%. Industrial delinquencies spiked 20 basis points to 7.57%.
New York's Biggest Foreclosure Owned by Nigerian Oil Investor --The owner of a $50.9 million Manhattan condo that is scheduled to be sold at a foreclosure auction next month is Kolawole "Kola" Aluko, a Nigerian businessman accused in court filings of defrauding that country's government. Nigerian officials have attempted to freeze Aluko's assets, including a full-floor penthouse at Midtown’s One57 skyscraper, as part of a wider investigation. Aluko and others are accused of pocketing $1.8 billion meant for government coffers and spending it on luxury goods around the globe, court filings in that country show. Foreclosure proceedings were started in January on Aluko's apartment on the 79th story of One57, which would be the costliest ever residential seizure in New York City. The 6,240-square-foot (580-square-meter) condo was bought in 2014 by a shell company listed in New York City public records as One57 79 Inc., whose sole shareholder is Earnshaw Associates Ltd. Earnshaw was set up by Aluko in the British Virgin Islands, according to the Panama Papers, a trove of documents leaked in 2016 to expose offshore tax evasion, which cite him as a shareholder and beneficiary. In September 2015, Earnshaw took out a $35.3 million mortgage from lender Banque Havilland SA, based in Luxembourg, according to New York City public records. The full payment of the loan was due one year later, foreclosure filings in New York State Supreme Court show. The borrower failed to repay, and now Banque Havilland is forcing a sale to recoup the funds, plus interest.
Fewer defaults for first-lien mortgages in May -- Defaults on first-lien mortgages fell 5 basis points in May from the previous month, dropping to their lowest level in a year. The S&P/Experian Consumer Credit Default Index composite for all four types of loans it tracks — first- and second-lien mortgages, bank credit cards and automobile loans — fell 4 basis points in May to 0.86%.
Freddie Mac: Mortgage Serious Delinquency rate declined in May, Lowest since May 2008 --Freddie Mac reported that the Single-Family serious delinquency rate in May was at 0.87%, down from 0.92% in April. Freddie's rate is down from 1.11% in May 2016. Freddie's serious delinquency rate peaked in February 2010 at 4.20%. This is the lowest serious delinquency rate since May 2008. These are mortgage loans that are "three monthly payments or more past due or in foreclosure".
Fannie Mae: Mortgage Serious Delinquency rate declined in May, Lowest since December 2007 -- Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 1.04% in May, from 1.07% in April. The serious delinquency rate is down from 1.38% in May 2016. This is the lowest serious delinquency rate since December 2007. These are mortgage loans that are "three monthly payments or more past due or in foreclosure". The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%. Although the rate is declining, the "normal" serious delinquency rate is under 1%. The Fannie Mae serious delinquency rate has fallen 0.34 percentage points over the last year, and at that rate of improvement, the serious delinquency rate will below 1% this Summer.
MBA: Mortgage Applications Decrease in Latest Weekly Survey --From the MBA: Mortgage Applications Decrease in Latest MBA Weekly SurveyMortgage applications decreased 6.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 23, 2017.... The Refinance Index decreased 9 percent from the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 8 percent higher than the same week one year ago. ...The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained unchanged at 4.13 percent, with points decreasing to 0.32 from 0.34 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans The first graph shows the refinance index since 1990.Refinance activity is mostly moving sideways at a low level this year, and will not increase significantly unless rates fall well below 4%. The second graph shows the MBA mortgage purchase index. According to the MBA, purchase activity is up 8% year-over-year.
Application defects reach their highest level since 2015 - Defects and misrepresentations on mortgage applications continued to rise in May, reaching levels last seen in 2015. The First American Loan Defect Index was 83, up 2.5% from April and 13.7% over May 2016. Defects and misrepresentations are an indicator of fraud connected with the mortgage application.
Big data tells mortgage traders an amazing amount about you - If you borrowed to buy your home, chances are TheNumber knows a good deal about you.The New York-based startup sucks in data from marketing firms, public loan filings, courthouses and dozens of other sources, and sells it to mortgage bond and loan traders. The vivid detail the company turns up — the types of stores borrowers tend to shop at and whether they rent out their homes on Airbnb Inc., for example — may unsettle privacy advocates, but it's a boon for investors trying to figure out how likely homeowners are to pay their obligations."We can do things that were not possible before," said Hans Thomas, a serial entrepreneur who co-founded the firm in 2015 with Guhan Kandasamy and Ziggy Jonsson. The information the company compiles could have previously taken weeks or even months to track down, and now it takes seconds. Across the world of finance, startups are using big data to try to improve Wall Street's success with everything from consumer lending to stock trading. Good data is critical for investors in the $9 trillion mortgage bond market. For subprime securities, prices can vary widely due to the differing quality of loans backing them, and being able to compare bonds quickly can be the difference between finding a bargain and getting stuck with a turkey. The average fund manager can gain 0.40 to 0.70 percentage point of return by using more intelligent data when trading mortgages, at least for home loans that haven't been bundled into securities, according to John Ardy, chief executive officer of Resitrader, an institutional marketplace for home loans.
U.S. 30-year mortgage rates fall to lowest since November: Freddie Mac - Interest rates on U.S. 30-year mortgages fell to their lowest levels in more than seven months in step with lower U.S. Treasury yields earlier this week, Freddie Mac said on Thursday. Benchmark government note yields, however, jumped to their highest level in more than a month on Thursday in a global bond market selloff, prompted by concerns the era of easy money might be drawing to close following hawkish rhetoric from several major central banks. "Mortgage rates may increase in next week's survey if Treasury yields continue to rise," Freddie Mac chief economist Sean Becketti said in a statement. The borrowing cost on 30-year mortgages, the most widely held type of U.S. home loan, averaged 3.88 percent in the week ended June 29, which was the lowest since 3.57 percent in the Nov. 10, 2016 week. Last week, the average 30-year rate was 3.90 percent, the mortgage finance agency said. On Thursday, 10-year Treasury yield touched 2.297 percent, matching the level last seen on May 24. It has risen 12 basis points since Tuesday, Reuters data showed. Below are the latest average mortgage rates in the week of June 29 Freddie Mac tracked:
Case-Shiller: National House Price Index increased 5.5% year-over-year in April – Mc Bride - S&P/Case-Shiller released the monthly Home Price Indices for April ("April" is a 3 month average of February, March and April prices). This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index. Note: Case-Shiller reports Not Seasonally Adjusted (NSA), I use the SA data for the graphs. From S&P: The S&P Corelogic Case-Shiller National Home Price NSA Index Sets Record for Five Consecutive Months The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.5% annual gain in April, down from 5.6% last month. The 10-City Composite annual increase came in at 4.9%, down from 5.2% the previous month. The 20-City Composite posted a 5.7% year-over-year gain, down from 5.9% in March.Seattle, Portland, and Dallas reported the highest year-over-year gains among the 20 cities. In April, Seattle led the way with a 12.9% year-over-year price increase, followed by Portland with 9.3%, and Dallas with an 8.4% increase. Seven cities reported greater price increases in the year ending April 2017 versus the year ending March 2017. Before seasonal adjustment, the National Index posted a month-over-month gain of 0.9% in April. The 10-City Composite posted a 0.8% increase and the 20-City Composite reported a 0.9% increase in April. After seasonal adjustment, the National Index recorded a 0.2% month-over-month increase. The 10-City Composite posted a 0.2% month-over-month increase. The 20-City Composite posted a 0.3% month-over-month increase. Eighteen of 20 cities reported increases in April before seasonal adjustment; after seasonal adjustment, 13 cities saw prices rise. “As home prices continue rising faster than inflation, two questions are being asked: why? And, could this be a bubble?” says David M. Blitzer Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up. The increase in real, or inflation-adjusted, home prices in the last three years shows that demand is rising. At the same time, the supply of homes for sale has barely kept pace with demand and the inventory of new or existing homes for sale shrunk down to only a four- month supply. Adding to price pressures, mortgage rates remain close to 4% and affordability is not a significant issue. “The question is not if home prices can climb without any limit; they can’t. Rather, will home price gains gently slow or will they crash and take the economy down with them?”
Home Prices Rose 5.5% Year-over-Year NSA in April, Record Levels - With today's release of the April S&P/Case-Shiller Home Price Index, we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.3% month over month. The seasonally adjusted national index year-over-year change has hovered between 4.2% and 5.8% for the last twenty-six months. Today's S&P/Case-Shiller National Home Price Index (Nominal) reached another new high. The adjacent column chart illustrates the month-over-month change in the seasonally adjusted 20-city index, which tends to be the most closely watched of the Case-Shiller series. It was up 0.3% from the previous month. The nonseasonally adjusted index was up 5.65% year-over-year.Investing.com had forecast a 0.4% MoM seasonally adjusted increase and 5.9% YoY nonseasonally adjusted for the 20-city series. Here is an excerpt of the analysis from today's Standard & Poor's press release."As home prices continue rising faster than inflation, two questions are being asked: why? And, could this be a bubble?" says David M. Blitzer Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "Since demand is exceeding supply and financing is available, there is nothing right now to keep prices from going up. The increase in real, or inflation-adjusted, home prices in the last three years shows that demand is rising. At the same time, the supply of homes for sale has barely kept pace with demand and the inventory of new or existing homes for sale shrunk down to only a fourmonth supply. Adding to price pressures, mortgage rates remain close to 4% and affordability is not a significant issue.""The question is not if home prices can climb without any limit; they can’t. Rather, will home price gains gently slow or will they crash and take the economy down with them? For the moment, conditions appear favorable for avoiding a crash. Housing starts are trending higher and rising prices may encourage some homeowners to sell. Moreover, mortgage default rates are low and household debt levels are manageable. Total mortgage debt outstanding is $14.4 trillion, about $400 billion below the record set in 2008. Any increase in mortgage interest rates would dampen demand. Household finances should be able to weather a fairly large price drop." [Link to source]The chart below is an overlay of the Case-Shiller 10- and 20-City Composite Indexes along with the national index since 1987, the first year that the 10-City Composite was tracked. Note that the 20-City, which is probably the most closely watched of the three, dates from 2000. We've used the seasonally adjusted data for this illustration.
Real House Prices and Price-to-Rent Ratio in April -- It has been more than ten years since the bubble peak. In the Case-Shiller release this morning, the seasonally adjusted National Index (SA), was reported as being 2.4% above the previous bubble peak. However, in real terms, the National index (SA) is still about 13.9% below the bubble peak. The year-over-year increase in prices is mostly moving sideways now just over 5%. In April, the index was up 5.5% YoY. In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted). Case-Shiller, CoreLogic and others report nominal house prices. As an example, if a house price was $200,000 in January 2000, the price would be close to $278,000 today adjusted for inflation (39%). That is why the second graph below is important - this shows "real" prices (adjusted for inflation). The first graph shows the monthly Case-Shiller National Index SA, the monthly Case-Shiller Composite 20 SA, and the CoreLogic House Price Indexes (through April) in nominal terms as reported. In nominal terms, the Case-Shiller National index (SA) is at a new peak, and the Case-Shiller Composite 20 Index (SA) is back to October 2005 levels, and the CoreLogic index (NSA) is back to December 2005. The second graph shows the same three indexes in real terms (adjusted for inflation using CPI less Shelter). Note: some people use other inflation measures to adjust for real prices. In real terms, the National index is back to June 2004 levels, the Composite 20 index is back to March 2004, and the CoreLogic index back to April 2004. In real terms, house prices are back to early 2004 levels. This graph shows the price to rent ratio (January 1998 = 1.0). On a price-to-rent basis, the Case-Shiller National index is back to November 2003 levels, the Composite 20 index is back to August 2003 levels, and the CoreLogic index is back to September 2003. In real terms, prices are back to early 2004 levels, and the price-to-rent ratio is back to 2003 - and the price-to-rent ratio maybe moving a little more sideways now.
Zillow Forecast: "May Case-Shiller Forecast: Expect the Cooldown to Continue" --The Case-Shiller house price indexes for April were released yesterday. Zillow forecasts Case-Shiller a month early, and I like to check the Zillow forecasts since they have been pretty close. From Svenja Gudell at Zillow: May Case-Shiller Forecast: Expect the Cooldown to Continue On the heels of a larger-than-expected slowdown in April, Zillow anticipates Case-Shiller data to show a continued cooling in home price growth in May almost across the board, with prices even falling slightly from April in one key index.Annual growth in all three main indices – the 10-city Composite, 20-city Composite and U.S. National Index – is expected to slow to 4.8 percent, 5.5 percent and 5.3 percent year-over-year growth in May, respectively, down from 4.9 percent, 5.7 percent and 5.5 percent in April. The U.S. National Index is expected to grow by a seasonally adjusted 0.2 percent in May from April, while prices will be unchanged from April on the 20-city Composite Index. Home prices are expected to fall by 0.1 percent from April to May on the smaller 10-city Composite Index (seasonally adjusted). April’s slower-than-expected growth caught some analysts off-guard, especially the monthly figures. One potential reason cited for the surprise to the downside could be related to the difficulty in seasonally adjusting a repeat-sales index like Case-Shiller’s. Over the long term, Zillow’s monthly forecast of Case-Shiller data has proven remarkably accurate, thanks in large part to differences in methodology between Case-Shiller’s indices and Zillow’s, and the timeliness and granularity of data collected. Zillow’s full forecast for May Case-Shiller data is shown below. These forecasts are based on today’s April Case-Shiller data release and the May 2017 Zillow Home Value Index. The May S&P CoreLogic Case-Shiller Indices will not be officially released until Tuesday, July 25. The year-over-year change for the Case-Shiller National index will probably be smaller in May than in April.
1 in 3 homebuyers now makes offers sight unseen — The housing market has come to this: buyers are willing to get a jump on the competition by making an offer based on just the pictures they see. Real estate listing firm Redfin said 33 percent of people who bought a home in the last year made an offer without first seeing the property in person. First-time buyers are even more likely to take the leap of faith. Redfin said among recent millennial homebuyers, 41 percent made sight-unseen offers. “Millennials are already starting to set trends in the real estate industry,” said Redfin Chief Economist Nela Richardson. “They are three times more likely than baby boomers to make an offer sight unseen, and they’re more likely than older buyers and sellers to negotiate commission savings,” she said. The Redfin survey of about 3,400 recent homebuyers and sellers also found affordable housing was the most prevalent economic concern, cited by 40 percent of buyers. Rising prices are now causing 21 percent to start looking in other metro areas where homes cost less, according to the survey. Rising mortgage rates don’t seem to be much of a concern — just 5 percent said they’d cancel their plans to buy if rates surpass 5 percent.
How Trump's immigration stance is affecting home sales - President Trump's immigration policies are prompting more than half of Arabs, Asians and Latinos to reconsider their plans to buy or sell a home, according to a Redfin survey. Among all respondents to a Redfin survey, 41% said those policies played a role in reshaping their decision to buy or sell a home.
Pending Home Sales Slump,Third Consecutive Month --This morning the National Association of Realtors released the May data for their Pending Home Sales Index. Here is an excerpt from the latest press release:Lawrence Yun, NAR chief economist, says it's clear the critically low inventory levels in much of the country somewhat sidetracked the housing market this spring. "Monthly closings have recently been oscillating back and forth, but this third consecutive decline in contract activity implies a possible topping off in sales," he said. "Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast." (more here). The chart below gives us a snapshot of the index since 2001. The MoM change came in at -0.8%. Investing.com had a forecast of 0.8%.
NAR: Pending Home Sales Index decreased 0.8% in May, down 1.7% year-over-year --From the NAR: Pending Home Sales Tumble in May for Third Straight MonthThe Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 0.8 percent to 108.5 in May from a downwardly revised 109.4 in April. The index is now 1.7 percent below a year ago, which marks the second straight annual decline and the most recent since November and December of last year....The PHSI in the Northeast decreased 0.8 percent to 96.4 in May, but remains 3.1 percent above a year ago. In the Midwest the index was 104.5 in May (unchanged from April), and is 2.8 percent lower than May 2016. Pending home sales in the South declined 1.2 percent to an index of 123.4 in May and are now 1.4 percent below last May. The index in the West subsided 1.3 percent in May to 98.6, and is now 4.5 percent below a year ago. This was below expectations of a 0.5% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in June and July.
Reis: Apartment Vacancy Rate increased in Q2 to 4.4% -- Reis reported that the apartment vacancy rate was at 4.4% in Q2 2017, up from 4.3% in Q1, and up from 4.2% in Q2 2016. This is the highest vacancy rate since Q3 2013 (although the increase has been small). The vacancy rate peaked at 8.0% at the end of 2009.From Reis: Shaking off a sluggish first quarter, the apartment market showed marked improvement in the second quarter as all but two of 79 metros saw effective rents increase or stay flat in the quarter. The average effective rent grew 1.1% in the quarter and 3.0% over the year. The vacancy rate increased from 4.3% to 4.4% Vacancy increased in 27 Metros, but the increase exceeded 0.2% in only eight metros. The number of new completions was lower than had been expected as was net absorption. The growth in effective rents suggests that landlords’ offers of free rent were less aggressive as the apartment market continued to benefit from stronger housing prices keeping more potential home buyers in rentals.Total inventory is expected to increase significantly in 2017; however, construction in the second quarter was lower than expected in a quarter that tends to see the highest activity. New construction of 36,477 units was the lowest quarterly addition in more than two years. With less new supply coming online, landlords were able to curb their concessions. At 4.4%, the national vacancy rate increased 10 basis points from 4.3% in the first quarter. One year ago, the vacancy rate was 4.2%. Occupancy growth, or net absorption, while low at 27,818 units, fell just shy of new supply pushing the vacancy rate up in the quarter.
San Francisco Is Burning - A series of strange and unsettling fires in the Mission District have people wondering: Are the city’s landlords using arson to drive out low-income tenants? And is this the deadly endgame of gentrification and tech-boom greed? Jon Ronson investigates the mystery. The Mission has been a refuge for immigrants and low-income San Franciscans ever since the Spanish founded Mission Dolores in 1776. It’s also been gentrifying for ages—but never like this. The past few years have seen sustained tech-worker colonization. Property prices have skyrocketed, and something strange and terrible has started happening: a spate of mysterious fires. There were 45 of them in 2015 and 2016, displacing 198 people and killing three, including a child. Legal evictions in San Francisco are costly and difficult, and so a lot of locals have started wondering: Could there be a plot by landlord arsonists to clear out the district to make way for the tech people? In June 2016 a local politician, David Campos, went as far as to write in the San Francisco Examiner, “There is nothing I want more [than] to assure my constituents that arson is not a factor in these fires. Unfortunately, at this point, I cannot say this with certainty.” One of the dead was Mauricio Orellana, a 40-year-old Salvadoran who worked at a moving company. There’s a theory why Orellana didn’t know flames were licking at his door. It’s that he was wearing his new headphones. That’s the last thing his friends remember about him—how happy he was to have saved up for them. Maybe that’s why he was oblivious to the screaming and the running, his neighbors throwing themselves and their dogs out the windows. The fire alarms might have been loud enough for him to hear over his music, but they weren’t working. So Orellana found himself trapped in his tiny bedroom on the third floor of his apartment building on the corner of Mission and 22nd Streets, a big old wooden structure with a Popeyes Louisiana Kitchen below and rickety staircases and fire escapes above. He died on the evening of January 28, 2015.
African Americans Have Lost Untold Acres of Land Over the Last Century - In the 45 years following the Civil War, freed slaves and their descendants accumulated roughly 15 million acres of land across the United States, most of it in the South. Land ownership meant stability and opportunity for black families, a shot at upward mobility and economic security for future generations. The hard-won property was generally used for farming, the primary occupation of most Southern blacks in the early 20th century. By 1920, there were 925,000 black-owned farms, representing about 14 percent of all farms in the United States.6 Over the course of the 20th century, however, that number dropped precipitously. Millions of farmers of all races were pushed off their land in the early part of the century, including around 600,000 black farmers. By 1975, just 45,000 black-owned farms remained. “It was almost as if the earth was opening up and swallowing black farmers,” writes scholar Pete Daniel in his book Dispossession: Discrimination Against African American Farmers in the Age of Civil Rights. Implicit in the decline of black farming was the loss of the land those farmers once tilled. Today, African Americans compose less than 2 percent of the nation’s farmers and 1 percent of its rural landowners.7 Many factors contributed to the loss of black-owned land during the 20th century, including systemic discrimination in lending by the US Department of Agriculture, the industrialization that lured workers into factories, and the Great Migration. But the lesser-known issue of heirs’ property also played a role, allowing untold thousands of acres to be forcibly bought out from under black rural families—often second-, third-, or fourth-generation landowners whose ancestors were enslaved—by real-estate developers and speculators.8
Reis: Mall Vacancy Rate increased in Q2 2017 --Reis reported that the vacancy rate for regional malls was 8.1% in Q2 2017, up from 7.9% in Q1, and up from 7.9% in Q2 2016. This is down from a cycle peak of 9.4% in Q3 2011.For Neighborhood and Community malls (strip malls), the vacancy rate was 10.0% in Q2, up from 9.9% in Q1, and up from 9.8% in Q2 2016. For strip malls, the vacancy rate peaked at 11.1% in Q3 2011. Comments from Reis Economist Barbara Byrne Denham: The Retail Vacancy Rate increased 0.1% in the second quarter to 10.0%. Asking rents increased 0.4% in the quarter that saw new stores opening on par with the number that closed. The Mall Vacancy Rate increased 0.2% to 8.1%. Mall Rents also increased 0.4%.Defying the doom and gloom aired in media reports, the retail real estate market posted positive net absorption in the second quarter. The vacancy rate increased a bit due to new construction that was only partially absorbed by new leasing. Still, the vacancy rate increase from 9.9% to 10.0% was smaller than most expected. The increase in the Mall vacancy rate was due to confirmed closings of Macy’s stores. This graph shows the strip mall vacancy rate starting in 1980 (prior to 2000 the data is annual). The regional mall data starts in 2000. Back in the '80s, there was overbuilding in the mall sector even as the vacancy rate was rising. This was due to the very loose commercial lending that led to the S&L crisis. Recently both the strip mall and regional mall vacancy rates have increased slightly from an already elevated level.
Reis: Office Vacancy Rate "flat" in Q2 at 16.0% --Reis released their Q2 2017 Office Vacancy survey this morning. Reis reported that the office vacancy rate was unchanged at 16.0% in Q2, from 16.0% in Q1. This is down from 16.1% in Q1 2016, and down from the cycle peak of 17.6%. From Reis Economist Barbara Denham: Office Vacancy Holds Steady at 15.8%; Rents Increase 0.5% in the Quarter. Vacancy Increases in 42 U.S. Metros, but only 10 See Effective Rent Decline. The Office Vacancy Rate remained flat in the second quarter at 16.0%. Asking rents increased 0.4% in the quarter and only 1.6% since the second quarter of 2016 – the lowest annual rate since 2011. Continuing its lackluster pace, the Office market recorded the lowest quarterly net absorption in three years as the vacancy rate remained flat at 16.0%. One year ago, the vacancy rate was 16.1%. In the last expansion, the U.S. vacancy rate had fallen from a high of 17.0% in 2003 to a low of 12.5% in 2007. In the current expansion that is now seven quarters longer than the previous expansion, the vacancy rate has fallen from a high of 17.6% to only 16.0% as tenants have leased far fewer square feet per added employee than in past cycles. New construction of 7.5 million square feet was also low by historic standards, but developers have been cautious throughout these last few years and have expanded the office supply at a less aggressive rate than in previous cycles. Net absorption, or occupancy growth, of 3.3 million square feet was the lowest since the second quarter of 2014. ...
Personal Income increased 0.4% in May, Spending increased 0.1% - The BEA released the Personal Income and Outlays report for May: Personal income increased $67.1 billion (0.4 percent) in May according to estimates released today by the Bureau of Economic Analysis. ... personal consumption expenditures (PCE) increased $7.3 billion (0.1 percent). ... Real PCE increased 0.1 percent. The PCE price index decreased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent.The May PCE price index increased 1.4 percent year-over-year and the May PCE price index, excluding food and energy, increased 1.4 percent year-over-year.The following graph shows real Personal Consumption Expenditures (PCE) through May 2017 (2009 dollars). Note that the y-axis doesn't start at zero to better show the change. The dashed red lines are the quarterly levels for real PCE.The increase in personal income was above expectations, and the increase in PCE was at expectations. Using the two-month method to estimate Q2 PCE growth, PCE was increasing at a 3.5% annual rate in Q2 2017. (using the mid-month method, PCE was increasing 3.7%). This suggests decent PCE growth in Q2.
May 2017 Headline Personal Income Improves: The headline data this month showed improved consumer income - but spending was weak. Personal consumption has been the major driver of GDP since the end of the Great Recession.. The rate of growth of consumption is slowing which does not bode well for 2Q2017 GDP. Economically, it seems the consumer is spending less with an improving savings rate, and higher income.. It is also significant that inflation is moderating. The backward revisions this month SIGNIFICANTLY affected the year-over-year rate of growth for expenditures.
- The monthly fluctuations are confusing. Looking at the inflation adjusted 3 month trend rate of growth, disposable income growth rate trend is accelerating while consumption's growth rate is also improving.
- Real Disposable Personal Income is up 2.2% year-over-year (published 1.9 % last month - now revised to 1.8 %), and real consumption expenditures is up 1.4 % year-over-year (published 2.6 % last month - now revised to 1.7 %)
- this data is very noisy and as usual includes moderate backward revision - this month the year-over-year changes modified the year-over-year trends.
- The 1Q2017 GDP estimate indicated the economy was expanding at 1.4 % (quarter-over-quarter compounded). Expenditures are counted in GDP, and income is ignored as GDP measures the spending side of the economy. However, over periods of time - consumer income and expenditure grow at the same rate.
- The savings rate continues to be low historically, and improved to 5.5 % this month [last month it was published the savings rate was 5.3% - and it was downwardly revised to 5.1%].
The Big Four Economic Indicators: Real Personal Income in May --This commentary has been updated to include this morning's release of the May data for Real Personal Income Less Transfer Receipts. Personal Income (excluding Transfer Receipts) in May rose 0.47% and is up 3.5% year-over-year. However, when we adjust for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) increased to 0.53%. The real number is up 2.0% year-over-year. Revisions were made going back to January. A Note on the Excluded Transfer Receipts: These are benefits received for no direct services performed. They include Social Security, Medicare & Medicaid, Unemployment Assistance, and a wide range other benefits, mostly from government, but a few from businesses. Here is an illustration of Transfer Receipts as a percent of Personal Income.
Savings Rate Soars To 8-Month Highs As Trumphoria Fades - US Real Personal Spending rates disappointed in the US (rising just 0.1% MoM - the weakest since February). While incomes rose slightly more than expected, spending growth was just 0.1% MoM - the weakest since August 2016. The PCE Deflator grew at its slowest since Nov 2016... All of which sent the savings rate to its highest since September...after plunging into year end 2016 on Trump confidence it has since surged as spending has slowed down Not exactly the signal that everyone is exuberantly buying the Trump trade.
Michigan Consumer Sentiment: June Final Slips, But Still Optimistic -- The University of Michigan Final Consumer Sentiment for June came in at 95.1, down from the May Final reading of 97.1. Investing.com had forecast 94.5. Surveys of Consumers chief economist, Richard Curtin, makes the following comments: Although consumer confidence slipped to its lowest level since Trump was elected, the overall level still remains quite favorable. The average level of the Sentiment Index during the first half of 2017 was 96.8, the best half-year average since the second half of 2000, and the partisan gap between Democrats and Republicans stood at 39 Index-points in June, nearly identical to the 38 point gap in February. The partisan divide still meant that June's Sentiment Index of 95.1 was nearly equal to both the average (95.7) between the optimism of Republicans and the pessimism of Democrats and the value for Independents (94.6). Surprisingly, the optimism among Republicans and Independents has largely resisted declines in the past several months despite the decreased likelihood that Trump's agenda will be passed in 2017. The most important policies to consumers are those that directly or indirectly affect their jobs, incomes, or their financial security. Fortunately, increasing uncertainty about future prospects for the economy has thus far been offset by the resurgent strength in the personal financial situation of consumers. The combination of continuing improvements in personal finances and increasing concerns about the economic outlook is typical around cyclical peaks. Nonetheless, the data provide no indication of an imminent downturn nor do the data provide any indication of a resurgent boom in spending. Even with a much improved 2nd quarter, personal consumption spending is expected to advance during 2017 by about 2.3%. [More...] See the chart below for a long-term perspective on this widely watched indicator. Recessions and real GDP are included to help us evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
New Study Finds Marijuana Users Are Happier And More Successful In Life --Shattering the stereotype of the lazy pothead, new research suggests cannabis users are actually more satisfied, more successful, and even more likely to volunteer in their communities than their nonsmoking counterparts. Last week, the Independent described to its readers how the research was carried out:“The study, conducted by market researchers BDS Analytics, surveyed consumers and abstainers across a wide variety of mental, social and financial factors. These included life satisfaction levels, attitudes towards parenting and employment data."The survey analysed extensive data from two US states that have voted to legalise the sale of cannabis — California and Colorado.”Among other surprising findings, researchers discovered that weed consumers make significantly more money than those who abstain, with Californians who use the plant earning nearly $24,000 more a year. This could be related to the fact that 20 percent of California pot consumers hold a master’s degree while only 12 percent of non-smokers in the state can say the same.Researchers found a similar situation in Colorado, where 64 percent of cannabis users have full-time jobs versus 54 percent of abstainers. Given those numbers, perhaps it’s not surprising that weed consumers in the state generally feel better about their personal lives than non-smokers.Marijuana consumption is also associated with healthier habits and a more active social life, researchers for BDS Analytics found. In Colorado, for instance, 36 percent of smokers described themselves as “very social people,” compared to 28 percent for those who avoid the plant. Additionally, in both Colorado and California, those who consume cannabis enjoy outdoor recreation at significantly higher rates. Perhaps the most surprising discovery, however — given the cliched image of the slacker on the couch eating Cheetos and watching reruns of Family Guy — is that users tend to be more generous with their time. Nearly 40 percent of California’s weed enthusiasts volunteer in their communities, researchers found, whereas only 25 percent of abstainers have decided to do the same.
U.S. to impose additional tariffs on Canadian lumber imports -- The U.S. will impose further punitive tariffs on imports of softwood lumber from Canada, escalating a longstanding trade dispute that’s already led to higher timber prices. Preliminary anti-dumping duties of as much as 7.7% will be levied on Canadian producers, the U.S. Department of Commerce said Monday in a statement. The move follows the government’s decision in April to slap countervailing tariffs of up to 24.1% on shipments from Canadian companies including West Fraser Timber Co. and Canfor Corp.Until Canada and the U.S. reach a negotiated solution on softwood lumber, the nation will continue to “vigorously apply” the anti-dumping and countervailing duties to “stand up for American companies and their workers,” U.S. Secretary of Commerce Wilbur Ross said in a statement.Canada is the world’s largest softwood lumber exporter and the U.S. is its biggest market. The trade spat, which has been going on intermittently for decades, was reignited in November when the U.S. lumber industry filed a petition asking for duties. The group alleges Canadian wood is heavily subsidized and imports are harming U.S. mills and workers. Since then, trade between the two countries has become an increasingly fraught issue, with President Donald Trump seeking to renegotiate the North American Free Trade Agreement. The U.S. Department of Commerce said in its preliminary determination that it calculated that Canfor is selling product in the U.S. at 7.72% less than fair value, Resolute FP Canada Inc. at 4.59%, Tolko Industries Ltd. at 7.53% and West Fraser at 6.76%. It set a preliminary dumping rate of 6.87% for all other producers in Canada.
U.S. advance goods trade deficit narrows in May, global growth to continue to support export growth - EconoTimes: U.S. advance goods trade balance recorded a nominal deficit in May, narrower than consensus expectations. U.S. goods trade balance deficit narrowed to USD 65.9 billion in May from April’s deficit of USD 67 billion. Consensus expectations were for the deficit to come in at USD 66 billion. Nominal goods exports grew 0.4 percent on a sequential basis, led by solid exports of automotive vehicles that rose 4.8 percent and consumer goods that grew 6 percent. Both these components rebounded following two months of declines. Meanwhile, exports of foods and beverages dropped sharply by 6.4 percent on a sequential basis, countering some of the gains. In nominal terms, exports grew 6.8 percent year-on-year, continuing with the upward momentum seen since early 2016. The rebound in exports is driven partly by the upturn in global growth and is expected to continue underpinning export growth in the near future, noted Barclays in a research report. Meanwhile, nominal goods imports dropped 0.4 percent on the month. Capital goods imports were up a solid 2.4 percent for the second consecutive month, which augurs well for business investment spending this quarter. Imports of other goods imports and capital goods were up strongly on the month. However, consumer goods imports dropped 3 percent on a sequential basis.
The U.S. No Longer Has One of the Top Three Fastest Supercomputers - A new ranking shows that for the second year running, the world’s fastest supercomputer is TaihuLight, housed at the National Supercomputing Center in Wuxi, China. Capable of performing 93 quadrillion calculations per second, it’s almost three times faster than the second-place Tianhe-2. And in third spot this year is a newly upgraded device, called Piz Dain, at the Swiss National Supercomputing Centre, which recently had its performance boosted by the addition of Nvidia GPUs.Sadly for America, the upgraded Piz Dain pushes the Department of Energy’s Titan supercomputer, which is housed at Oak Ridge National Laboratory, into fourth spot. Able to make 17.6 quadrillion number crunches per second, Titan is just a fifth as fast as TaihuLight. In its defense, the U.S. still claims five of the top 10 spots, and it is home to 169 of the supercomputers that make up the fastest 500. China, meanwhile, can only claim 160. But the news nonetheless serves to highlight America's decline as a supercomputing heavyweight. This is the first time since 1996 that America hasn’t held one of the top three spots. It indicates that, while it certainly has significant supercomputing resources, it can’t tackle its biggest problems at anywhere near the speeds enjoyed by researchers in China.
Vehicle Sales Forecast: "Sixth Consecutive Decline in June" --The automakers will report June vehicle sales on Monday, July 3rd. There were 26 selling days in June 2017, the same as in June 2016. From WardsAuto: U.S. Forecast: Sixth Consecutive Decline in JuneA WardsAuto forecast calls for U.S. automakers to deliver 1.50 million light vehicles in June. A daily sales rate of 57,762 units over 26 days represents a 0.7% decline from like-2016 (also 26 days). mThe report puts the seasonally adjusted annual rate of sales for the month at 16.82 million units, above year-ago’s 16.77 million and May’s 16.58 million mark. ...WardsAuto is forecasting U.S. sales of 17.1 million units in calendar-year 2017. The outlook assumes a sales surge in the summer caused by deep price discounting or other means to trim the excess stock. If inventory is not cut by 400,000 to 500,000 units by September, another sell-off is possible in Q4, probably December. Without such a surge, sales are heading to 16.8 million units for the year. From Reuters: U.S. auto sales seen down 2 percent in June: JD Power and LMCThe seasonally adjusted annualized rate for the month will be 16.5 million vehicles, down nearly 2 percent from 16.8 million units in the same month in 2016. Overall sales are down from the record in 2016.
U.S. Durable-Goods Orders Fell 1.1% in May - Demand for long-lasting factory goods declined in May for the second straight month, a possible sign of softness in the U.S. manufacturing sector. Orders for durable goods--products designed to last at least three years, such as computers and industrial robots--decreased 1.1% from April to a seasonally adjusted $228.18 billion in May, the Commerce Department said Monday. That was the largest drop in six months. Economists surveyed by The Wall Street Journal had expected a more modest 0.4% decline last month. April orders were revised down to a 0.9% decline, which followed four straight monthly rises. Last month's fall was led by sharp declines in two volatile categories, a 30.8% drop in military-aircraft orders and a 11.7% drop in orders for civilian airplanes and parts. Excluding the transportation segment, orders rose 0.1% in May. Excluding defense products, orders were down 0.6% from April. More broadly, factory demand has strengthened in 2017. Durable-goods orders rose 2.8% in the first five months of 2017 compared with a year earlier. >A closely watched proxy for business investment in new equipment, orders for nondefense capital goods excluding aircraft, fell 0.2% in May from the prior month but was up 2.3% year-to-date.
Headline Durable Goods Orders Down Again in May, Worse Than Forecast --The Advance Report on Manufacturers’ Shipments, Inventories, and Orders released today gives us a first look at the latest durable goods numbers. Here is the Bureau's summary on new orders:New orders for manufactured durable goods in May decreased $2.5 billion or 1.1 percent to $228.2 billion, the U.S. Census Bureau announced today. This decrease, down two consecutive months, followed a 0.9 percent April decrease. Excluding transportation, new orders increased 0.1 percent. Excluding defense, new orders decreased 0.6 percent. Transportation equipment, also down two consecutive months, drove the decrease, $2.7 billion or 3.4 percent to $75.4 billion. Download full PDFThe latest new orders number at -1.1% month-over-month (MoM) was worse than the Investing.com consensus of -0.6%. The series is up 2.7% year-over-year (YoY).If we exclude transportation, "core" durable goods came in at 0.1% MoM, which was below the Investing.com consensus of 0.5%. The core measure is up 5.5% YoY. If we exclude both transportation and defense for an even more fundamental "core", the latest number is up 1.0% MoM and up 4.8% YoY.Core Capital Goods New Orders (nondefense capital goods used in the production of goods or services, excluding aircraft) is an important gauge of business spending, often referred to as Core Capex. It is down 0.2% MoM and up 5.0% YoY. For a look at the big picture and an understanding of the relative size of the major components, here is an area chart of Durable Goods New Orders minus Transportation and Defense with those two components stacked on top. We've also included a dotted line to show the relative size of Core Capex.
Wholesale and Retail Inventories Rise Led by Autos: Diving Into Seasonal Adjustments -- On Monday, Census Department data showed durable-goods orders declined 1.1% for the month.Yet, despite falling sales and a warning from GM, durable goods orders for autos and auto parts rose 1.2% in May. That was on top of a 0.5% gain in April.The auto mystery continues as today’s advance trade data from the Census Department shows Wholesale inventories rose 0.3% and retail inventories rose 0.6%. The auto-related details were even more interesting. Auto imports for the past two months are down a total of 4.6%. Auto exports for the past two months are up a net total of 0.7%. Adjusted vs. Unadjusted Numbers:
- Unadjusted, merchant inventories -0.9% in May and -0.9% in April
- Adjusted, merchant inventories +0.4% in May and -0.3% in April
- Unadjusted, retail inventories -0.7% in May and -0.4% in April
- Adjusted, retail inventories +0.6% in May and -0.2% in April
- Unadjusted, retail motor vehicles -1.0% in May and -0.1% in April
- Adjusted, retail motor vehicles +1.1% in May and -0.2% in April
That’s a 2.1 percentage point difference between motor vehicle inventories in May, adjusted vs. unadjusted. The above chart shows manufacturers’ inventories of motor vehicles and parts.The swings in deal inventories, month-over-month, unadjusted vs seasonally adjusted for the month of May are not wild.
Dallas Fed: "Texas Manufacturing Continues to Expand but at a Slower Pace" in June --From the Dallas Fed: Texas Manufacturing Continues to Expand but at a Slower Pace -- Texas factory activity increased in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 11 points to 12.3, indicating output grew but at a slower pace than in May. Other measures of current manufacturing activity also indicated that growth moderated. The new orders and growth rate of orders indexes fell several points each, coming in at 9.6 and 4.7, respectively. The capacity utilization index moved down to 12.3, and the shipments index retreated to 8.5 after surging last month. Perceptions of broader business conditions improved in June, although the indexes were less positive than in May. The general business activity index edged down to 15.0. The company outlook index posted a 10th consecutive positive reading but fell nine points to 10.8.Labor market measures indicated continued employment gains and longer workweeks this month. The employment index posted a sixth consecutive positive reading and edged up to 9.6. Nineteen percent of firms noted net hiring, compared with 10 percent noting net layoffs. The hours worked index dropped to 8.9, down seven points from a six-year high last month. CR note: This suggests solid growth, although at a slower pace than in May. The recent decline in oil prices might impact the Dallas surveys in coming months.
Dallas Fed Manufacturing Outlook: Conditions Improve Despite Slight Drop - This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for June. The latest general business activity index came in at 15.0, down slightly from 17.2 in May.Here is an excerpt from the latest report:Texas factory activity increased in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell 11 points to 12.3, indicating output grew but at a slower pace than in May.Perceptions of broader business conditions improved in June, although the indexes were less positive than in May. The general business activity index edged down to 15.0. The company outlook index posted a 10th consecutive positive reading but fell nine points to 10.8. Expectations regarding future business conditions continued to improve. The index of future general business activity held steady at 31.9, while the index of future company outlook came in at 35.6, up five points from last month’s reading. Other indexes for future manufacturing activity showed mixed movements but remained solidly in positive territory. Monthly data for this indicator only dates back to 2004, so it is difficult to see the full potential of this indicator without several business cycles of data. Nevertheless, it is an interesting and important regional manufacturing indicator.
Richmond Fed: "Manufacturers in the Fifth District Improved in June" --From the Richmond Fed: Reports from Manufacturers in the Fifth District Improved in JuneReports from Fifth District manufacturers improved in June, according to the latest survey by the Federal Reserve Bank of Richmond. The composite manufacturing index rose from 1 in May to 7 in June, as the indexes for shipments and new orders increased. The employment index was relatively flat. Most firms continued to report steady or higher wages; although the index for wages did fall in June, it remained above 0. Meanwhile, more firms reported a decline in the average workweek than reported an increase. Looking six months ahead, manufacturing executives were more optimistic in June than in May, although even the May readings were very positive. This was the last of the regional Fed surveys for June. Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:
Chicago PMI Increases in June, Highest in Three Years --From the Chicago PMI: June Chicago Business Barometer at 65.7 vs 59.4 in May The MNI Chicago Business Barometer rose to 65.7 in June from 59.4 in May, the highest level in over three years. “June’s MNI Chicago Business Barometer Survey is a testament to firms’ expectations of a busy summer. With Production and New Orders touching levels not seen in three years, rising pressure on backlogs and delivery times has led to higher optimism among firms both in general business conditions and the local economy,” said Shaily Mittal, Senior Economist at MNI Indicators. This was well above the consensus forecast.
Factories May Be Coming Back To The U.S., But The Jobs Aren't: McKinsey Trump effectively owes his election to the promise of bringing factories and manufacturing jobs back to the United States. His relentless, targeted attacks against the 'Big 3' U.S. auto manufacturers for outsourcing jobs to Mexico was undoubtedly a key reason that he was able to shock the world and win Michigan, Wisconsin, Ohio and Pennsylvania...an accomplishment which has eluded Republicans since Ronald Reagan.Unfortunately, while factories may once again be making a comeback in the United States, after chasing low wages all around the globe for decades, they're unlikely to bring the jobs with them. As a new study from McKinsey highlights, if a new factory opens up in the United States you can bet it's only because most of the jobs that used to be performed by humans have since been automated. Per Bloomberg:American manufacturing could be poised to rebound as technological disruption shakes up global production chains, but that will offer little relief to displaced factory workers, according to new research by the McKinsey Global Institute.Now, McKinsey sees conditions changing in a way that could favor U.S. producers: automation is weakening the case for labor arbitrage as wages rise in emerging market economies and developing market residents are coalescing into a new consumer class, among other factors.While the U.S. could seize on those manufacturing growth opportunities, especially if the government and companies invest to make production more competitive, there are catches. Importantly, production might bounce back without bringing a lot of jobs in tow.“Even if we rebuild factories here and you build plants here, they’re just not going to employ thousands of people -- that just doesn’t happen,” said report co-author and McKinsey Global Institute Director James Manyika. “Find a factory anywhere in the world built in the last 5 years -- not many people work there.”
US Copyright Office Wimps Out on Right to Repair --naked capitalism by Jerri-lynn Scofield - As more and more devices require software to operate, copyright holders employ a number of measures that thwart an end user’s right to repair a product s/he ostensibly owns. As the Electronic Frontier Foundation (EFF) recognizes, although in theory one may own a device outright, one’s only allowed to license the software necessary to make the device work properly. The terms of that license may preclude any efforts to tinker with the device, reverse engineer it, or have a third party undertake a repair.To elaborate (according to the EFF):Further complication: the software may come with digital locks (aka Digital Rights Management [DRM] or Technical Protection Measures [TPMs]) supposedly designed to prevent unauthorized copying. And breaking those locks, even to do something simple and otherwise legal like tinkering with or fixing your own devices, means breaking the law, thanks to Section 1201 of the Digital Millennium Copyright Act (DMCA). The United States Copyright Office on 22nd June released a report analyzing in great detail just these controversial Section 1201 provisions. A Boing Boing article, US Copyright Office recommends sweeping, welcome changes to America’s DRM laws, spells out the DMCA’s broad sweep:DMCA 1201 says that bypassing a computer program that controls access to a copyrighted work is a potential felony, punishable by a five-year prison sentence and a $500,000 fine (for a first offense!). This has allowed entertainment companies to take away many of the public’s rights under copyright — for example, by locking your ebooks to your account and your ebook reader, so you can’t lend or sell your used books when you’re done with them. But DMCA 1201 goes much farther than this: because any “smart” device has software in it, and because that software is copyrighted, device manufacturers have used [DRMs] and DMCA 1201 to control who can diagnose and repair your gadgets (from phones to cars and beyond), and also who can make parts for them, who can make or remanufacture their consumables (from coffee-pods to inkjet cartridges), and how you can use them.
Weekly Initial Unemployment Claims increase to 244,000 -- The DOL reported: In the week ending June 24, the advance figure for seasonally adjusted initial claims was 244,000, an increase of 2,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 241,000 to 242,000. The 4-week moving average was 242,250, a decrease of 2,750 from the previous week's revised average. The previous week's average was revised up by 250 from 244,750 to 245,000. The previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.
Low Productivity Growth: The Capital Formation Link – NY Fed - A major economic concern is the ongoing sluggishness in the growth of output per worker hour, generally called labor productivity. In an arithmetic sense, the growth of the economy can be accounted for by the increase in hours worked plus that of labor productivity. With the unemployment rate now at a level widely regarded as near “full employment,” growth in hours worked is likely to be limited by demographic forces, most importantly the very limited expansion of the working-age population. If productivity growth also remains low, the sustainable pace of increase of real GDP will be limited and remain noticeably lower than historic norms. Productivity growth numbers are highly volatile, both on a quarterly basis and on an annual basis. The chart below looks at the series over a five year, or twenty quarter, horizon—a period that smooths out much of the volatility. We see that the recent figure is less than 1 percent, a level not seen since the depths of the deep 1981-82 recession. The New York Fed’s Kahn-Rich model, using a more sophisticated statistical method, confirms that the current productivity trend is low, though the point estimate coming from this model is a bit over 1 percent—still much lower than the historical average.
Amazon’s Move Signals End of Line for Many Cashiers - NYT - Imagine this scene from the future: You walk into a store and are greeted by name, by a computer with facial recognition that directs you to the items you need. You peruse a small area — no chance of getting lost or wasting time searching for things — because the store stocks only sample items. You wave your phone in front of anything you want to buy, then walk out. In the back, robots retrieve your items from a warehouse and deliver them to your home via driverless car or drone.Amazon’s $13.4 billion purchase of Whole Foods, announced Friday, could speed that vision along. Amazon has already made shopping for almost everything involve spending less time waiting, doing work or interacting with people, and now it could do the same for groceries. It’s already trying with a store in Seattle, Amazon Go, that has no salespeople or checkout lines. Our mental image of job-killing automation is robots in factories or warehouses. But the next jobs to disappear are probably ones that are a much bigger part of most people’s daily lives: retail workers and cashiers in stores and restaurants. Eight million people, 6 percent of American workers, are retail salespeople and cashiers, according to the Bureau of Labor Statistics. Cashier jobs are expected to grow 2 percent by 2024, significantly slower than 7 percent job growth over all, and technology is the main reason, according to the bureau. Half the time worked by salespeople and cashiers is spent on tasks that can be automated by technology that’s currently in use, according to a recent McKinsey Global Institute report. Two-thirds of the time on tasks done by grocery store workers can be automated, it said. Another report, by Forrester, estimated that a quarter of the tasks salespeople do would be automated this year, and 58 percent by 2020.
Yes, Your Parents’ Status Does Influence Your Earning Power - Britain is joined by the U.S., France and Italy in having a high correlation between parents' earnings and those of their children, according to a report by Standard Life Investments. The relationship also exists in Scandinavian economies as well as Australia, Germany and Canada, but to a lesser extent.That's creating challenges for the most-affected countries. Such societies tend to waste or misallocate human capital; workers are often less motivated and as a result, less productive; and the associated higher levels of inequality are found to be detrimental to economic growth, the research shows. "In practically all countries for which evidence is available, there is a clear link between what your parents earned and your own earnings prospects,'' said Jeremy Lawson, chief economist at Standard Life and a lead author of the report. "Addressing low mobility is challenging. There is no global silver bullet, with each country facing issues in its own unique institutional and policy environment.'' An obvious first solution is education, including spending on early age intervention and developing schooling systems that don't separate students by ability. But the problem is deeply ingrained.In the U.S., three decades of sluggish real wage gains have prompted researchers to seek answers. They tracked the proportion of those aged 30 who earned more than their parents at that age and found a significant downtrend: just 50 percent of children born in the 1980s earned more than their parents at the same age, compared with nearly 80 percent of 1950s kids. Industrial decline has been a major culprit. In the American Midwest, just 41 percent of children born in 1984 earned more than their parents, compared with 95 percent for those born in 1940. "Little wonder that President Trump's campaign messages were so well received in states like Michigan, Ohio and Pennsylvania,''
Trump administration sides with big business over working people by acting to weaken the overtime rule - Today the Department of Labor announced that it will defend its authority to use a salary threshold to determine whether workers are eligible for overtime pay—asking the U.S. Court of Appeals for the Fifth Circuit to uphold the authority DOL has exercised for almost 80 years. DOL has used salary as well as duties to determine overtime eligibility since 1938, and it would have been an abandonment of the agency’s responsibility to U.S. workers to have abdicated this authority.However, the department’s brief also states that the department “has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be.” In other words, the Trump administration is defending the agency’s authority to establish an overtime threshold in order to issue a new rule that hurts working and weakens overtime protections.Last year, after years of work, DOL issued a rule updating the salary threshold under which all workers are guaranteed the right to overtime pay—giving 12.5 million workers new or strengthened rights to get paid overtime or get time with their families. Far too many salaried workers were not covered by overtime protections because the threshold of $23,660 per year had not kept up with wage growth or inflation and was therefore far too low. Under the updated rule, salaried employees making less than $47,476 a year must be paid time-and-a-half when they work more than 40 hours in a week. From the beginning, the Trump administration has made it clear that it intends to lower the salary threshold and weaken or perhaps kill the updated rule. DOL plans to issue a Request for Information that marks the beginning of this process. By issuing this RFI and not defending the updated threshold, the Trump administration is working to roll back the hard earned rights of working people. It is yet another example of President Trump’s siding with big businesses and corporate lobbyists over working people that the Trump DOL is working undo a rule that simply allows members of the middle class who work hard to be paid what they are worth.
Letter to the House Committee on Education & the Workforce concerning H.R. 986, The Tribal Labor Sovereignty Act of 2017; H.R. 2776, The Workforce Democracy and Fairness Act; and H.R. 2775 -- Heidi Shierholz and Celine McNicholas of the Economic Policy Institute Policy Center submitted the following letter to the U.S. House of Representatives Committee on Education & the Workforce, on June 28, 2017. Dear Chairwoman, Ranking Member, and Distinguished Committee Members: We write on behalf of the Economic Policy Institute Policy Center (EPI-PC), to express our views on H.R. 986, The Tribal Labor Sovereignty Act of 2017; H.R. 2776, The Workforce Democracy and Fairness Act; and H.R. 2775, The Employee Privacy Protection Act. The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank created in 1986. We were the first – and remain the premier – such think tank to focus on the needs of low- and middle-income workers in economic policy discussions. For years, EPI’s researchers have studied the effect of the erosion of collective bargaining and union membership. The research is clear1 – the erosion of collective bargaining has been a core contributor to our decades-long problems with wage stagnation and inequality, hurting not only union workers but nonunion workers as well. Any legislation that amends our nation’s basic labor law should protect and enhance workers’ freedom to join a union and collectively bargain, not make it harder for working men and women to exercise this fundamental right. Unfortunately, all three of the bills the Committee is considering today would make it harder for workers to engage in collective bargaining. We strongly urge all Members of this Committee to oppose these bills.
How a Rising Minimum Wage Affects Jobs in Seattle -- Three years ago, Seattle became one of the first jurisdictions in the nation to embrace a $15-an-hour minimum wage, to be phased in over several years. Over the past week, two studies have purported to demonstrate the effects of the first stages of that increase — but with starkly diverging results. The first study, by a team of researchers at the University of California, Berkeley, supports the conclusion of numerous studies before it, that increasing the minimum wage up to a level that is about half or less of an area’s typical wage leads to at most a small reduction in employment. That roughly describes Seattle, which first increased its minimum wage to $11 an hour from $9.47 for large businesses in April 2015, then to $13 an hour for many of those businesses in January 2016. (Small businesses, and large ones that provide health insurance for workers, had lower increases.)The Berkeley study focused on the restaurant industry because of the high proportion of restaurant workers who are paid the minimum wage. It found that for every 10 percent that the minimum wage rose, wages in the industry rose nearly 1 percent, and that there was no discernible effect on employment. By contrast, the second study, which a group of researchers at the University of Washington released on Monday, suggests that the minimum wage has had a far more negative effect on employment than even skeptics of minimum-wage increases typically find. (Neither study has been formally peer-reviewed.)
That Seattle minimum wage study has some curious results. --Jared Bernstein --I’m quoted in this story about a new paper on the Seattle minimum wage increase–it’s in the process of phasing up to $15/hr–as follows: “The literature shows that moderate minimum wage increases seem to consistently have their intended effects, [but] you have to admit that the increases that we’re now contemplating go beyond moderate. That doesn’t mean, however, that you know what the outcome is going to be. You have to test it, you have to scrutinize it, which is why Seattle is a great test case.”I still think that. But I also think something seems pretty “off” with the study, reviewed here by the WaPo.–How could they get such job- and income-loss effects for low-wage workers in Seattle relative to their controls with such tiny wage effects? This is especially curious when considering the excellent point made by Schmitt and Zipperer, who critically review the Seattle study, that compared to Seattle’s relatively high wage base, $13/hr isn’t that far out of the usual range (be sure to read their critique).–It seems extremely unlikely that increasing the min wg to $13 leads to job growth for those making >$19. I can’t think of any labor market logic to that.–The Seattle economy is doing really well, with solid job and wage growth amidst very low unemployment. I’d think that if the increase threw such a large wrench into the low-wage labor market as this study suggests, we’d see it in the broader economic statistics.When you have an outlier study–their negative results are huge multiples of past research—with such unusual “internals,” there may be something wrong. It could be the multi-establishment firms they left out, though if the increase is whacking smaller firms, that’s a problem too. So I suspect their control cohort—the other parts of the state that are serving as a control—is non-independent of the Seattle increase. This new study from Allegretto et al doesn’t have the granular data available to the Seattle researchers but it uses what looks to me like a more credible control cohort and finds the Seattle increase to be having its intended effect.
The Seattle Study: Increasing the Minimum Wage as a Way to Boost High Income Jobs - Finally, after years of published studies that largely downplayed the labor demand disincentive effects of minimum wage laws, a report has been issued that finds immense negative effects—vastly larger in fact than those that have appeared in the past.The backdrop to this, of course, is the economic performance of the city of Seattle itself, which has been about as strong as any city in the country. During the period of the latest minimum wage increase Seattle has experienced essentially full employment, as reflected in an unemployment rate of about 3%. Thus, any negative impact in one part of the city’s economy had to have been offset by positive impacts elsewhere. And this in fact is also a finding of the Seattle minimum wage study, although its authors don’t mention it. They restrict their sample of affected workers to those in the low wage labor market, and they employ a range of cutoffs to see how truncating the sample in different ways affect their results, but their empirical methods intrinsically apply to workers at all wage levels. This is because their strategy for identifying employment impacts is to use various control groups, actual or synthetic, and compare employment between Seattle and these controls before and after the change in the minimum wage. The employment impact is whatever comes out of this comparison. Well, guess what? The treatment-versus-control methods that generate employment losses in the lower-wage segment of the labor market are nearly exactly offset by employment gains in the higher wage segment. This stands to reason, because Seattle as a whole is doing great: it hasn’t suffered overall from the rise in minimum wages, so dips in some parts of its economy imply bumps in others. The calculations that make this explicit are performed by Ben Zipperer and John Schmitt of the Economic Policy Institute. They do this for the overall city economy and also for the restaurant sector. With its narrower focus, this second approach is especially informative. The key paragraph here is: The spurious results are clear in the case of the restaurant industry, as we illustrate in Figure B, where the authors’ own methodology and estimates imply that the Seattle minimum wage increase caused an incredible 20.1 percent growth in restaurant jobs paying above $19.00 per hour. ‘
St. Louis $10 minimum wage will revert back to $7.70 in August, Greitens announces - stltoday.com: The minimum wage in St. Louis will revert to $7.70 an hour on Aug. 28, with Gov. Eric Greitens announcing on Friday that he will allow a bill blocking the city’s increase to become law without his signature. When the Legislature sends the governor a bill, he has several options. He can sign it, veto it or take the middle course — without action before a constitutional deadline, the bill automatically takes effect. The bill in question bans local minimum wages, requiring all cities and municipalities in Missouri to stick to the statewide standard. Minimum wage workers in St. Louis are making $10 an hour after winning a two-year legal fight against business groups who challenged a 2015 city ordinance authorizing an increase. Under that city law, the wage was set to rise again in January to $11 an hour, then increase annually with inflation. “It will kill jobs,” Greitens said of the increase. “And despite what you hear from liberals, it will take money out of people’s pockets.” Both workers and businesses alike now face a jarring change ahead. It’s unclear whether many businesses as of Aug. 28 will seek to reduce pay to employees who have recently received increases. It’s a situation the Missouri House had sought to avoid by fast-tracking its version of the bill to the Senate in March, in the hopes it could be signed into law before a court’s injunction on the increase was lifted in St. Louis. But the Senate didn’t take up the bill until the final hours of the 2017 legislative session. Greitens, who has clashed with senators numerous times since assuming office, said the uncertainty for businesses could have been avoided if they had “done their job on time.” His reasoning for not signing the bill outright? Those career politicians, Greitens said.
Supreme Court Declines To Accept Yet Another Second Amendment Case - Continuing a pattern that goes back seven years now, the Supreme Court has once again declined to hear an appeal involving the Second Amendment, in this case, a ruling upholding California’s strict statute governing who may obtain a license to carry a concealed weapon in public: The Supreme Court on Monday declined to hear a Second Amendment challenge to a California law that places strict limits on carrying guns in public.As is their custom, the justices gave no reasons for deciding not to hear the case. The court has turned away numerous Second Amendment cases in recent years, to the frustration of gun rights groups and some conservative justices. Justice Clarence Thomas, joined by Justice Neil M. Gorsuch, dissented. The court’s refusal to hear the case, Justice Thomas wrote, “reflects a distressing trend: the treatment of the Second Amendment as a disfavored right.” In 2008, in District of Columbia v. Heller, the Supreme Court ruled that the Second Amendment protects an individual right to keep guns at home for self-defense.Since then, the court has said little else about what other laws may violate the Second Amendment. In the lower courts, very few challenges to gun control laws since the Heller decision have succeeded.But legal experts say that it is only a matter of time before the court confronts the question of whether and how the Second Amendment applies outside the home. The question has divided the lower courts. The federal appeals court in Chicago struck down an Illinois law that banned carrying guns in public, while federal appeals courts in New York, Philadelphia and Richmond, Va., upheld laws that placed limits on permits to carry guns outside the home. The Supreme Court turned away appeals in all three cases.
Kentucky’s Hedge Funder Governor Keeps State Money In Secretive Hedge Funds - Kentucky’s public pension system is a long-running, worst-in-the-nation disaster. Even as state workers chip in their fair share, the system suffers from years of chronic underfunding by the state. Seeking higher returns, the program, formally known as Kentucky Retirement Systems, has turned to “alternative investments” such as private equity and hedge funds. But those funds also carry far more risk than traditional investments in stocks and bonds ― and much higher fees. The year before the state’s Republican governor, Matt Bevin, was elected, the pension system had 25 percent more alternative investments than its peers, 27 percent higher costs and 15 percent lower long-term returns, according to a report prepared for the pension board. As a part-owner of a hedge fund himself, Bevin said in 2015 that he didn’t have a problem with the pension system’s heavy reliance on alternative investments like hedge funds. But he campaigned on promises to improve the system and shore it up for the future. He hasn’t. Despite the Republican Party being in total control of Kentucky state government for the first time in nearly a century, the actual policy changes Bevin has implemented or overseen have mainly ended up supporting the system’s ruinous status quo. And some legislators are raising concerns that state officials ― potentially including Bevin himself ― could benefit financially from the system. Maintaining Kentucky’s status quo requires that oversight be finely balanced between people who are deeply invested in the current system and people who have very little idea of what’s going on. Since taking office in December 2015, Bevin has picked a former hedge fund director, a current hedge fund owner and a dermatologist to serve on the board that watches over the pension system. In February 2017, he signed bipartisan legislation that shielded the board from disclosing how much it paid some investment managers and prevented it from opening its contract process to competitive bidding. Under Bevin’s watch, the pension fund has continued to rely on alternative investments. It makes no sense, some state lawmakers argue, to overpay for risky financial products that rarely outperform the market. The retirements of as many as 350,000 public employees ― including social and mental health workers, university staff and others ― are at stake.
IL DOT will halt construction projects without a state budget: Illinois lawmakers are entering their seventh day of special session Tuesday morning at 10 a.m. On Monday, they met for just minutes. The Illinois Senate met for six minutes and eight seconds while the House met for four minutes and twenty-six seconds. Local lawmakers say they trust that state leaders can agree on some sort of budget by Friday, the end of the current fiscal year. "I'm confident that we are getting closer," said State Rep. Mike Halpin (D) Rock Island. "There is becoming some consensus on the rank and file, but this is really a question of leadership." "I trust our leadership that they are looking at our caucus as a whole and for the state of Illinois," Said State Rep. Tony McCombie (R) Savanna. "We will and have provided some ideas to get the conversation started." Local construction workers could be out of a job if that conversation goes nowhere. Major projects like the Savanna-Sabula Bridge, John Deere Road, and even the I-74 Bridge project could be halted
Trump says he is sending federal help to quell Chicago violence - President Trump tweeted on Friday he will send federal resources to Chicago in order to quell the city’s violence. Crime and killings in Chicago have reached such epidemic proportions that I am sending in Federal help. 1714 shootings in Chicago this year! — Donald J. Trump (@realDonaldTrump) June 30, 2017 Trump’s tweet comes after authorities confirmed to The Chicago-Sun Times reported that Trump had sent twenty agents from U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to the city. 20 new ATF agents have joined a force of 35 to 40 agents, who were already in the city, according to the report. The agents are collaborating with the Chicago Police Department and the Illinois State Police on a strike force that will work to track down gun traffickers and solve shootings in the city with the help of ballistics technology.Chicago police said Superintendent Eddie Johnson first met with Attorney General Jeff Sessions in March to discuss the strike force. Trump tweeted shortly after taking office in January that if city of Chicago did not fix the “carnage,” he would send in federal aid. There have been 320 murders in Chicago so far this year. 2016 experienced 760 killings, making it the deadliest year Chicago has seen in twenty years, according to the Times.
New Device Allows Cops To Download All Of Your Smartphone Activity In Seconds - “Any person who operates a motor vehicle in the state shall be deemed to have given consent to field testing of his or her mobile telephone and/or personal electronic device for the purpose of determining the use thereofwhile operating a motor vehicle, provided that such testing is conducted by or at the direction of a police officer.”That’s language from the text of a bill currently working its way through the New York state legislature. The legislation would allow cops to search through drivers’ cell phones following traffic incidents — even minor fender-benders — to determine if the person was using their phone while behind the wheel.Most states have laws banning the use of mobile devices while driving, though such laws are rarely enforced. This is largely because it’s nearly impossible to catch someone in the act. What person would admit to an officer that they broke the law, the argument goes, particularly when it’s after the fact? After all, cops don’t show up until after the accident occurs.Now, technology exists that would give police the power to plug drivers’ phones into tablet-like devices — being called “textalyzers” in the media — that tell officers exactly what they were doing on their phone and exactly when they were doing it. And if the readout shows a driver was texting while driving, for instance, the legal system will have an additional way to fine them.“Recording your every click, tap or swipe, it would even know what apps you were using. Police officers could download the data, right on the spot,” Jeff Rossen of NBC News said in a video report on the technology.
Judges refuse to order fix for court software that put people in jail by mistake -- On Wednesday, a California appeals court denied efforts to overturn a county court’s decision not to intervene in an ongoing dispute between the public defender’s office and the administrative arm of the Alameda County Superior Court itself. The dispute is over allegedly flawed court software. The public defender, Brendon Woods, has argued since December 2016 that a recent upgrade is inadequate for Alameda County and has resulted in many mistaken jailings. In March 2017, a local judge rejected Woods’ demands to fix the software, which is known as Odyssey Court Manager and made by Tyler Technologies. The 1st Appellate District, a state-level appeals court based in San Francisco, ruled that Woods lacked standing to bring the appeal “in his own right.” Even if there was standing, the plaintiffs did not establish that they would “suffer harm or prejudice in a manner that cannot be corrected on appeal.” “They also fail to show that they lack an adequate remedy at law, as they may move for correction of erroneous records at any time,” the 1st District continued. As Ars reported in December 2016, the Alameda County Superior Court switched from a decades-old courtroom management software to a much more modern one on August 1, 2016. However, since then, the public defender’s office has filed approximately 2,000 motions informing the court that, due to its reportedly imperfect software, many of its clients have been forced to serve unnecessary jail time, be improperly arrested, or even wrongly registered as sex offenders.
"You Want To Play Chicken? Let's Play Chicken" Maine Governor Threatens Shutdown Over Proposed Tax Hike Connecticut isn’t the only state in New England that’s facing a budget showdown today. As Reuters reports, Maine is bracing for a possible partial government shutdown on Friday – what would be the first in the state since 1991 - as Republican Governor Paul LePage has warned he will reject any budget deal that does not cut income taxes. LePage, a second-term Republican who faced national scrutiny and calls to resign earlier this year after making an allegedly racist comment about out-of-state drug dealers worsening the heroin epidemic in Maine, said he would declare a state of civil emergency if a budget is not reached by midnight, which would keep state police, prisons, parks and tax collection services but close most other aspects of state government, according to Reuters. "I will tell you this: If they put a tax increase, ready for a shutdown. End of story," LePage said in a Thursday interview on Maine's WGAN radio. "They're playing chicken at 100 miles per hour and I'm telling you something, you want to play chicken, let's play chicken."The conflict at the center of the budget showdown is the issue of funding the state’s schools,as Reuters explains.“Legislators are negotiating a roughly $7 billion two-year budget, with the main sticking point being how to fully fund state schools. Voters in November passed a measure imposing a 3 percent income tax on state residents who earn more than $200,000 a year, a measure the governor and statehouse Republicans object to.The Democratic Speaker of the state House of Representatives, Sara Gideon, has blasted the threat of a shutdown, saying earlier this week, "We must find a path forward and close this budget."Maine state law gives the governor 10 days to respond to any budget passed by the legislator. LePage warned on Thursday he planned to wait that long before vetoing any bu dget that raised taxes. Most of the government would be shut during that time.”
Maine To Begin Shutdown After Gov. LePage Says He Won't Sign Budget Bill - After Maine Gov. Paul LePage delivered an ultimatum to state lawmakers, promising to provoke a government shutdown should the state's legislature hand him a budget that includes a tax increase, it appears the governor intends to keep his word. LePage told reporters at the state capital that he won't sign anything Friday, ensuring that a shutdown will begin at midnight, because the current budget proposalwhich was endorsed late Thursday by a special panel of lawmakers but has not yet been approved by the state legislature, includes a 1.5% lodging tax increase.According to the Bangor Daily News, the budget package currently under consideration would raise the lodging tax from 9% to 10.5%. The budget does, however, include a 3% cut to an education surtax on individuals earning more than $200,000. LePage has also taken issue with the size of the $7.1 billion budget. To be sure, it’s not entirely certain that the budget will even make it to the governor’s desk before the day is over. That’s because LePage has asked the state’s House Republicans to oppose the deal, which was negotiated by Senate President Mike Thibodeau, R-Winterport, and House Speaker Sara Gideon, D-Freeport.
The Danger of "Public" Education - Murray Rothbard -- The key issue in the entire discussion is simply this: shall the parent or the State be the overseer of the child? There is no third, or middle, ground in this issue. Some party must control, and no one suggests that some individual third party have authority to seize the child and rear it. It is obvious that the natural state of affairs is for the parents to have charge of the child. The parents are the literal producers of the child, and the child is in the most intimate relationship to them that any people can be to one another. The parents have ties of family affection to the child. The parents are interested in the child as an individual, and are the most likely to be interested and familiar with his requirements and personality. Finally, if one believes at all in a free society, where each one owns himself and his own products, it is obvious that his own child, one of his most precious products, also comes under his charge. The only logical alternative to parental "ownership" of the child is for the State to seize the infant from the parents and to rear it completely itself. To any believer in freedom this must seem a monstrous step indeed. In the first place, the rights of the parents are completely violated, their own loving product seized from them to be subjected to the will of strangers. In the second place, the rights of the child are violated, for he grows up in subjection to the unloving hands of the State, with little regard for his individual personality. Furthermore — and this is a most important consideration — for each person to be "educated," to develop his faculties to the fullest, he needs freedom for this development. We have seen above that freedom from violence is essential to the development of a man's reason and personality. But the State! The State's very being rests on violence, on compulsion. As a matter of fact, the very feature that distinguishes the State from other individuals and groups is that the State has the only (legal) power to use violence. In contrast to all other individuals and organizations, the State issues decrees which must be obeyed at the risk of suffering prison or the electric chair. The child would have to grow up under the wings of an institution resting on violence and restriction. What sort of peaceful development could take place under such auspices?
$70,000 a day in interest — the cost of another short-term CPS budget solution -- Two expensive loans that Chicago Public Schools secured over the last week will cost roughly $70,000 a day in interest for the cash-strapped district under the terms of the deals.The district's borrowing agreements with JPMorgan require CPS to hold $387 million in loans until at least Sept. 29. That means CPS will likely pay a minimum of roughly $7 million in interest, according to a Tribune analysis based on current interest rate forecasts and the terms of both deals.The two loans are to be repaid with pending Illinois education grants that are delayed as state government appears to be on the brink of entering its third consecutive fiscal year without a budget while accumulating billions of dollars' worth of past-due bills. As of June 19, when the district completed the initial loan of $275 million, the state owed the district about $467 million in grants that weren't paid during the just-completed school year. On Monday, the district borrowed an additional $112 million through JPMorgan, also backed with education grants.CPS faces a Dec. 28 deadline to repay or refinance the loans. Should the state fail to come through with the grants by that date, CPS agreed to take on full responsibility to repay the loan — plus interest — using short-term debt or its own cash no later than the end of March.This is what it's come to for a massive school system with metastasizing budget problems: With no savings to burn and Springfield failing to deliver promised grant money, CPS has turned to costly, short-term debt to help pay expenses, including a colossal contribution to the Chicago Teachers' Pension Fund. The temporary reprieve risks adding to the district's budget pressures and further damaging its credibility with a financial sector and weary public that may soon hear of painful budget plans for the coming school year.
Most school districts raising taxes, reducing staff to meet rising costs - Tax increases, furloughs and not replacing retiring employees are three ways area school districts are addressing 2017-18 budget shortfalls that are primarily happening because of increased pension costs and changes to state funding.Although Gov. Tom Wolf and House Republicans proposed a $100 million increase in the state’s 2017-18 budget for basic education funding, they proposed cuts to other school programs, such as a cut of $50 million to school transportation, according to the Campaign for Fair Education funding. Pension costs are projected to rise $140 million, requiring districts to find big chunks of money to make required contributions.The top three actions school administrators plan to take in the 2017-18 school year as a result of budget funding issues are taking money from the fund balance, raising local property taxes and reducing staffing, according to the Pennsylvania School Boards Association’s most recent state of education report. The report states 74.7 percent statewide planned to draw from fund balance, 72.9 percent expected to raise local property taxes and 47.6 percent planned to reduce staff/number of positions.
Stadiums or Schools: An Analysis of Public Expenditures - What we found is that ten states have allocated public funds to fund new professional sports stadiums since 2008. This does not include state expenditures on collegiate or high-school sports facilities. While there are certainly debates we should have over, for example, how much a state spends on high school instruction versus a high school football stadium, because school (i.e. college and high-school) sports facilities are technically part of a school and have some (the size of which is, of course, debatable) educational benefit, we left them out. We therefore focused on public revenue used to finance professional sports stadiums for privately owned teams. The ten states have allocated nearly six billion dollars for these facilities since 2008. What’s troubling is that six of those states–Florida, Georgia, Michigan, New York, Texas and Wisconsin–have, over the same period, cut their education budgets. Those six states have allocated over $4 billion to help finance privately owned sports stadiums while at the same time cutting their state education budgets. Most alarming, three of those states–Georgia, Texas and Wisconsin–rank in the top 12 among states that have cut education budgets since 2008. Ultimately, the issue of using taxpayer dollars to fund privately owned sports stadiums raises larger ethical questions about public expenditures. These questions become particularly important when situated within the recent history of cuts to education budgets and rising college tuition costs in most states. Moreover, in an era of incessant government austerity, shouldn’t we be putting specific fiscal constraints on the lease agreements between professional sports teams and state governments? This seems especially prudent given the fact that virtually every analysis of the long term economic effects of stadiums find no evidence that cities receive anywhere near an attractive return on their investment. Cities, in fact, lose money on these investments. Considering the antitrust exemption enjoyed by sports teams and the often billionaire net worths of their owners, maybe it is time to consider laws that require owners commit a sizeable majority percentage of funding for stadiums in their lease agreements before the public has to commit any funds, or prohibits state support altogether.
Guess who uses public libraries the most? Millennials - CNN -A public library may conjure up an image of a place where a septuagenarian is scouring for books on tape or a harried mom is trying to calm her kids by reading "Where The Wild Things Are."But the biggest users of public libraries today are millennials.Yes, those selfie-snapping, blog-posting millennials are the generation most likely to visit a public library, according to a report out this week.The Pew Research Center report found that 53% of millennials ages 18 to 35 last fall said they have used a public library or bookmobile within the last year. The data doesn't include on-campus libraries.Only 45% of Generation Xers (ages 36-51), 43% of baby boomers (52-70) and 36% of the silent generation (71-88) said they visited a library during the same time period.Technology may explain the survey's findings.Many libraries have modernized facilities with high-speed Internet and 3D printers.That's made them a draw for millennials."These kids are familiar with the fact that the library offers them the bandwidth and wireless access they might not get anywhere else," Julie Todaro, president of the American Library Association, told CNN. Libraries also allow users to check out digital devices such as iPads."Teens see libraries different than their parents or caregivers used to see them," she said.
Want a $1 Million Paycheck? Skip College and Go Work in a Lumberyard -- Sabastian Kleis, the son of a waitress from Rust Belt Ohio, was supposed to be the first person in his family to graduate from college. Instead, he dropped out of Kent State University after two years. By most accounts, Kleis, 24, should be flipping burgers. But on a recent afternoon a lumber company was grooming him for a management job.One of the nation’s largest building-supply chains, 84 Lumber Co., spends millions on ads to drive home its message that learning a trade can be more valuable than earning a college degree. The company pays manager trainees about $40,000 a year, and that’s just the beginning. Those in charge of top-grossing stores can earn $200,000, and in a few cases more than $1 million, including bonuses. Yet, astonishingly, its recruiters have had trouble finding qualified takers. 84 Lumber is in the vanguard of a corporate quest to solve a labor market conundrum: Skilled and high-paying blue-collar jobs go unfilled, while millions take on loans to pay for degrees of dubious financial value. “You can go to college and learn the theology of the Roman Empire,” says Kleis, who just completed a three-day training program at 84 Lumber’s rural Pennsylvania headquarters. “You learn all this ridiculous nonsense, and when you get out, what are you applying that to? I know how to frame a house.” The 250-store chain and other employers are taking that message to the masses. Associated General Contractors of Colorado is spending $2 million on recruiting and apprenticeships. Carpentry Contractors Co. in Minnesota hired a comedian to star in recruiting videos that have racked up a quarter-million views on YouTube.
An Education Worth Fighting For - Jacobin - On April 27, Purdue University’s president, Mitch Daniels, the former governor of Indiana, unveiled a dramatic new program that he and the board of trustees had been fashioning in secret for months. This self-proclaimed world-class university would be acquiring Kaplan University, one of several controversial for-profit, online education companies that have emerged over the last twenty years.The announcement surprised the university community, who learned about the deal either during a hastily called meeting between Daniels and select faculty or through an email message. When the Chronicle of Higher Education interviewed students and professors about the proposed merger, many expressed concern.My colleague David Sanders decried the “Walmartization” of higher education, in which degrees are provided quickly and cheaply. “When speed and cost become more important than quality,” he explained, “faculty are going to object.”The dramatic developments at Purdue point to a number of issues facing universities and colleges in the twenty-first century. While universities have long served the interests of business and the capitalist state, the neoliberal revolution has radically shifted educational priorities, assessments, and budgets, sparking adjunctification, state disinvestment, attacks on faculty tenure, the prioritization of STEM fields, and the introduction of online education. In the face of this barrage, faculty, in alliance with students and other groups, must fight for a free and well-rounded education for all students, fair employment practices for all instructors, and the right to participate in the decision-making process about their institutions’ future.
Cities where student loan borrowers struggle with debt -- To figure out which cities student loan borrowers struggled the most in, we took a look at the top 23 most populous cities in the U.S. based on U.S. Census data. We then compared the average income of our borrowers in each of those cities with the average monthly housing payment and their average monthly student loan payment, to see how affordable student loan payments actually are for borrowers across the country. 5 cities where student loans borrowers struggle the most with debt:
- 1. San Jose, California
- 2. Fort Worth, Texas
- 3. Boston, Massachusetts
- 4. Los Angeles, California
- 5. Denver, Colorado
5 cities where student loans borrowers struggle the least with debt:
- 1. Dallas, TX
- 2. Jacksonville, FL
- 3. Houston, TX
- 4. Columbus, OH
- 5. Austin, TX
The key indicator for affordability was how much of a borrower’s monthly income would go towards their student loan payments and monthly housing costs. In the cities that topped our ranking for the most affordable cities for recent grads — Dallas, Jacksonville, and Houston — borrowers have more of their income left over after paying their monthly loan and housing bills as compared to the other cities on the list. But even in these cities, nearly 27 percent of borrowers’ average monthly income is eaten up by their monthly housing payment and their monthly loan payment alone. That doesn’t even take into account other expenses such as taxes, food, or transportation. That’s not all that different from the cities at the very bottom of our list — San Jose, Fort Worth, and Boston — where more than 30 percent of borrowers’ average monthly income is dedicated to loan and housing payments. The following are the average monthly loan payment, monthly housing payment, and annual income for the nearly 9,000 borrowers in the cities we analyzed:
Federal student loan interest rates to rise Saturday --College students and their families can expect to pay more as they borrow for the fall semester.Starting Saturday, interest rates will rise on new federal loans for 2017-2018.Rates were set based on the Treasury Department's May 10 auction of 10-year notes. For new loans disbursed from July 1, 2017, to June 30, 2018, undergraduates will pay 4.45 percent. That's an increase from this year's rate of 3.76 percent.Graduate students can also expect to pay higher financing costs after Saturday.They will pay 6 percent for a direct unsubsidized loan — which begins accruing interest as soon as the borrower takes out the loan — an increase from 5.31 percent this year.Finally, rates on direct PLUS loans, which both graduate students and parents of undergrads can use, will rise to 7 percent from the current 6.31 percent. The increases don't apply to private student loans.
Fed Raises Student Loan Rates 15% to 4.75 on 10yr Loans and Your Kid is a G-2 Employee - College ain't what it used to be. And student loans are paving the way to indentured servitude possibly for the next generation. In one admittedly cynical scenario we see in the future a large number of college graduates unable to repay student loans. We also see a government unable to disclose that default to the public and risk its own credit rating being downgraded. And we see in this dystopian future recent college graduates being offered deferment and forbearance on their loans if they take government jobs at ridiculously low wages. The deal offered would delay, pay down, or forgive their loans if they work for the US Gov't for 10 years. And with one stroke, the US Government has solved unemployment and credit risk to itself. Via Grant's Interest Rate Observer Beginning on Saturday, July 1st, interest rates on new student loans will be set higher, to 4.45% on ten year debt from the 3.76% rate seen this year for undergraduate students, according to CNBC. Graduate lending rates are also moving north, to 6% as of July 1st from the prior year’s 5.31%. The upward rate reset, which was established by the May 10 auction of 10-year U.S. Treasury notes, corresponds to a similarly higher yield in the 10-year compared to last year. Legislation signed in the 2013 Student Loan Fairness act tied interest rates to that 10 year Treasury. Christine DiGangi of credit.com explains the details: Every year, the undergraduate loan rates are calculated by adding 2.05 percentage points to the high yield of the 10-year note at the last auction prior to June 1. Add 3.6 percentage points to the high yield to determine unsubsidized graduate loan rates, and for PLUS loans, add 4.6 percentage points. That the sting of higher borrowing costs will be felt by a growing membership is a now-self-evident fact; according to data from the New York Fed’s consumer panel, total student loan debt has risen to $1.34 trillion in the first quarter, representing about 10.5% of total consumer liabilities. That compares to $663 billion in student loan debt as of the first quarter 2009 equating to 5.3% of total household borrowings.Overall, average Federal debt load per student reached $30,200 in the first quarter, up from $20,500 in the first quarter of 2009, according to the National Student Loan Data System.
Medicaid patients to ask judge to make Illinois pay its bills faster --- Medicaid patients are going back to court Wednesday to ask a federal judge to require the state of Illinois to start making $1 billion in monthly payments to the program that provides medical care for the poor, after talks with the state broke down.The request comes as the state has amassed about $2 billion in unpaid bills owed to Medicaid doctors and hospitals amid its two-year budget impasse. Pushing $1 billion to the front of Illinois' long waiting list for payments would cost the already cash-strapped state about $550 million every month once federal money is factored in. That means the Illinois comptroller might have to violate other court orders and state laws that require prompt payouts for state employee salaries, debt payments and pension fund contributions. A federal court in 2015 ordered the state to pay the Medicaid bills, but cash-flow problems have made it difficult for the comptroller's office to find the cash to make the payments. Illinois is nearly $15 billion behind on its bills as a result of the budget impasse, including the $2 billion owed to Medicaid doctors and hospitals. Earlier this month, federal Judge Joan Lefkow ordered Comptroller Susana Mendoza to start making a "substantial" dent in the Medicaid bill backlog. The judge gave the state and Medicaid recipients time to negotiate how much should be paid, and on what schedule. Those talks have not been productive, the attorneys for the patients wrote in a motion filed Tuesday with the court. Now, the lawyers are asking Lefkow to order the comptroller to pay $586 million each month for current Medicaid claims and $500 million for the next four months to pay down the overdue bills. Because the federal government matches state spending on the Medicaid program, the lawyers said they expect the payments to cost the state $293 million and $250 million respectively.
Talks over boosting Illinois Medicaid payments fail - (Reuters) - A U.S. judge should order Illinois to pay Medicaid providers about $1 billion a month to ensure medical care continues for the three million recipients of the health program after talks with the state reached an impasse, according to a court filing on Monday. The move would cause a huge problem for the cash-strapped state, which has accumulated a $15 billion bill backlog due to a budget stalemate between its Republican governor and Democrats who control the legislature. It could force Illinois to stop making full payments on other state-mandated or court-ordered spending such as pensions and payroll. The filing in U.S. District Court by attorneys representing Medicaid recipients asked Judge Joan Lefkow to order the state to pay $500 million a month for four months to start reducing a $3.1 billion pile of unpaid bills owed to managed care organizations that turn pay doctors and others. As long as Illinois remains without an enacted budget, the proposed order calls for the state to spend an additional $586 million a month to cover Medicaid-related bills incurred after June 30, 2017. The proposed order noted that federal reimbursements for Medicaid would reduce Illinois' outlay to $543 million a month. The two sides are scheduled to appear on Wednesday before Lefkow, who previously ruled Illinois' minimal payments to managed care organizations did not comply with federal consent decrees that resulted from two cases filed against the state in 1992. The judge had ordered negotiations aimed at getting Illinois to "substantial" compliance with the decrees, noting the state has managed to make its monthly bond and pension payments on time and in full.
Illinois Tells Court It Can't Pay Much More for Medicaid (AP) — A lawyer has told a federal judge in a civil case surrounding billions of dollars in unpaid Medicaid bills that trying to squeeze money out of Illinois as it heads into a third year without a budget is like trying to squeeze "blood out of a stone." His comments came at a hearing Wednesday in Chicago on a request from Medicaid recipients that Judge Joan Lefkow order Illinois to pay $1 billion a month to ensure care for the poor and others isn't jeopardized. Illinois would pay half and federal funds would match that.State attorney Brent Stratton said Illinois can't come close to finding a spare $500 million. He said it could pay $150 million at best, half paid by federal funds. Lefkow said she hoped to rule Friday.
California Health Care Bill: Big Corporate Money Opposes Single-Payer Proposal - David Sirota - The so-called single-payer system has been a long-sought goal of progressive groups, who now hope that California lawmakers will pass a bill to create such a system. Proponents hope the system could then begin moving the United States to follow Canada, which saw its own national single-payer system first begin in the province of Saskatchewan. But before that happens, single-payer proponents are going to have to overcome powerful resistance. While California is known as a liberal stronghold, industry groups with a financial interest in blocking the measure are lining up in opposition — and they have poured cash into the campaigns of key state lawmakers who will decide the fate of the bill. Since the 2010 election, the 24 lawmakers on the two California legislative committees that will consider the single-payer legislation have collectively received more than $819,000 in donations from the industry groups that are officially opposing the measure. The cash haul includes more than $80,000 to the chairmen of the Assembly and Senate health committees, the latter of which is set to consider the legislation at a public hearing Wednesday. The groups opposing the bill are listed on a new state report. It also lists the bill’s supporters — primarily grassroots advocacy organizations and labor unions rather than corporate groups. In addition to the cash that has flowed to the individual legislators from corporate groups opposing the legislation, California’s Democratic and Republican parties received more than $2.2 million from the same groups in the last four election cycles. House Speaker Anthony Rendon, Senate President Kevin De Leon and Gov. Jerry Brown, all Democrats, have also separately received a combined $370,000 from the groups. Brown recently expressed skepticism about the single-payer legislation.
Democrats Help Corporate Donors Block California Health Care Measure, And Progressives Lose Again -- As Republican lawmakers grapple with their unpopular bill to repeal Obamacare, Democrats have tried to present a united front on health care. But for all their populist rhetoric against insurance and drug companies, Democratic powerbrokers and their allies remain deeply divided on the issue — to the point where a political civil war has spilled into the open in America’s largest state.In California last week, Democratic state Assembly Speaker Anthony Rendon helped his and his party’s corporate donors block a Democrat-sponsored bill to create a universal health care program in which the government would be the single payer.Rendon’s decision shows how progressives’ ideal of universal health care remains elusive — even in a liberal state where government already foots 70 percent of the total health care bill. Until Rendon’s move, things seemed to be looking up for Democratic single-payer proponents in deep blue California, which has been hammered by insurance premium increases. There, the Democratic Party — which originally created Medicare — just added a legislative supermajority to a Democratic-controlled state government that oversees the world’s sixth largest economy. That 2016 election victory came as a poll showed nearly two-thirds of Californians support the creation of a taxpayer-funded universal health care system in a state whose population is roughly the size of Canada — which already has such a system. California’s highest-profile federal Democratic lawmaker recently endorsed state efforts to create single-payer systems, and 25 members of its congressional delegation had signed on to sponsor a federal single-payer bill.
Patients May be the New Payers, But Two in Three Do Not Pay Their Hospital Bills in Full - A new TransUnion Healthcare analysis revealed a significant rise in the percentage of patients that didn’t pay their hospital bills in full. Approximately 68% of patients with bills of $500 or less did not pay off the full balance during 2016 – up from 53% in 2015 and 49% in 2014. The analysis was released today at the 2017 Healthcare Financial Management Association's (HFMA) Annual National Institute in Orlando in conjunction with a book signing by TransUnion Healthcare’s Jonathan Wiik. Wiik’s new book, titled “Healthcare Revolution: The Patient is the New Payer,” explores how the financing and delivery of healthcare has changed significantly due to major shifts in coverage, payments and legislation. “There are many reasons why more patients are struggling to make their healthcare payments in full, the most prominent of which are higher deductibles and the increase in patient responsibility from 10% to 30% over the last few years,” said Wiik, author of the book and also principal for healthcare revenue cycle management at TransUnion. “This shift in healthcare payments has been taking place for well over a decade, but we are seeing more pronounced changes in how hospital bills are paid during just the last few years.” The trend of not paying off balances in full may only just be commencing. TransUnion Healthcare’s analysis projects that by the year 2020, the percentage of patients not paying their bills in full will rise to 95%. The study also revealed that the percentage of patients that have made partial payments toward their hospital bills has gone down dramatically from 89-90% in 2015-2016 to 77% in 2016.
U.S. Births decreased in 2016, Women 30-34 Now have Highest Birth Rate --From the National Center for Health Statistics: Births: Provisional Data for 2016. The NCHS reports:The provisional number of births for the United States in 2016 was 3,941,109, down 1% from 2015. The general fertility rate was 62.0 births per 1,000 women aged 15–44, down 1% from 2015 to a record low for the United States. ...The provisional birth rates for teenagers aged 15–17 and 18–19 were 8.8 and 37.5 births per 1,000 women, respectively, down by 11% and 8% from 2015 and record lows for both groups..The provisional birth rate for women aged 20–24 was 73.7 births per 1,000 women in 2016, a decline of 4% from 2015 (76.8), reaching again another record low for this age group...The rate for women aged 25–29 was 101.9 births per 1,000 women, down 2% from 2015 (104.3) and another record low for this age group....The provisional birth rate for women aged 30–34 in 2016 was 102.6 births per 1,000 women, up 1% from 2015 (101.5) to the highest rate for this age group since 1964....The provisional birth rate for women aged 40–44 in 2016 was 11.4 births per 1,000 women, up 4% from 2015 (11.0) to the highest rate for this age group since 1966.Here is a long term graph of annual U.S. births through 2016 ...
America's Fertility Rate Falls To Record Low --The US isn't yet grappling with the economic disaster that is a shrinking popuation - unlike Japan. Though it's starting to look like a not-too-distant possibility. US birthrates fell to yet another historic low in 2016 as a whirlwind of economic and cultural factors inspire more women to delay, or forgo, having children. According to provisional data for the fourth quarter provided by the CDC, the US birthrate has declined to 62 births per 1000 women – its lowest level on record, and down from 62.5 in 2015.This is especially troubling because demographers worry that a dwindling birth rate will hurt economic growth and tax revenues needed to fund transfer payments to a growing elderly population, as more members of the baby boomer generation age into retire. The CDC did not say why the birth rate is declining. But according to Axios, research and surveys have shown several reasons, including wider availability of birth control, personal economic instability from student loans or other debt, women focused on launching a career before starting a family, and a growing acceptance that not everyone wants to have children.
Why opioid deaths are this generation’s Aids crisis -- According to official statistics opioids, including heroin and prescription versions of the drug, killed more than 33,000 people in the US in 2015 – a record surge that is expected to see yet more increases A New York Times analysis earlier this month estimated that overdose deaths are rising faster than ever. And, as the Guardian has reported, more US citizens die from overdoses than from gun fatalities or car crashes. It is now becoming the leading cause of death for the under-50s. Ciccarone draws parallels with the early years of the HIV epidemic, including that those affected are vilified by wider society. Indeed, the problem is increasingly being called this generation’s Aids crisis. At its peak in 1995, that epidemic claimed 51,000 US lives. Overdoses are spiralling partly because illicitly manufactured Fentanyl, a synthetic opioid, and similar drugs are entering the US illegally. Fentanyl is around 50 times more potent than heroin (and in some forms much more so). A combination of its strength and the fact that users aren’t aware that parts of the heroin supply have been laced with it or that it’s often used in fake prescription opioids, makes it especially lethal. This crisis isn’t confined to the US. Canada is in the midst of its own opioid crisis. However, coinciding with last month’s Harm Reduction International conference in Montreal, the Canadian government took what was seen as a world-leading step to confront the problem. It passed legislation making it easier to open supervised injection sites so that users can inject safely and, should an overdose occur, trained medical professionals are on site to provide life-saving help such as administering anti-overdose medication. It’s the epitome of a sensible harm reduction approach that aims to reduce or eliminate harm rather than, as is often the case, punish or stigmatise users. The magnitude of the north American crisis may be unrivalled, but there are nevertheless worrying portents for Britain. Published earlier this month, the latest annual analysis from the European Monitoring Centre for Drugs and Drug Addiction reported that deaths by overdose in the UK accounted for almost one in three overdose deaths in Europe – primarily related to heroin and other opioids. Thirty-one percent of the total 8,441 deaths recorded in 2015 were in the UK.
STAT forecast: Opioids could kill nearly 500,000 Americans in the next decade -- Opioids could kill nearly half a million people across America over the next decade as the crisis of addiction and overdose accelerates.Deaths from opioids have been rising sharply for years, and drug overdoses already kill more Americans under age 50 than anything else. STAT asked leading public health experts at 10 universities to forecast the arc of the epidemic over the next decade. The consensus: It will get worse before it gets better. There are now nearly 100 deaths a day from opioids, a swath of destruction that runs from tony New England suburbs to the farm country of California, from the beach towns of Florida to the Appalachian foothills. In the worst-case scenario put forth by STAT’s expert panel, that toll could spike to 250 deaths a day, if potent synthetic opioids like fentanyl and carfentanil continue to spread rapidly and the waits for treatment continue to stretch weeks in hard-hit states like West Virginia and New Hampshire. If that prediction proves accurate, the death toll over the next decade could top 650,000. That’s almost as many Americans as will die from breast cancer and prostate cancer during that time period. Put another way, opioids could kill nearly as many Americans in a decade as HIV/AIDS has killed since that epidemic began in the early 1980s. The deep cuts to Medicaid now being debated in Congress could add to the desperation by leaving millions of low-income adults without insurance, according to the nonpartisan Congressional Budget Office.
A Deadly Brain-Invading Worm Is Disturbingly Widespread in Florida -- Scientists in Florida have found traces of rat lungworm in five counties, bolstering the idea that this potentially fatal parasite may be expanding its geographical range on account of—you guessed it—climate change. If this sounds familiar, you’re probably thinking of the recent rash of rat lungworm infections in Hawaii. Previously, over the past 20 years, only two cases of the disease, known as an Angiostrongylus Infection, had been documented in the Pacific island state. But in the past several months, six cases were reported in rapid succession. The parasitic worm, which spreads through an unholy alliance between snails and rats, it endemic to Hawaii, but has also been detected in California, Alabama, Louisiana and Florida. And as as a new study published in PLOS One reveals, the disease’s geographic extent in Florida is far greater than assumed. The new research is adding credence to the idea that climate change might be playing a role in the subtropical worm’s range expansion. Rat lungworm poses a serious health risk to humans and other animals who ingest snails. Fatality rates for the disease are low, but the parasite can cause a form of meningitis, and severe infections can lead to a coma or death. In adults, signs of infection include headaches, stiff neck, fever, vomiting, nausea, and paralysis of the face and limbs. Infected children exhibit nausea, vomiting and fever. According to the US Centers for Disease Control, there is no treatment for an A. cantonensis infection. This malicious worm is dependent on two species for its lifecycle. Snails ingest the parasite by eating infected rat feces. In turn, rats eat the infected snails, and the cycle of despair continues. Humans contract the disease by consuming infected snails—either accidentally or deliberately—or by eating infected frogs or crustaceans, which can also contract the parasite.
The Mere Presence of Your Smartphone Reduces Brain Power, Study Shows — Your cognitive capacity is significantly reduced when your smartphone is within reach — even if it’s off. That’s the takeaway finding from a new study from the McCombs School of Business at The University of Texas at Austin. McCombs Assistant Professor Adrian Ward and co-authors conducted experiments with nearly 800 smartphone users in an attempt to measure, for the first time, how well people can complete tasks when they have their smartphones nearby even when they’re not using them. In one experiment, the researchers asked study participants to sit at a computer and take a series of tests that required full concentration in order to score well. The tests were geared to measure participants’ available cognitive capacity — that is, the brain’s ability to hold and process data at any given time. Before beginning, participants were randomly instructed to place their smartphones either on the desk face down, in their pocket or personal bag, or in another room. All participants were instructed to turn their phones to silent.The researchers found that participants with their phones in another room significantly outperformed those with their phones on the desk, and they also slightly outperformed those participants who had kept their phones in a pocket or bag.The findings suggest that the mere presence of one’s smartphone reduces available cognitive capacity and impairs cognitive functioning, even though people feel they’re giving their full attention and focus to the task at hand. “We see a linear trend that suggests that as the smartphone becomes more noticeable, participants’ available cognitive capacity decreases,” Ward said. “Your conscious mind isn’t thinking about your smartphone, but that process — the process of requiring yourself to not think about something — uses up some of your limited cognitive resources. It’s a brain drain.”
There is no shame worse than poor teeth in a rich world -- More than 126 million people in the US – nearly half the population – had no dental coverage in 2012, according to the US National Association of Dental Plans. In 2007, the New York State Dental Journal reported that while only one-tenth of general physician costs were paid out of pocket, nearly half of all dental costs were settled directly by patients. This reflects spending by the uninsured but also those sharing costs with coverage providers; most plans cover routine cleanings but leave patients to pay for 20 to 50 per cent of fillings, crowns and other big-ticket visits. For those who can’t afford to pay that difference, treatment is delayed and teeth continue to degrade.But expense isn’t the only barrier to dental care. Those on Medicaid find that few dentists participate in the programme due to its low payout. And more than 45 million people in the US live in areas, often rural or impoverished, with dentist shortages, according to the US Department of Health and Human Services. Medicare, as a general rule, doesn’t include dental. In the past year, the Affordable Care Act, or ‘ObamaCare’, has changed many lives for the better – mine included. But its omission of dental coverage, a result of political compromise, is a dangerous, absurd compartmentalisation of health care, as though teeth are apart from and less important than the rest of the body.
Air pollution limits in U.S. inadequate to prevent deaths | Reuters: - With the Trump Administration threatening to loosen air pollution controls, a new study is showing that even existing rules are causing tens of thousands of extra deaths in the United States each year. Researchers used 12 years of data - health records from nearly 61 million Medicare beneficiaries, combined with a massive databank of pollution readings - to link specific air quality levels to death rates. They found that for every increase of just 10 micrograms in small-particle pollution known as PM2.5, the death rate went up 7.3 percent. That's the equivalent of 120,000 fatalities among people age 65 and older, lead author Qian Di of the Harvard T.H. Chan School of Public Health in Boston told Reuters Health in a telephone interview. For every 10 part-per-billion rise in ozone concentration, the mortality rate rose by 1.1 percent, producing an extra 19,000 deaths just among the elderly. Even in years when the concentrations in a region were low, "we continued to see significant associations between exposure and mortality," Di and his colleagues write in the New England Journal of Medicine. Their conclusion: current U.S. rules are not strict enough to prevent pollution-related deaths and further reductions in pollution will produce a big drop in fatalities."The Clean Air Act and the Environmental Protection Agency have done great work, but the data indicates that additional effort to reduce PM2.5 and ozone would save lives," Dr. Brian W Christman, who is also a spokesman for the American Lung Association, told Reuters Health by phone. "As a matter of fact, further reduction in PM2.5 below the (federal standard) of 12 micrograms per cubic meter are likely to be even more effective than previous reductions."
California to List Glyphosate as Cancer-Causing; Monsanto Vows Fight (Reuters) - Glyphosate, an herbicide and the active ingredient in Monsanto Co's popular Roundup weed killer, will be added to California's list of chemicals known to cause cancer effective July 7, the state's Office of Environmental Health Hazard Assessment (OEHHA) said on Monday. Monsanto vowed to continue its legal fight against the designation, required under a state law known as Proposition 65, and called the decision "unwarranted on the basis of science and the law." The listing is the latest legal setback for the seeds and chemicals company, which has faced increasing litigation over glyphosate since the World Health Organization's International Agency for Research on Cancer said that it is "probably carcinogenic" in a controversial ruling in 2015. Dicamba, a weed killer designed for use with Monsanto's next generation of biotech crops, is under scrutiny in Arkansas after the state's plant board voted last week to ban the chemical. OEHHA said the designation of glyphosate under Proposition 65 will proceed following an unsuccessful attempt by Monsanto to block the listing in trial court and after requests for stay were denied by a state appellate court and the California's Supreme Court. Monsanto's appeal of the trial court's ruling is pending. "This is not the final step in the process, and it has no bearing on the merits of the case. We will continue to aggressively challenge this improper decision," Scott Partridge, Monsanto's vice president of global strategy, said. Listing glyphosate as a known carcinogen under California's Proposition 65 would require companies selling the chemical in the state to add warning labels to packaging. Warnings would also be required if glyphosate is being sprayed at levels deemed unsafe by regulators.
Appeals Court Denies Monsanto's Request for Reconsideration Post Controversial Reuters Story -- Monsanto , the maker of the glyphosate -based herbicide Roundup, filed a motion June 16 in U.S. District Court, Northern District of California to reconsider the chemical's addition to California's Proposition 65 list of agents known to cause cancer. The agrochemical giant made this move based on a June 14 Reuters investigation of Dr. Aaron Blair, a lead researcher on the World Health Organization's International Agency for Research on Cancer (IARC) committee, that classified glyphosate as a "2A probable human carcinogen" in March 2015. On June 22, Monsanto's petition for review and application for stay were denied by the court. Earlier this year, California became the first state to consider requiring Monsanto to label glyphosate as a chemical "known to the state to cause cancer" in accordance with the Safe Drinking Water and Toxic Enforcement Act of 1986, better known as Prop 65. The designation was compelled by the IARC's glyphosate classification . Glyphosate is at the center of hundreds of cancer lawsuits in which plaintiffs across the U.S. claim that they or their loved ones developed non-Hodgkin's lymphoma due to exposure to Monsanto's Roundup, pointing in part to the IARC cancer classification. But the St. Louis-based agrochemical maker has vehemently defended the safety of its star product and has previously attempted to block the herbicide from California's cancer list. The Reuters piece accused Dr. Blair, a top epidemiologist from the U.S. National Cancer Institute, for failing to share "important" scientific data from the Agricultural Health Study (AHS) he conducted with other scientists to assess the herbicide glyphosate for the IARC. Dr. Blair, who worked on the AHS study and the IARC analysis testified [starting on page 70] that he supported IARC's carcinogenicity finding notwithstanding the AHS results, repeatedly asserting that the AHS study was unfinished and unpublished, and IARC required that findings only rely upon studies that were complete, therefore the incomplete AHS data could not have been relied upon by IARC scientists. Monsanto and its industry allies accused Blair of deliberately concealing data. Blair called the accusations "absolutely incorrect." Reuters reported that IARC is "sticking with its findings.”
California to list glyphosate, main compound in Monsanto’s Roundup, as carcinogenic - -- The California Environmental Protection Agency said it will list glyphosate, the main compound in Monsanto's Roundup herbicide, as a chemical known to cause cancer.The California EPA's Office of Environmental Health Hazard Assessment said it will add glyphosate to its state-wide list created under the Safe Drinking Water and Toxic Enforcement Act of 1986, or Proposition 65, which mandates the state government maintain a list of naturally occurring or synthetic chemicals known to cause cancer or birth defects or other reproductive harm.The OEHHA said it would add glyphosate as a chemical known to cause cancer in late March pending a lawsuit from Monsanto."Monsanto's challenge was unsuccessful in the trial court," the OEHHA said in a statement. "Although the case has been appealed, no stay of the listing has been granted. Therefore, glyphosate is being added to the Proposition 65 list on July 7."California's list must be updated at least once a year and includes more than 800 chemicals since it was first published in 1987.The World Health Organization considers glyphosate as "probably carcinogenic." Countries that have banned glyphosate include Malta, Sri Lanka, the Netherlands and Argentina. In Colombia, President Juan Manuel Santos' government stopped using glyphosate, which was used in aerial fumigations to destroy illegal coca plantations. Glyphosate was used to remove the leaves of the coca plant in Colombia for about 20 years.
Corn better used as food than biofuel, study finds -- Corn is grown not only for food; it is also used as an important renewable energy source. But renewable biofuels can come with hidden economic and environmental issues.The question of whether corn is better used as food or as biofuel has persisted since ethanol came into use. Now, for the first time, researchers have quantified and compared these issues in terms of the economics of the entire production system to determine if the benefits of biofuel corn outweigh the costs.Scientists Praveen Kumar and Meredith Richardson of the University of Illinois at Urbana-Champaign published their findings this week in the American Geophysical Union journal Earth's Future.The results show that using biofuel corn doesn't completely offset the environmental effects of producing that corn.As part of a National Science Foundation (NSF) project to study the environmental effects of agriculture in the U.S., the Illinois researchers obtained a comprehensive view of agricultural ecosystems to analyze crops' effects on the environment in monetary terms. The research was conducted as part of NSF's Intensively Managed Landscapes Critical Zone Observatory (CZO), one of a network of nine NSF CZOs across the country.
Dakota Drought Sparks Biggest Spring Wheat Price Spike In 7 Years -- The price of your bagels and pizzas are about to rise as the cost of so-called 'aristocrat of wheat' - Hard red spring wheat - is exploding on the back of a worsening drought in the US High Plains. Futures soared as much as 8.5 percent on Thursday, the most intraday since 2010, after Canada cut its planting outlook and drought conditions expand in U.S. growing states. Prices are up 31 percent in June, beating the gains for 80 other commodities tracked by Bloomberg. As Bloomberg reports, the northern U.S. has been plagued by dryness this year, and conditions for the domestic spring-wheat crop are their worst for this time since 1988.Now, traders are eyeing a smaller crop in Canada, too. The country’s government on Thursday cut its outlook for the total wheat acreage more than analysts expected and said canola plantings will top the grain for the first time ever. “Millers will import wheat out of Canada if they can’t buy locally from U.S. farmers,” Brian Hoops, president of Midwest Market Solutions in Springfield, Missouri, said by telephone. “With smaller wheat acres and some production issues in Canada, as well, that means there’s less product there to market, and demand has not backed off from what we can see.”“Basically, the crop is burning up,” Data released Thursday by the US Drought Monitor show more than 90 per cent of the two states was in drought, with “severe” or “extreme” conditions in dozens of counties.
Households accounted for more than one-third of U.S. food-related energy use in 2012 | USDA --Food-related energy use includes all energy used in the production and preparation of foods and beverages purchased by and for U.S. consumers. In 2012, a total of 11.9 quadrillion British thermal units (qBtu) were used throughout all stages of the food system. At the household level, 3.5 qBtu were used in kitchens and 0.6 qBtu were used for household food-related transportation. This includes energy used directly—to drive to the grocery store and to power refrigerators, stoves, and other kitchen appliances in the home—and indirectly—to build those appliances. The total 4.1 qBtu used by households accounted for over one-third of energy use attributed to the food system. Food and beverage processors, such as meat packers, commercial bakeries, and breweries, used 2.2 qBtu in 2012. Electricity was the most used energy commodity at 6.8 qBtu, or 58 percent of the total. Petroleum products and natural gas contributed similar shares at 20 and 18 percent, respectively, while other energy such as renewables, ranked last in its contribution to food system energy use at 0.5 trillion Btu. This chart appears in "The Relationship Between Energy Prices and Food-Related Energy Use in the United States" in ERS’s Amber Waves magazine, June 2017.
A million bottles a minute: world’s plastic binge ‘as dangerous as climate change’ - A million plastic bottles are bought around the world every minute and the number will jump another 20% by 2021, creating an environmental crisis some campaigners predict will be as serious as climate change.New figures obtained by the Guardian reveal the surge in usage of plastic bottles, more than half a trillion of which will be sold annually by the end of the decade. The demand, equivalent to about 20,000 bottles being bought every second, is driven by an apparently insatiable desire for bottled water and the spread of a western, urbanised “on the go” culture to China and the Asia Pacific region.More than 480bn plastic drinking bottles were sold in 2016 across the world, up from about 300bn a decade ago. If placed end to end, they would extend more than halfway to the sun. By 2021 this will increase to 583.3bn, according to the most up-to-date estimates from Euromonitor International’s global packaging trends report.Most plastic bottles used for soft drinks and water are made from polyethylene terephthalate (Pet), which is highly recyclable. But as their use soars across the globe, efforts to collect and recycle the bottles to keep them from polluting the oceans, are failing to keep up. Fewer than half of the bottles bought in 2016 were collected for recycling and just 7% of those collected were turned into new bottles. Instead most plastic bottles produced end up in landfill or in the ocean. Between 5m and 13m tonnes of plastic leaks into the world’s oceans each year to be ingested by sea birds, fish and other organisms, and by 2050 the ocean will contain more plastic by weight than fish, according to research by the Ellen MacArthur Foundation.Experts warn that some of it is already finding its way into the human food chain. Scientists at Ghent University in Belgium recently calculated people who eat seafood ingest up to 11,000 tiny pieces of plastic every year. Last August, the results of a study by Plymouth University reported plastic was found in a third of UK-caught fish, including cod, haddock, mackerel and shellfish. Last year, the European Food Safety Authority called for urgent research, citing increasing concern for human health and food safety “given the potential for microplastic pollution in edible tissues of commercial fish”.
EPA moves to repeal Obama water rule | TheHill: The Environmental Protection Agency (EPA) formally proposed Tuesday to repeal the Obama administration’s controversial regulation that extended the reach of the federal government over small waterways. Under the proposal from the EPA and the Army Corps of Engineers, federal officials would go back to enforcing a guidance document from 2008 when deciding whether a waterway is subject to federal oversight for pollution control purposes. It’s the first formal step by the EPA to fulfilling President Trump’s campaign promise to repeal the 2015 “waters of the United States” regulation, which Republicans and numerous industry groups have long argued would have subject farmers, developers and others to costly and time-intensive federal permitting for everyday activities like moving soil. The Trump administration plans to separately write a new regulation to replace the water rule with a more industry-friendly definition of federal power over waterways. “We are taking significant action to return power to the states and provide regulatory certainty to our nation's farmers and businesses,” EPA Administrator Scott Pruitt said in a statement. “This is the first step in the two-step process to redefine ‘waters of the U.S.’ and we are committed to moving through this re-evaluation to quickly provide regulatory certainty, in a way that is thoughtful, transparent and collaborative with other agencies and the public.”The Obama rule asserted federal power over ponds, headwaters, wetlands and other water bodies that feed into larger water areas, but whose Clean Water Act jurisdiction was unclear because of conflicting Supreme Court cases.
Trump administration to propose repealing rule giving EPA broad authority over water pollution -- President Trump’s administration will revoke a rule that gives the Environmental Protection Agency broad authority over regulating the pollution of wetlands and tributaries that run into the nation’s largest rivers, EPA Administrator Scott Pruitt said Tuesday. Testifying before Congress, Pruitt — who earlier said he would recuse himself from working on active litigation related to the rule — said that the agency would “provide clarity” by “withdrawing” the rule and reverting standards to those adopted in 2008. Pruitt, as Oklahoma attorney general, had sued EPA over the regulation, saying it “usurps” state authority, “unlawfully broadens” the definition of waters of the United States and imposes “numerous and costly obligations” on landowners. A withdrawal was expected, based on the executive order Trump signed in February targeting the rule. But this is the first clear signal of how the EPA will act on the president’s order. The current rule, known as Waters of the United States (WOTUS), unambiguously gives EPA and the Army Corps of Engineers authority that many think the agencies already possessed under the Clean Water Act. The 1972 law gave the agencies control over navigable rivers and interstate waterways, but a series of court rulings left the extent of that power ambiguous. The Obama administration sought to end a decade of confusion by finalizing the WOTUS rule, which took effect in August 2015, triggering protests from a variety of real estate development, agricultural and industrial interests. The existing regulation covers wetlands adjacent to either traditional navigable waters or interstate waters, as well as streams serving as tributaries to navigable waters. The rule says that wetlands and tributaries must be “relatively permanent,” a phrase used in previous court opinions, which means they can be intermittent. Defining it this way extends federal jurisdiction to 60 percent of the water bodies in the United States. Trump signed an executive order in late February calling on EPA and the Army Corps of Engineers to revisit the regulation, a move he described as “paving the way for the elimination of this very destructive and horrible rule.”
EPA, Agencies to Rescind Clean Water Rule -- naked capitalism by Jerri-lynn Scofield - The Environmental Protection Agency (EPA), Department of Army, and Army Corps of Engineers yesterday announced “they are proposing a rule to rescind the Clean Water Rule– adopted in 2015– by re-codifying the regulatory text that existed prior to 2015 defining “waters of the United States” or WOTUS,” according to this EPA press release from yesterday. A February 28 Trump executive order kicked off the process for reconsidering exactly to which waters the EPA’s clean water regulatory policy applies. That order said: It is in the national interest to ensure that the Nation’s navigable waters are kept free from pollution, while at the same time promoting economic growth, minimizing regulatory uncertainty, and showing due regard for the roles of Congress and the States under the Constitution. In order to meet these objectives, the EPA press release announces that the three agencies “intend to follow an expeditious, two-step process that will provide certainty across the country.” Exactly what the agencies propose to do is spelled out in this 42-page document. As the first step in this rule-making process, the proposed new Trump administration rule would recodify the identical regulatory text that existed prior to adoption of the 2015 Clean Water Rule in 2015 and that currently remains in place following an October 2015 decision by the U.S. Court of Appeals to stay the 2015 rule. So, the press release explains, that the new rule-making, “when final, will not change current practice with respect to how the existing definition applies.” The second-step in the rule-making– upon which the agencies have already embarked– will be “a re-evaluation and revision of the definition of “waters of the United States” in accordance with the [February] Executive Order,” again according to the press release. More detailed information about the history of the Clean Water Rule, may be found at this EPA web portal.
No One Has the Data to Prevent the Next Flint - You have no real way of knowing if your town, your family, or your children face the kind of water contamination that exposed everyone in Flint, Michigan, to lead poisoning. Not because Flint is an outlier–it may, in fact, be the norm—but because no one has enough data to say for sure. Five state and local officials in Flint face involuntary manslaughter charges for failing to alert the public to the looming health crisis there. Yet a recent Reuters report found 3,000 geographic areas in the US with lead poisoning rates twice that of Flint. But you would be hard-pressed to determine whether you lived in one of them because the United States lacks the data—and data collection requirements—needed to know for sure whether people are being poisoned by their drinking water. President Trump’s proposed cuts to the Environmental Protection Agency’s could make it even harder to know. “The data gaps are so huge. It is abominable. We have a huge number of people in this country living completely in the dark,” Some 170,000 public water systems provide water to Americans. The federal government regulates that water under laws like the Safe Water Drinking Act and the Lead and Copper Rule, but leaves it to states, utilities, and property owners to test that water and enforce the laws. Yet the number of taps that must be tested remains woefully small. The rules require water systems serving at least 100,000 people, for instance, to test 100 taps every six months. The requirements decrease from there. Systems that serve, say, 90,000 people must test just 60 taps. Smaller systems, only five. And certain systems qualify for reduced testing. In some cases, that means testing once every nine years.
Some U.S. States Relax Restrictions On Cladding Suspected In Grenfell Tower Fire - The type of siding or "cladding" used on the Grenfell Tower in London — and suspected of feeding the massive fire that killed dozens of residents — is not allowed on the exterior of tall buildings across most of the U.S. But a few states and the District of Columbia have relaxed their building codes in recent years and have started to permit the material's use. The cladding installed on Grenfell Tower as part of a 2016 refurbishing project has become a focus for investigators. NPR's Frank Langfitt has confirmed that the cladding had a combustible polyethylene core rather than a more fire-resistant mineral core.At least 79 people died last week when the fire spread quickly through the 24-story public housing tower. Investigators say a refrigerator started the fire, which then spread to the cladding outside. Reuters reports that at least 600 buildings in England use the same type of cladding and that authorities are testing the material to determine whether other buildings are at risk of fire.In the United States, most jurisdictions don't allow this type of cladding for buildings higher than 40 feet.
The World Is Burning - Record high temperatures are gripping much of the globe and more hot weather are to come. This implies more drought, more food insecurity, more famine and more massive human displacements.In fact, extremely high May and June temperatures have broken records in parts of Europe, the Middle East, North Africa and the United States, the World Meteorological Organization (WMO) reported, adding that the heat-waves have arrived unusually early. At the same time, average global surface temperatures over land and sea are the second highest on record for the first five months of 2017, according to analyses by the US National Oceanic and Atmospheric Administration (NOAA), NASA-Goddard Institute for Space Studies and the European Centre for Medium Range Weather Forecasting Copernicus Climate Change Service. Meanwhile, the world has marked New Inhumane Record: One Person Displaced Every Three Second. Nearly 66 million people were forcibly displaced from their homes last year, the United Nations High Commissioner for Refugees (UNHCR) informed in its report Global Trends, released ahead of the World Refugee Day on June 20. The figure equates to “one person displaced every three seconds – less than the time it takes to read this sentence. Such an unprecedented high records of human displacements is not only due to conflicts. In fact, advancing droughts and desertification also lay behind this “tsunami” of displaced persons both out of their own countries and in their own homelands. On this, the United Nations Convention to Combat Desertification (UNCCD) on the occasion of the World Day to Combat Desertification (WDCD) on June 17, alerted that by 2025 –that’s in less than 8 years from today– 1.8 billion people will experience absolute water scarcity, and two thirds of the world will be living under water-stressed conditions. Now it is feared that advancing drought and deserts, growing water scarcity and decreasing food security may provoke a huge ‘tsunami” of climate refugees and migrants.
Earth is losing its fire power -- The world's open grasslands and the beneficial fires that sustain them have shrunk rapidly over the past two decades, thanks to a massive increase in agriculture, according to a new study led by University of California, Irvine and NASA researchers published today in Science. Analyzing 1998 to 2015 data from NASA's Terra and Aqua satellites, the international team found that the total area of Earth's surface torched by flames had fallen by nearly 25 percent, or 452,000 square miles (1.2 million square kilometers). Decreases were greatest in Central America and South America, across the Eurasian steppe and in northern Africa, home to fast-disappearing lions, rhinoceroses and other iconic species that live on these fire-forged savannas. "A billion and a half more people have been added to the planet over the past 20 years, livestock has doubled in many places, and wide-open areas once kept open by fire are now being farmed," said James Randerson, Chancellor's Professor of Earth system science at UCI. "Our fire data are a sensitive indicator of the intense pressure humans are placing on these important ecosystems." Modelers had forecast that as global temperatures rose, fire risk would soar. But the researchers learned that widely used prediction tools didn't account for surging population growth or the conversion of grasslands and subsistence farming to industrial agriculture in some of the world's poorest regions.Fire has been an important factor for millennia in the maintenance of healthy grasslands, which support many large mammals. Without occasional blazes, trees and shrubs encroach on this habitat, which covers about a fifth of the planet's terrain. The researchers discovered a profound transformation over the past two decades.
Wildfires May Be More Toxic Than Scientists Thought - They made for a large and diverse group: chemists and geoscientists, meteorologists and climatologists, engineers and pilots. They had the keys to an unusual aircraft: a NASA-owned DC-8 jumbo jet with a laboratory inside it. Their primary mission took them over patches of woods across the U.S. Southwest, where they measured the kind of chemicals off-gassed by trees.But on that particular morning they took the plane slightly north, toward the Sierra Nevadas, where an enormous wildfire—known as the Rim Fire—was chewing through ancient pine forest. And after a couple of hours of flying, once they got to the fire, they drove the plane straight into its enormous plume of smoke—and then they did it again, and again. This was not the first time they had flown the plane through a smoke cloud. NASA’s DC-8 had made two earlier trips to different wildfires in Oregon and Washington that summer. It measured towers of soot and ash close to the ground and more than 10 miles in the air, from the bottom of the troposphere to the lower reaches of the stratosphere.“The thing that you’re always surprised by when you fly through the fire is that everything that you can measure, you see enhanced,” said Greg Huey, an atmospheric chemist at Georgia Tech and one of the leaders of the mission. “You just get big signals for everything in one of these fires.”And they got one big signal in particular. The initial results of the three flights were published this month in the Journal of Geophysical Research: Atmospheres.The research could dramatically revise scientists’ understanding of how much pollution is caused by wildfires.Specifically, Huey and his colleagues found that wildfires seem to emit three times as much of the smallest type of particulate matter—PM1, particulate matter less than 1 micrometer thick—as is commonly estimated. This would be enough to notably worsen air quality in nearby cities.
Burger King pledges to end deforestation by 2030, scientists skeptical | Reuters: - The owner of Burger King has pledged to eliminate deforestation from its supply chains by 2030 but scientists say the company is not moving fast enough to stop its hamburgers from destroying rainforests and the communities who depend on them. Restaurant Brands International, one of the world's largest fast-food restaurant operators, has been criticized by activists for buying soy and beef from newly deforested land in Brazil and other South American countries. It its first sustainability report, the firm, which also owns Tim Hortons and Popeyes, committed to making sure its suppliers stopped clearing primary forests or disturbing lands with a high conservation value by 2030. "It is our intention to report regularly on our progress towards eliminating deforestation," Restaurant Brands International said in its report released on Thursday. The company also pledged to respect the land rights of communities who live in areas where its suppliers cultivate soy, cattle and other farm products to make sure local people grant informed consent concerning development on their land.
Norway cuts forest protection payments to Brazil to $35 million | Reuters: Norway told visiting Brazilian President Michel Temer on Friday that it would slash its payments to help safeguard the Amazon rainforest in 2017 by more than half to about $35 million because of a rise in forest destruction. Rich from producing oil and gas, Norway has invested more than $1.1 billion in an Amazon Fund since 2008 to help Brazil protect the forests, which are under threat from logging and their conversion to farmland. "I expressed concern that deforestation has risen somewhat (in recent years after past successes)," Prime Minister Erna Solberg told reporters after talks with Temer, who is visiting Oslo to promote investment in Brazil after a trip to Moscow. Temer said Brazil was working to protect the Amazon, for example, by expanding national parks. "Brazil is one of the biggest, if not the biggest, environmental reserves in the world," he said. Norway's Environment Ministry said payments, under a performance-based plan to reward forest protection, were likely to be about $35 million in 2017, around $65 million less than the previous year when fewer forests were destroyed. "This should not in any way be understood as a weakening of our commitment to the partnership," Environment Minister Vidar Helgesen said in a statement. "On the contrary, we stand by our commitments, and if deforestation is brought back down, our payments will go back up." Norway paid about 1 billion Norwegian crowns ($118 million) a year to Brazil from 2011-15, when Brazil successfully slowed forest losses.
How New Dams in Amazon Put Entire World at Risk - What's considered by some to be clean energy could devastate the Amazon, according to new research. A massive increase in hydropower from a series of planned Amazon dams could harm the world's most important rainforest all the way from the slopes of the Andes to the Atlantic Ocean. Altogether, 428 dams are being built or are under consideration along the network of rivers that drain—and nourish—6 million square kilometers of forest spanning nine countries. Of these, around 140 are already finished or under construction. The Amazon is home to four of the world's 10 largest rivers. Of the 34 largest tropical rivers, 20 are in the Amazon region, and these rivers are the source of one fifth of the planet's fresh water. That same flow delivers the nutrient-rich sediments to habitats downstream to support the teeming life of the region, including the canopy that shelters its shrubs, plants, insects, reptiles, amphibians, mammals and birds. Those rivers exchange sediments and nourish a mosaic of wetlands, said Edgardo Latrubesse , a geographer at the University of Texas at Austin, who led a collaboration from 10 universities to assess the potential environmental damage, and report in the journal Nature . "We have to put the risks on the table and change the way people are looking at the problem. We are massively destroying our natural resources, and time urges us to find some rational alternatives for preservation and sustainable development." Dams conserve water, deliver irrigation in the dry season, reduce the threat of flooding and of course provide energy for hydropower. On the other hand, they impose an environmental cost: Sediments vital downstream are trapped upriver and the floods they might prevent are an integral part of the forest's long-term stability . So dams come at a price not normally measured in economic cost-benefit analyses, but they can change a river system and damage an economy all the same.
Lawsuit seeking to save 15K trees from NJ solar farm dismissed (AP)— A lawsuit seeking to block a Six Flags theme park in New Jersey from cutting down nearly 15,000 trees to make way for a solar farm to power the park has been dismissed. A Superior Court judge said in a ruling Monday that the local governing boards in deciding to approve the project proposed by Six Flags Great Adventure and KDC Solar could weigh the environmental advantage of renewable solar energy against other environmental impacts. Environmentalists said the project will have a devastating effect on the environment and they opposed the decision by the Jackson Township committee and planning board to allow the work to go forward. They argued in the lawsuit that the project isn't consistent with the township's master plan. "This project is a black eye for clean energy," Sierra Club director Jeff Tittel said in a statement. "Six Flags can't have green energy by destroying a forest." Project officials say the 21.9-megawatt facility will provide all the park's electrical needs and will be the largest in New Jersey. It is expected to result in a net reduction in carbon emissions of about 216,000 tons over a 15-year period.
Utah officials blame lack of logging for major wildfire (AP) — Insisting that logging could have cleaned up dead, bug-infested trees that are fueling a Utah wildfire, a Republican state lawmaker blamed federal mismanagement and lawsuits by "tree hugger" environmentalists for the blaze that has burned 13 homes and forced the evacuation of 1,500 people. A conservation group called that contention "shameful" and misleading, saying it fails to take into account climate change and drought. In addition, a U.S. Forest Service researcher said logging probably would not have made a big difference in the high-altitude fire that is sending embers from tree-to-tree over long distances — normal for the ecosystem. Utah state Rep. Mike Noel said Tuesday he wants to use the fire near the ski town of Brian Head and a popular fishing lake to highlight the imbalance of power afforded environmental groups under previous presidents and to ease bureaucratic and legal blockades for logging companies. He believes the Trump administration will provide a more receptive audience for his plea. The blaze is one of several in the West. Crews in California were making gains against two new fires that spread quickly, and firefighters in Idaho battled five lightning-sparked wildfires burning in grass and brush. Authorities say the Utah fire was started on June 17 by someone using a torch tool to burn weeds on private land.
Is Giant Sequoia National Monument Next on the Hit List? - Sequoiadendron giganteum. That's the scientific name for the giant sequoia: the mammoth trees found in California's Sierra Nevada that are the largest organisms on Earth, and among the longest-lived. Biologists estimate that about half of all sequoias live in Giant Sequoia National Monument, a 328,000-acre preserve in the Southern Sierra Nevada established by President Clinton in 2000. Now that national monument is in jeopardy. When President Donald Trump signed an executive order in April directing Interior Sec. Ryan Zinke to review national monuments established since 1996 and larger than 100,000 acres to determine whether they should be rescinded or reduced in size, it appeared that California's national monuments were relatively safe. Although California is home to six of the 27 monuments under review (more than any other state), its monuments haven't been as controversial as others on Zinke's list. So far, much of the Zinke's attention has been focused on Utah's Bears Ears —which earlier this month the interior secretary said he was likely to recommend downsizing —and Maine's Katahdin Woods and Waters National Monument, where, despite strong support from local residents and the rest of the state's political establishment, Gov. Paul LePage is waging a one-man campaign to abolish the monument. It seemed likely that the six California monuments (Mojave Trails, Sand to Snow, Berryessa Snow Mountain, San Gabriel Mountains, Carrizo Plain, and Giant Sequoia) would escape the unprecedented Trump-Zinke assault on public lands . The fight over the future of Giant Sequoia will intensify Tuesday, June 27, as supervisors in two California counties vote on measures to roll back protections for forests within the monument. Supervisors in Tulare County will consider a resolution urging Sec. Zinke to "clearly permit the removal of dead or dying hazard trees and to allow the U.S. Forest Service to actively manage the groves"—a demand that echoes the wishes of logging companies, which for years have sought to cut timber in the monument. Also Tuesday, supervisors in Kern County will vote on a resolution calling on Sec. Zinke to reduce Giant Sequoia National Monument by 200,000 acres.
Fires rise in Arctic as 'lightning follows the warming' - Climate change is driving up the number of forest fires ignited by lightning, and it's pushing them farther north, to the edges of the Arctic tundra, researchers say. Lightning-caused fires have risen 2 to 5 percent a year for the last four decades, according to a paper published yesterday in the journal Nature Climate Change. And as thunderstorms intensify and become more frequent, fires are increasingly occurring in the boreal forests, and even on the permafrost tundra. Warmer temperatures encourage more thunderstorms, which in turn bring more lightning and greater fire risk. The changes are part of a complex climate feedback loop that is only now becoming more clear to scientists, said Sander Veraverbeke of Vrije Universiteit Amsterdam, the study's lead author. A feedback loop is a series of interrelated phenomena that is worsened by climate change and continues to build upon itself with additional consequences. In the north, fires release more carbon dioxide and methane from the permafrost, he said. "You have more fires; they creep farther north; they burn in these soils which have a lot of C02 and methane that can be exposed directly at the moment of the fire and then decades after," Veraverbeke said. "That contributes again to global warming; you have again more fire."Scientists have previously connected climate change to an increase in lightning. For every degree Celsius of warming, lightning strikes are estimated to increase 12 percent, according to research published in the journal Science in 2014. Based on projected warming, that could mean a 50 percent increase by the end of the century. There are currently about 20 million lightning strikes over the continental United States, and about half of all wildfires are now traced to lightning strikes.
6 Endangered Whales Found Dead This Month in 'Unprecedented Event' - Canadian government officials and marine biologists are investigating the mysterious deaths of six North American right whales . The endangered animals all turned up dead between June 6 and June 23 in the Gulf of St. Lawrence, off Canada's southeastern coast. North Atlantic right whales are the rarest of all large whale species and among the rarest of all marine mammal species, with only about 450 right whales in the North Atlantic. "The loss of one whale has a huge impact for any endangered species, but in particular for the North Atlantic right whale," Sigrid Kuehnemund, the lead ocean specialist with the World Wildlife Fund-Canada , told the Globe and Mail . "Looking at this number of deaths, it will take such a devastating toll on the population. And we know that, of the whales that have been sighted, at least two are females. So, we're not just losing those whales but also the potential for those females to have calves into the future." The six deaths—accounting for approximately one percent of the population—has been described by Tonya Wimmer, a marine biologist and the director of Marine Animal Response Society , as an " unprecedented event ." "It seems very odd that they would die in this time frame and in the same area," Wimmer told National Geographic . "It's catastrophic." National Geographic reported that various marine animals in the busy port area around St. Lawrence face a number of threats, from ship strikes to toxic infections. Furthermore, the publication noted: "A 2013 report found that water contaminants, high levels of noise, decline in prey availability, and global warming all negatively impacted the St. Lawrence beluga population, which shares habitat with right whales. And unlike belugas, the whales feed on zooplankton, which are also highly susceptible to changes in climate."
Only 30 Left in the Wild: Saving the Nearly Extinct Vaquita -In one of the longest campaigns in Sea Shepherd 's history, Operation Milagro III concluded its six-month operation in Mexico's Gulf of California to protect the near-extinct vaquita porpoise and the endangered totoaba bass . Two Sea Shepherd vessels, the M/V Farley Mowat, along with the M/Y Sam Simon, spent the last six months patrolling the vaquita refuge in the upper gulf, retrieving illegal gillnets that trap and kill the vaquita and totoaba, along with other marine wildlife. Together, the two ships removed 233 illegal fishing gear including 189 totoaba nets, 27 shrimp and corvina nets and 17 long lines. In February, scientists announced that only about 30 vaquita remained left in their habitat. This is half the amount that was previously recorded in 2015, making the vaquita the most endangered marine mammal in the world. Sadly, during Operation Milagro III , Sea Shepherd discovered five dead vaquita. Their deaths are attributed to being caught in gillnets set up by poachers to trap the totoaba bass, whose swim bladder is prized for unsubstantiated medicinal properties in China and Hong Kong, where it sells for tens of thousands of dollars. Once vaquita become entangled in these gill nets, they are unable to reach the surface of the water to breathe, causing them to drown. But the nets do not discriminate. During the campaign, the crew removed 1,195 dead animals—among them sharks, dolphins, whales, turtles and sea lions—and released 795 live ones. Watch this video detailing facts and figures. Throughout the campaign, Sea Shepherd used radar and drones to nab poachers in the act, contacting authorities who could then make arrests. The ships also gathered information on the location of the nets to retrieve them from the sea. The nets are subsequently destroyed, separated and then handed over to NGO Parley for the Oceans for recycling. "If we had not been there, if we were unable to have removed those nets, the vaquita would now be extinct,"
72 percent of the world’s most majestic coral reefs have been hit by major heat stress since 2014 -- Nearly three-quarters of the world’s most majestic coral reefs have suffered severe and repeated heat stress in the past three years, a United Nations report found Friday. The report, prepared for the U.N. Educational, Scientific and Cultural Organization’s (UNESCO) World Heritage Centre by a group of coral scientists, found damage in 21 of 29 reefs on the organization’s list of World Heritage sites, or 72 percent, including Australia’s Great Barrier Reef. That is the broad time span of a global bleaching event, which ran from 2014 through 2017 and hit the Great Barrier Reef in two successive years, causing devastating levels of coral death. “Coral mortality during the third global bleaching event has been among the worst ever observed, including at World Heritage reefs; e.g., Great Barrier Reef (Australia), Papahānaumokuākea (USA) and Aldabra Atoll (Seychelles),” noted the report. World Heritage sites are considered “of outstanding value to humanity,” according to UNESCO. They range from Stonehenge to the pyramids to Greenland’s most dramatic fjord, but also include many marine areas containing particularly extensive coral reefs. UNESCO warned that without action to stop climate change, the reefs could “disappear” by the end of the century. The document finds that only if the world somehow hits the most ambitious target in the Paris climate agreement — holding warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above preindustrial temperatures — will there be “a chance of retaining coral-dominated communities for many reef locations around the globe.” But scientists have agreed that 1.5 C is a near-impossible target, given current carbon dioxide emissions. That means, in effect, that coral reefs could be some of the first ecosystems to become casualties of rapid climate change.
Scientists Fear "Supervolcano" Eruption As Earthquake Swarm Near Yellowstone Soars To 800 --More than 800 earthquakes have now been recorded at the Yellowstone Caldera, a long-dormant supervolcano located in Yellowstone National Park, over the last two weeks - an ominous sign that a potentially catastrophic eruption could be brewing. However, despite earthquakes occurring at a frequency unseen during any period in the past five years, the US Geological Survey says the risk level remains in the “green,” unchanged from its normal levels, according to Newsweek. The biggest earthquake in this “swarm” - which registered a magnitude of 4.4 – took place on June 15, three days after the rumblings started. That quake was the biggest in the region since a magnitude 4.8 earthquake struck close to Norris Geyser Basin in March 2014. This magnitude 4.4 earthquake was so powerful that people felt it in Bozman Montana, about eight miles away.A scientist from the University of Utah said the quakes have also included five in the magnitude three range, and 68 in the magnitude two range.“The swarm consists of one earthquake in the magnitude 4 range, five earthquakes in the magnitude 3 range, 68 earthquakes in the magnitude 2 range, 277 earthquakes in the magnitude 1 range, 508 earthquakes in the magnitude 0 range, and 19 earthquakes with magnitudes of less than zero,” the latest report said.An earthquake with a magnitude less than zero is a very small event that can only be detected with the extremely sensitive instruments used in earth quake monitoring.”
Drought in Northern China Is Worst on Record, Officials Say -- Officials governing a large area of northern China say their region is suffering from the worst drought on record, leading to crops wilting and farmers and herders growing desperate to get water to farmlands, grasslands, animals and their households.The drought is affecting the northeastern and eastern areas of the Inner Mongolian Autonomous Region, which is near Beijing.In recent years, Chinese scientists have attributed extreme weather patterns in China, and especially in northern China, to climate change. The region of Inner Mongolia and its residents have been hit especially hard by wide fluctuations in the weather. President Xi Jinping and other Chinese leaders say climate change is an urgent problem that nations must address together, and they have insisted that countries abide by the Paris climate accord, despite President Trump’s announcement this month that the United States would withdraw from the agreement. In Inner Mongolia, official statistics from the vast municipal area of Hulunbuir, also known as Hulunbei’er, indicate that the economic loss from the recent drought has been 5.3 billion renminbi, or $780 million.The municipality is a rural area with grasslands and herders that abuts Russia and lies immediately west of the region once known as Manchuria. Officials in Hulunbuir said 16 million acres of pastureland had been affected. From the air, vast patches of land appear brown and lifeless.
Iranian city soars to record 129 degrees: Near hottest on earth in modern measurements -- A city in southwest Iran posted the country’s hottest temperature ever recorded Thursday afternoon, and may have tied the world record for the most extreme high temperature. Etienne Kapikian, a forecaster at French meteorological agency MeteoFrance, posted to Twitter that the city of Ahvaz soared to “53.7°C” (128.7 degrees Fahrenheit). Kapikian said the temperature is a “new absolute national record of reliable Iranian heat” and that it was the hottest temperature ever recorded in June over mainland Asia. Iran’s previous hottest temperature was 127.4. Weather Underground’s website indicates the temperature in Ahvaz climbed even higher, hitting 129.2 degrees at both 4:51 and 5 p.m. local time. If that 129.2 degrees reading is accurate, it would arguably tie the hottest temperature ever measured on Earth in modern times. Christopher Burt, a weather historian for Weather Underground, has exhaustively analyzed world temperature extremes and determined the 129.2 degree readings posted in Mitribah, Kuwait on July 21, 2016, and Death Valley, Calif., on June 30, 2013, are the hottest credible temperature measurements that exist in modern records. For the 129.2 degree-reading Ahvaz posted on Weather Underground to stand and match the highest modern global temperature, it will require review by the World Meteorological Organization. The scorching temperature reading was brought about by a dome of heat centered over the Middle East. The excessively hot air over Ahvaz, a city of 1.1 million people, felt even more stifling due to high humidity. As the temperature climbed into the high 120s, the dew point, a measure of humidity, peaked in the low 70s; a high level for the desert location (due to moist air flow from the Persian Gulf, to the south). The heat index — a measure of how hot it feels factoring in the humidity — exceeded 140 degrees. This combination of heat and humidity was so extreme that it was beyond levels the heat index was designed to compute. Thursday marked the second straight day of record heat in Ahvaz. On Wednesday, it hit 127.2 degrees (52.9 Celsius), breaking the record for Iran’s hottest June temperature, only to be exceeded the next day.
We are heading for the warmest climate in half a billion years -- Carbon dioxide concentrations are heading towards values not seen in the past 200m years. The sun has also been gradually getting stronger over time. Put together, these facts mean the climate may be heading towards warmth not seen in the past half a billion years. A lot has happened on Earth since 500,000,000BC – continents, oceans and mountain ranges have come and gone, and complex life has evolved and moved from the oceans onto the land and into the air. Most of these changes occur on very long timescales of millions of years or more. However, over the past 150 years global temperatures have increased by about 1℃, ice caps and glaciers have retreated, polar sea-ice has melted, and sea levels have risen. Some will point out that Earth’s climate has undergone similar changes before. So what’s the big deal?Scientists can seek to understand past climates by looking at the evidence locked away in rocks, sediments and fossils. What this tells us is that yes, the climate has changed in the past, but the current speed of change is highly unusual. For instance, carbon dioxide hasn’t been added to the atmosphere as rapidly as today for at least the past 66m years. In fact, if we continue on our current path and exploit all convention fossil fuels, then as well as the rate of CO₂ emissions, the absolute climate warming is also likely to be unprecedented in at least the past 420m years. That’s according to a new study we have published in Nature Communications.
Climate Change Will Worsen U.S. Inequality, Finds a Revolutionary New Study – Climate change will aggravate economic inequality in the United States, essentially transferring wealth from poor counties in the Southeast and the Midwest to well-off communities in the Northeast and on the coasts, according to the most detailed economic assessment of the phenomenon ever conducted. The study, published Thursday in Science, simulates the costs of global warming in excruciating detail, modeling every day of weather in every U.S. county during the 21st century. It finds enormous disparities in how rising temperatures will affect American communities: Texas, Florida, and the Deep South will bleed income in the broiling heat, while some chillier northern states gain moderate benefits. “We are really sure the South is going to get hammered,” says Solomon Hsiang, one of the authors of the paper and a professor of public policy at the University of California, Berkeley. “The South is really, really negatively affected by climate change, much more so than the North. That wasn’t something we were expecting going in.” Overall, the paper finds that climate change will cost the United States 1.2 percent of its GDP for every additional degree Celsius of warming, though that figure is somewhat uncertain. If global temperatures rise by four degrees Celsius by 2100—which is very roughly where the current terms of the Paris Agreement would put the planet—U.S. GDP could shrink anywhere between 1.6 and 5.6 percent. Yet beyond its initial findings, the paper represents a major breakthrough for the field of climate economics. Previously, the best financial forecasts of climate change approximated damages for the entire country at once. This new study worked from the bottom up, building its model from dozens of microeconomic studies into how climate change is already affecting regional economies across the United States. Every algorithm in the model emerges from a previously observed relationship in real-world data.
New study confirms the oceans are warming rapidly - As humans put ever more heat-trapping gases into the atmosphere, the Earth heats up. These are the basics of global warming. But where does the heat go? How much extra heat is there? And how accurate are our measurements? These are questions that climate scientists ask. If we can answer these questions, it will better help us prepare for a future with a very different climate. It will also better help us predict what that future climate will be. The most important measurement of global warming is in the oceans. In fact, “global warming” is really “ocean warming.” If you are going to measure the changing climate of the oceans, you need to have many sensors spread out across the globe that take measurements from the ocean surface to the very depths of the waters. Importantly, you need to have measurements that span decades so a long-term trend can be established. These difficulties are tackled by oceanographers, and a significant advancement was presented in a paper just published in the journal Climate Dynamics. That paper, which I was fortunate to be involved with, looked at three different ocean temperature measurements made by three different groups. We found that regardless of whose data was used or where the data was gathered, the oceans are warming. In the paper, we describe perhaps the three most important factors that affect ocean-temperature accuracy. First, sensors can have biases (they can be “hot” or “cold”), and these biases can change over time. An example of biases was identified in the 1940s. Then, many ocean temperature measurements were made using buckets that gathered water from ships. Sensors put into the buckets would give the water temperature. Then, a new temperature sensing approach started to come online where temperatures were measured using ship hull-based sensors at engine intake ports. It turns out that bucket measurements are slightly cooler than measurements made using hull sensors, which are closer to the engine of the ship.
Major Correction to Satellite Data Shows 140% Faster Warming Since 1998 - A new paper published in the Journal of Climate reveals that the lower part of the earth's atmosphere has warmed much faster since 1979 than scientists relying on satellite data had previously thought. Researchers from Remote Sensing Systems (RSS), based in California, have released a substantially revised version of their lower tropospheric temperature record. After correcting for problems caused by the decaying orbit of satellites, as well as other factors, they have produced a new record showing 36 percent faster warming since 1979 and nearly 140 percent faster (e.g. 2.4 times faster) warming since 1998. This is in comparison to the previous version 3 of the lower tropospheric temperature (TLT) data published in 2009 . Climate skeptics have long claimed that satellite data shows global warming to be less pronounced than observational data collected on the earth's surface. This new correction to the RSS data substantially undermines that argument. The new data actually shows more warming than has been observed on the surface, though still slightly less than predicted in most climate models. Both the old record, version 3 in grey, and new record, version 4 in red, are shown in the figure above, along with the difference between the two, in black. The trends since 1998 for both are shown by dashed lines. Most of the difference between the old and new record occurs after the year 2000. While the old record showed relatively little warming during the oft-debated post-1998 "hiatus" period , the new record shows warming continuing unabated through to present. Similarly, while the old RSS v3 record showed 2016 only barely edging out 1998 as the warmest year in the satellite record, the new v4 record shows 2016 as exceeding 1998 by a large margin.
As the North Slope of Alaska warms, greenhouse gases have nowhere to go but up -- The amount of carbon dioxide being released from tundra in the northern region of Alaska during early winter has increased 70 percent since 1975, according to a new regional climate paper by scientists participating in a research project funded by NOAA and NASA. The fate of carbon locked in northern permafrost—vast regions of frozen soil containing undecayed vegetation—is of intense interest to scientists. That’s because these soils contain an estimated 1,330-1,580 billion tons of organic carbon, about twice as much as currently contained in the atmosphere. When permafrost thaws, carbon can be released to the atmosphere either as methane or carbon dioxide (CO2). Scientists are concerned that increasing greenhouse gas emissions will accelerate a regional warming trend that could drive a further increase in greenhouse gas emissions from the tundra. Permafrost is like a giant freezer for carbon: thousands of years worth of plant, animal, and microbe remains mixed with blocks of ice. In the past decade, parts of the Arctic tundra have become a net source of carbon-containing greenhouse gases because microbial activity is continuing well into winter, after plants go dormant. NOAA Climate.gov drawing. Permafrost map from NSIDC. Produced as part of the highlights of NOAA's 2016 Arctic Report Card. Warmer fall temperatures observed in northern Alaska delay freezing of tundra, increasing the length of time the tundra is giving off greenhouse gas emissions during the year, according to the study’s lead author Róisín Commane of Harvard University. “In the past, tundra soils may have taken a month or so to freeze, but with warmer temperatures in recent years there are locations in Alaska where tundra soils now take more than three months to freeze completely,” said Commane. “We are seeing emissions of carbon dioxide from soils continue all the way through this early winter period." Results of the study were published in last month’s Proceedings of the National Academy of Sciences.
Climate Change Is Not The Only Cause of Greenland Ice Melt. Blame Sunnier Days.: Greenland’s ice sheet is melting faster than expected, and this has been accelerating over the past two decades. It is now the biggest single contributor to global sea level rise, accounting for 25 percent of the total. But besides warming climes, there is another culprit for the melt: sunnier days in fair Greenland. A paper published June 28 in the journal Science Advances shows that cloud cover has decreased by 14 percent from 1994 to 2009, at an average of just under 1 percent per year. That may not sound like much, but for ice, it’s a big deal. The researchers show that for every 1 percent drop in cloud cover, the amount of ice melt has increased by 27 gigatons. That’s a vast amount of water, approximately equivalent to the domestic water supply of the United States. The more plentiful sunshine is actually now the leading cause of the increased melting, says co-author Jonathan Bamber, a researcher with the University of Bristol, which led the study. Of course, increasing temperatures also are important; Greenland, along with the rest of the Arctic, is warming at about twice the global average rate. “But while the changing temp is important, more important is the impact of cloud cover.”
Antarctica's Larsen C Ice Shelf set to cleave off huge iceberg soon: A crack spreading inexorably across the Larsen C Ice Shelf in northwest Antarctica has surged forward at record rates, bringing the ice shelf closer to cleaving off an iceberg roughly the size of Delaware. If this occurs, it would be one of the largest icebergs ever observed and could leave the ice shelf behind it in a precarious state, more vulnerable to melting from both relatively mild ocean waters encroaching on the ice from underneath, as well as increasing air temperatures melting ice from above. While scientists have said it is not clear that global warming is behind this particular iceberg, the Antarctic Peninsula, where the Larsen C Ice Shelf is located, is one of the most rapidly warming areas in Antarctica, rivaling temperature increases seen in the Arctic. The scientists from Project MIDAS, which is funded by UK-based research institutions, are using satellite observations to determine the progress that the rift in the floating ice shelf is making. In some places, the fissure is 1,500 feet wide, which is about 600 feet wider than a typical Manhattan avenue block. In a June 28 blog post, the scientists report: "...The soon-to-be-iceberg part of [the] Larsen C Ice Shelf has tripled in speed to more than ten meters per day between 24th and 27th June 2017." This means that the crack has moved at least 33 feet per day during the course of this 4-day period.
Antarctic sea ice levels have shrunk to record low levels for late June - The late June sea ice surrounding the Antarctic continent is at its lowest level in nearly 40 years of records, according to data from the National Snow and Ice Data Center. While it is currently the start of winter at the South Pole and sea ice extent is expanding, current levels show the extent is right around 13.1 million square kilometers, far below the average extent at this time of year around 14 million square kilometers. Antarctic sea ice extent has been monitored since 1979. The extent of Antarctic sea ice in recent months – near and at record low levels – marks a dramatic reversal from past years. The original version of this article (see below), published in September 2013, was headlined “Antarctic sea ice hit 35-year record high”. But there has been a marked decline in Antarctic ice extent ever since.When this story previously highlighted the record high Antarctic sea ice extent, some who deny climate change shared it to sow doubt about the reality of climate warming. But as I explained then (see below), and reiterate now, Antarctic sea ice behavior is not a straight forward or terribly useful indicator of climate change because it is influenced by many factors beyond temperature.Of course, now that the Antarctic sea ice is at record low levels, it makes citing Antarctic sea ice data as evidence refuting global warming even more preposterous. Yet at the same time, because Antarctic sea ice trends are so complex and variable, it’s also unwise to tout the current level as an unambiguous indicator of climate warming. “It is tempting to say that the record low we are seeing this year is global warming finally catching up with Antarctica,” said Walt Meier, sea ice specialist at NASA. “However, this might just be an extreme case of pushing the envelope of year-to-year variability. We’ll need to have several more years of data to be able to say there has been a significant change in the trend.”
Global sea level rise accelerates since 1990, study shows | Reuters: The rise in global sea levels has accelerated since the 1990s amid rising temperatures, with a thaw of Greenland's ice sheet pouring ever more water into the oceans, scientists said on Monday. The annual rate of sea level rise increased to 3.3 millimeters (0.13 inch) in 2014 - a rate of 33 centimeters (13 inches) if kept unchanged for a century - from 2.2 mm in 1993, according to a team of scientists in China, Australia and the United States. Sea levels have risen by about 20 cms in the past century and many scientific studies project a steady acceleration this century as man-made global warming melts more ice on land. Until now, however, scientists have found it hard to detect whether the rate has picked up, is flat or has fallen since 1990. The study found that early satellite data had exaggerated the rate of sea level rise in the 1990s, masking the recent acceleration. The confirmation of a quickening rise "highlights the importance and urgency" of working out ways to cut greenhouse gas emissions and to protect low-lying coasts, the scientists wrote in the journal Nature Climate Change. A thaw of Greenland's ice sheet accounted for more than 25 percent of the sea level rise in 2014 against just 5 percent in 1993, according to the study led by Xianyao Chen of the Ocean University of China and Qingdao National Laboratory of Marine Science and Technology. Other big sources include loss of glaciers from the Himalayas to the Andes, Antarctica's ice sheet and a natural expansion of ocean water as it warms up from its most dense at 4 degrees Celsius (39.2°F).
Bill Clinton: 'The water is going to keep rising’ whether US stays in Paris or not | TheHill: Former President Bill Clinton on Saturday offered advice to U.S. mayors who plan to honor the Paris climate accords in the wake of President Trump’s decision to pull the U.S. out of the agreement. “You can get out of it or in it, but the water is going to keep rising. Politics has almost no influence on science, in case you hadn’t noticed,” Clinton said during the U.S. Conference of Mayors in Miami Beach. Clinton also argued that pursuing clean energy would only improve the economy. “We have got to do more to accelerate this transition, because it’s good economics,” he said. The former president’s comments come after Trump announced early this month his decision to pull the U.S. from the landmark accord that was reached under the Obama administration with nearly 200 nations. Trump argued that pulling the U.S. out of the 2015 agreement would help U.S. workers. “I was elected to represent the citizens of Pittsburgh, not Paris,” Trump said when he announced the United States's future departure from the deal. However, leaders in cities across the U.S., including Pittsburgh, have vowed to meet the standards set in the Paris climate accords.
Two billion people may become refugees from climate change by the end of the century - An unimaginable 2 billion people could become displaced from their homes by 2100 due to climate change-related rising ocean levels. That would be about one-fifth of the world’s population at that time, and account for those who live near coastlines, according to new Cornell University research. “We’re going to have more people on less land and sooner than we think,” the study’s lead author, Charles Geisler, said in a statement. “The future rise in global mean sea level probably won’t be gradual, yet few policy makers are taking stock of the significant barriers to entry that coastal climate refugees, like other refugees, will encounter when they migrate to higher ground.” By 2100, Earth’s rising population is expected to reach 11 billion, according to the United Nations. As oceans swell from melting sea ice and coastlines are pushed inland, the sea water will ruin fertile land, making it more difficult for nations to feed that many people. And landmass available to live on will be diminished. The researchers at Cornell estimate that these issues, exacerbated by climate change, will create 1.4 billion refugees by 2060. Geisler said that number could reach 2 billion by 2100. He admits that these predictions are based on the worst case scenario. “We project what will happen if the entire low elevation coastal zone is lost due to swollen oceans — swelling caused by more melt water (glaciers and ice sheets) and warmer oceans,” Geisler told the Daily News. “That’s where the 1.4 billion becomes relevant. Permanent flooding of the low elevation coastal zone means land 10 meters above mean sea level would be lost to ocean encroachment.
No country on Earth is taking the 2 degree climate target seriously - One of the morbidly fascinating aspects of climate change is how much cognitive dissonance it generates, in individuals and nations alike. The more you understand the brutal logic of climate change — what it could mean, the effort necessary to forestall it — the more the intensity of the situation seems out of whack with the workaday routines of day-to-day life. It’s a species-level emergency, but almost no one is acting like it is. And it’s very, very difficult to be the only one acting like there’s an emergency, especially when the emergency is abstract and science-derived, grasped primarily by the intellect. This psychological schism is true for individuals, and it’s true for nations. Take the Paris climate agreement. In Paris, in 2015, the countries of the world agreed (again) on the moral imperative to hold the rise in global average temperature to under 2 degrees Celsius, and to pursue "efforts to limit the temperature increase to 1.5 degrees." To date, 62 countries, including the United States, China, and India, have ratified the agreement. Are any of the countries that signed the Paris agreement taking the actions necessary to achieve that target? No. The US is not. Nor is the world as a whole.The actions necessary to hold to 2 degrees, much less 1.5 degrees, are simply outside the bounds of conventional politics in most countries. Anyone who proposed them would sound crazy, like they were proposing, I don’t know, a war or something. So we say 2 degrees is unacceptable. But we don’t act like it is. This cognitive dissonance is brought home yet again in a report published in October from Oil Change International (in collaboration with a bunch of green groups). It’s about fossil fuels and how much of them we can afford to dig up and burn, if we’re serious about what we said in Paris. It’s mostly simple math, but the implications are vast and unsettling. Scientists have long agreed that warming higher than 2 degrees will result in widespread food, water, weather, and sea level stresses, with concomitant immigration, conflict, and suffering, inequitably distributed. But 2 degrees is not some magic threshold where tolerable becomes dangerous. A two-year review of the latest science by the UNFCCC found that the difference between 1.5 and 2 degrees means heat extremes, water shortages, and falling crop yields. "The ‘guardrail’ concept, in which up to 2°C of warming is considered safe," the review concluded, "is inadequate." So the authors of the Oil Change report choose two scenarios to model. One gives us a 66 percent chance of stopping short of 2 degrees. The other gives us a 50 percent chance of stopping short of 1.5 degrees. Here’s what they look like: As you can see, in either scenario, global emissions must peak and begin declining immediately. For a medium chance to avoid 1.5 degrees, the world has to zero out net carbon emissions by 2050 or so — for a good chance of avoiding 2 degrees, by around 2065.After that, emissions have to go negative. Humanity has to start burying a lot more carbon than it throws up into the atmosphere.
At food trading 'chokepoints', climate change could disrupt supplies - report | Reuters: - International trade in food relies on a small number of key ports, straits and roads, which face increasing risks of disruption due to climate change, a report said on Tuesday. Disruptions caused by weather, conflict or politics at one of those so-called "chokepoints" could limit food supplies and push up prices, the study by British think-tank Chatham House warned. "The risks are growing as we all trade more with each other and as climate change takes hold," Laura Wellesley, one of the study's authors, said in a statement. Almost 25 percent of all food eaten around the world is traded on international markets, the report said. The amount of maize, wheat, rice and soybean moved across the world each year is enough to feed some 2.8 million people and more than half it passes through at least one of 14 inland routes, ports, and straits, like the Panama and Suez canals. About 20 percent of global wheat exports, for example, transit via the Turkish Straits, while more than 25 percent of soybean exports is shipped across the Straits of Malacca. But infrastructure at these junctures is often old and ill-suited to cope with natural disasters, which are expected to increase in frequency as the planet warms, said Wellesley. Roads in Brazil, the world's largest exporter of soy bean, for instance, were exposed to the risk of flooding and landslides caused by heavy rains, while U.S. Gulf Coast ports could suffer more storm surges boosted by rising seas, she said. That posed risks for the food security of importing countries and the economies of those exporting food, she added. The report called on governments to invest in "climate-resilient" infrastructure as well as taking other precautionary measures such as diversifying food production and stocks.
I worked on the EPA’s climate change website. Its removal is a declaration of war -- Jason Samenow -- This spring, political officials at the Environmental Protection Agency removed the agency’s climate change website, one of the world’s top resources for information on the science and effects of climate change. To me, a scientist who managed this website for more than five years, its removal signifies a declaration of war on climate science by EPA Administrator Scott Pruitt. There can be no other interpretation. I draw this conclusion as a meteorologist with a specialization in climate science and as an independent voter who strives to keep my political and scientific views separate. I concede that this specific issue is personal for me, given the countless hours I spent working on the site. But it should be obvious to anyone how this senseless action runs counter to principles of good governance and scientific integrity. Some 20 years in the making, the breadth and quality of the website’s content was remarkable. It lasted through Democratic and Republican administrations, partly because its information mirrored the findings of the mainstream scientific community, including the National Academy of Sciences, other federal agencies and the United Nations Intergovernmental Panel on Climate Change. It “presented the current understanding of the science and possible solutions in a fair and balanced way,” says Kerry Emanuel, a world-renowned atmospheric scientist at MIT and a political conservative. The site’s overarching conclusion, informed by these scientific organizations and reports, was that recent warming is largely a result of human activities, specifically the burning of fossil fuels, which releases large amounts of carbon dioxide into the atmosphere. Yet Pruitt, a lawyer who has spent much of his career fighting climate change mitigation efforts, decided that he knows more than the thousands of scientists whose decades of work support this conclusion. These are his words about the impact of human activity: “I would not agree that it’s a primary contributor to the global warming that we see.” Pruitt has championed the administration’s decision to exit the Paris climate agreement and called for a debate on the fundamentals of the issue, even though there’s virtually no disagreement about it among scientists. He then effectively cleansed the EPA’s Board of Scientific Counselors, a steering committee for the agency’s research.
Top EPA Official 'Bullied' Scientist to Change Congressional Testimony - The U.S. Environmental Protection Agency's ( EPA ) chief of staff pressured the leader of its Board of Scientific Counselors to change her congressional testimony to downplay the impact of the agency's mass dismissal of scientists from the board, the New York Times reports. According to emails obtained by the Times, EPA chief of staff Ryan Jackson requested that Dr. Deborah Swackhamer, a retired science and public policy professor, keep to agency "talking points" on the dismissals ahead of a May 23 appearance before the House Science Committee. Jackson also requested Swackhamer tell the committee a "decision had not yet been made" on final dismissals, despite notices being sent to multiple scientists earlier that month. "I was stunned that he was pushing me to 'correct' something in my testimony," Swackhamer told the Times. "I was factual, and he was not. I felt bullied."
On Capitol Hill, EPA chief gets an earful about Trump’s ‘downright offensive’ budget plan -- Another trip to Capitol Hill for Environmental Protection Agency Administrator Scott Pruitt, another reminder that lawmakers from both parties have no intention of approving the deep cuts President Trump is seeking at the agency. Pruitt heard a familiar sentiment Tuesday from both Republican and Democratic members of a Senate Appropriations Committee — that a proposed 31 percent cut to EPA isn’t going to happen, and that shuttering key programs and laying off thousands of employees conflicts with the Trump administration’s stated goals about safeguarding the nation’s air and water. Sen. Lisa Murkowski (R-Alaska) noted that while she supports Pruitt’s approach of focusing on the EPA’s central responsibilities while steering away from the climate policies of the Obama administration, the current budget proposal is “in direct contrast” to such an approach. She singled out aid to Alaska Native villages and a radon detection program as areas that have proven to save and improve lives. “We have rejected changes like these in past, and I will certainly push my colleagues to do so again this year,” Murkowski said. Democrats were even more blunt. “The budget request before us today is downright offensive,” Sen. Tom Udall (D-N.M.) said as he cited a litany of programs slated for elimination or massive cuts. “I can’t square this with your rhetoric about returning EPA to its core responsibilities. Nothing was spared. EPA’s core is hollowed out. … These cuts aren’t an intent to rein in spending, they are an intentional step to undermine science and ignore environmental and public health realities.” Sen. Patrick J. Leahy (D-Vt.) called the Trump administration’s proposal “really the worst I’ve seen.” “This budget that you’ve proposed doesn’t uphold your agency’s mission,” Leahy said. “We ought to be doubling down on our investment to protect our environment for the sake of our children and grandchildren. We ought to curb the effects of climate change. Instead, the administration is tearing down the legacy of the Clean Air Act and the Clean Water Act.”
Republicans fear onslaught of green group lawsuits | TheHill: Republican lawmakers on Wednesday held a hearing to address what they fear is "excessive litigation" against the Interior Department from green groups and other liberal activists. "In reality, a legal subindustry has thrived from endless environmental litigation while burdening the livelihood of countless citizens," said Rep. Mike Johnson (R-La.) at a hearing of the House Natural Resources Subcommittee on Oversight. "Excessive litigation against the department drains our taxpayers' dollars away from good stewardship of our natural resources," he added. Lawmakers heard from experts who said that green groups are abusing the courts to challenge the agency's policies. Mark Barron, an energy and natural resources attorney, said the current system incentivizes lawsuits with the promise of big attorney's fees. “The department is already burdened by a lack of resources,” Baron said. “Then this constant litigation exacerbates that existing problem.” Activist groups have vowed to challenge the Trump administration in court as officials begin to roll back a slew of Obama-era regulations. The groups insist they have no other recourse to halt policies they say weaken health and environmental protections.“It has been prevalent in the media that they intend to challenge every approval, every permit process, and every implementation of environmental policy under the new administration,” Barron said. “If you look at the publicly available websites for most of the major environmental groups, they issue a press release and a fundraising request every time that there is a lawsuit filed,” he also alleged.
House lawmakers back amendment requiring Pentagon climate change report | TheHill: The House Armed Services Committee’s annual defense policy bill will include a provision requiring a Defense Department report on the effects of climate change on military installations. The amendment — brought up by Rep. Jim Langevin (D-R.I.) in the readiness portion of Wednesday’s markup — instructs each military service to come up with a list of the top 10 military installations likely to be affected by climate change over the next 20 years. The report would include a list of possible ways to combat such climate change threats as flooding, droughts and increased wildfires.Such a provision aims to ensure that the Defense Department “is prepared to address the effects of a changing climate on threat assessments, resources and readiness,” according to the amendment language. Climate change has become a hotly debated issue under President Trump, who earlier this month announced his intention to pull the United States out of the Paris climate agreement. Trump himself has not said whether he believes in climate change. “The changing global climate will lead to increased instability in the form of economic migration, increased competition over resources and possibly more failed states, which result in breeding grounds for extremism and terrorism,” Langevin said before the committee. In his amendment, Langevin cites Defense Secretary James Mattis, who has said he agrees “that the effects of a changing climate — such as increased maritime access to the Arctic, rising sea levels, desertification, among others — impact our security situation.”
Perry calls for climate change debate, says he doesn't know Trump's stance - POLITICO: Energy Secretary Rick Perry said Tuesday that he believes in climate change and called for a debate about humans' role in causing it — but like other administration officials, he said he did not know President Donald Trump's stance on the issue. “Here’s what I believe, and I’m pretty much on the record, but I love getting the opportunity to talk about it again: The climate is changing. Man is having an impact on it,” Perry said during Tuesday’s White House press briefing. “I’ve said that time after time," he said, adding that he wanted an "intellectual conversation" about the impacts of humans on the climate. Perry, a two-time GOP presidential candidate and the former governor of Texas, told CNBC in an interview last week that he does not believe carbon dioxide emissions to be the main driver of climate change, a view that puts him at odds with the overwhelming majority of climate scientists. Last Thursday, Perry told the Senate Appropriations Committee that man’s impact on climate change “is not settled science.” At Tuesday’s briefing, he suggested that the issue could benefit from more open debate and that he was personally not so dug into his views that they would not change.
Perry defends energy grid study | TheHill: Energy Secretary Rick Perry defended his department’s study into the reliability of the electric grid on Tuesday, saying the research will ensure the grid “isn’t tossed aside in favor of some political favorites.” Speaking at an Energy Information Administration conference in Washington, Perry said his goal is to roll back the “political” goals of the Obama administration that he said prioritized renewable energy to such an extent that it put the electric grid at risk. “I recognize markets have had a role in the evolution of our energy mix, but no reasonable person can deny the thumb, or even the whole hand, if you will, has been put on the scale in favor of certain political outcomes,” Perry said.“Our plan is to use America’s abundant resources to ensure grid reliability and economic stability.” The Energy Department is putting together a study of federal policies related to the reliability of the electric grid. The department was due to release the study this week, but it has pushed back that deadline to at least next month. Renewable energy groups and advocates have raised concerns that the study will be aimed at diminishing policies that support their fuels. They have released research of their own that they say shows their fuels can contribute to a reliable electric grid. Perry acknowledged Tuesday that the study is designed to reassess federal policies on fossil fuels, primarily coal, which has seen its role in the electric sector diminish as the price of natural gas and renewable energy has fallen. But Perry blamed the decline of coal on federal policies as well. “These politically driven policies, driven primarily by a hostility to coal, threatened the reliability and the stability of the greatest electrical grid in the world,” he said. “It’s not reasonable to rely exclusively on fossil fuels. It’s not feasible to rely exclusively on renewables,” he said.
Perry: Trump wants to use energy for ‘global leadership’ | TheHill: President Trump wants the United States to use its energy as a geopolitical tool for influence and leadership, Energy Secretary Rick Perry said. Perry spoke with reporters Monday about how he, Trump and the administration see their stated goal of “energy dominance,” in which the U.S. goes beyond energy independence and starts actively competing on multiple global stages through self-sufficiency and exports of natural gas, oil, coal and other forms of energy. Perry’s briefing at the White House came at the beginning of the Trump administration’s self-proclaimed “Energy Week,” in which officials are trying to highlight the president’s energy agenda thus far and his plans for the future.Like Infrastructure Week and Technology Week before it, the attempt to focus on what the administration sees as positive policy accomplishments comes while national headlines are dominated by other stories. The Congressional Budget Office reported Monday that the Senate’s healthcare reform bill, which Trump supports and is set for a vote later this week, would leave 22 million more people uninsured over the next decade. Nonetheless, through a series of events this week, the Trump administration wants the focus to be on energy. “President Trump wants America to achieve energy dominance, utilizing our abundant domestic energy resources for good, both here at home and abroad,” Perry said.
Trump launches dominant energy policy focused on exports | Reuters: U.S. President Donald Trump on Thursday announced measures to launch what he calls a "golden era" of energy policy, which will revive the ailing nuclear power sector and ease restrictions on energy exports. "We are here today to unleash a new American energy policy," Trump said at an event at the Department of Energy. "We will export American energy all around the world." Trump said his administration will seek to find new ways to revive the U.S. nuclear energy sector, launching a review of domestic policies to find ways to make the energy more competitive with natural gas and renewables and addressing the issue of nuclear waste. He also said he will lift Obama-era restrictions on U.S. development banks that prevented financing of coal projects overseas. He also kicked off a public comment period for the Interior Department as it develops a new national offshore oil and gas leasing program.
Huge Milestone: Renewables Now Provide More Electricity Than Nuclear Power - The latest issue of the U.S. Energy Information's " Electric Power Monthly " (with data through April 30) reveals that—for the first time since the beginning of the nuclear era— renewable energy sources (i.e., biomass, geothermal, hydropower, solar —inc. small-scale PV, wind) are now providing a greater share of the nation's electrical generation than nuclear power. For the first third of this year, renewables and nuclear power have been running neck-in-neck with renewables providing 20.20 percent of U.S. net electrical generation during the four-month period (January to April) compared to 20.75 percent for nuclear power. But in March and April, renewables surpassed nuclear power and have taken a growing lead: 21.60 percent (renewables) vs. 20.34 percent (nuclear) in March, and 22.98 percent (renewables) vs. 19.19 percent (nuclear) in April. While renewables and nuclear are each likely to continue to provide roughly one-fifth of the nation's electricity generation in the near-term, the trend line clearly favors a rapidly expanding market share by renewables. Electrical output by renewables during the first third of 2017 compared to the same period in 2016 has increased by 12.1 percent whereas nuclear output has dropped by 2.9 percent. In fact, nuclear capacity has declined over the last four years, a trend which is projected to continue, regardless of planned new reactor startups. From 2013-16, six reactors permanently ceased operation (Crystal River, Kewaunee, San Onofre-2, San Onofre-3, Vermont Yankee, Fort Calhoun), totaling 4,862 MW of generation capacity. Last year, one new reactor (Watts Bar-2) was connected to the grid (after a 43-year construction period), adding 1,150 MW, for a net decline of 3,712 MW since 2013. Six more reactors are scheduled to close by 2021, totaling 5,234 MW (5.2 percent of nuclear capacity). Two more reactors totaling 2,240 MW are scheduled to close by 2025.
California invested heavily in solar power. Now there’s so much that other states are sometimes paid to take it -- On 14 days during March, Arizona utilities got a gift from California: free solar power. Well, actually better than free. California produced so much solar power on those days that it paid Arizona to take excess electricity its residents weren’t using to avoid overloading its own power lines. It happened on eight days in January and nine in February as well. All told, those transactions helped save Arizona electricity customers millions of dollars this year, though grid operators declined to say exactly how much. And California also has paid other states to take power. The number of days that California dumped its unused solar electricity would have been even higher if the state hadn’t ordered some solar plants to reduce production — even as natural gas power plants, which contribute to greenhouse gas emissions, continued generating electricity. Solar and wind power production was curtailed a relatively small amount — about 3% in the first quarter of 2017 — but that’s more than double the same period last year. And the surge in solar power could push the number even higher in the future. Why doesn’t California, a champion of renewable energy, use all the solar power it can generate? The answer, in part, is that the state has achieved dramatic success in increasing renewable energy production in recent years. But it also reflects sharp conflicts among major energy players in the state over the best way to weave these new electricity sources into a system still dominated by fossil-fuel-generated power. No single entity is in charge of energy policy in California. This has led to a two-track approach that has created an ever-increasing glut of power and is proving costly for electricity users. Rates have risen faster here than in the rest of the U.S., and Californians now pay about 50% more than the national average. Perhaps the most glaring example: The California Legislature has mandated that one-half of the state’s electricity come from renewable sources by 2030; today it’s about one-fourth. At the same time, however, state regulators — who act independently of the Legislature — until recently have continued to greenlight utility company proposals to build more natural gas power plants.
U.S. solar demand could drop 66 percent if trade case succeeds: report | Reuters: The utility-scale solar industry, which accounts for more than half of U.S. installations, would be hit hardest if Washington adopts the hefty remedies sought by bankrupt solar panel maker Suniva. That is because large projects depend on being cost-competitive with natural gas-fired plants to spur buying, research firm GTM Research said in their analysis. "This is arguably one of the biggest downside risks to the future of U.S. solar," GTM's associate director of U.S. solar, Cory Honeyman, said in an interview. In April, Suniva filed a rare Section 201 petition with the U.S. International Trade Commission nine days after seeking Chapter 11 bankruptcy protection. In the petition, the company asked for new duties on imported solar products to combat a global glut of panels that has depressed prices and made it difficult for American producers to compete. Suniva was founded in Georgia but as of 2015 is majority owned by Hong Kong-based Shunfeng International Clean Energy. It was joined in the petition by another domestic manufacturer, the U.S. division of Germany's SolarWorld. The German company filed for insolvency last month. Suniva is seeking a duty rate of 40 cents per watt on solar cells and a minimum price on modules of 78 cents a watt for the first year, levels unseen since 2012, according to GTM. Between 2018 and 2022, U.S. solar installations would fall from 72.5 gigawatts to 36.4 GW with a minimum module price of 78 cents a watt, GTM said. If a 40 cent cell tariff were implemented as well, installations would drop to 25 GW during the period.
Wind Power's Big Bet: Turbines Taller Than Skyscrapers — Wind farm operators are betting on a new generation of colossal turbines, which will dwarf many skyscrapers, as they seek to remain profitable after European countries phase out subsidies that have defined the green industry since the 1990s. The world's three leading offshore wind operators - DONG Energy, EnBW and Vattenfall - all told Reuters they were looking to these megaturbines to help adapt to the upcoming reality with dwindling government handouts. According to interviews with turbine makers and engineers, at least one manufacturer - Siemens Gamesa - will have built a prototype megaturbine by next year and the first farms could be up and running in the first half of the next decade. These massive machines will each stand 300 metres tall – almost as high as London's Shard, western Europe's tallest building - with 200-metre rotor spans that will stretch the length of two football fields. The countries that form the hub of the European offshore wind industry - Denmark, Germany, the Netherlands and Britain - are looking to gradually phase out the handouts over the next decade. This will end a crucial source of revenue for operators; in tenders concluded as recently as 2014, subsidies still accounted for around half of European wind projects' income. With the writing on the wall, DONG and EnBW submitted bids with no subsidies factored in at a tender in April for a German project planned for 2024. The auction represented an industry milestone, the first with zero-subsidy bids, but raised the burning question of how operators will be able to make money and survive while offering a commercially attractive alternative to coal and nuclear. The answer, according to the companies, are the megaturbines, which would sweep a far bigger area and harness more wind, cutting costs per megawatt. They will each generate between 10 and 15 megawatts (MW) of power - a considerable leap from the largest turbines currently in operation, made by MHI Vestas, which are 195 metres tall and generate 8 MW.
Peak demand and the winter wind -- A winter high pressure settles over Europe. Darkness descends, temperatures plunge, electricity demand skyrockets and wind generation dies. But not to worry, says the Met Office – on the coldest nights the wind will pick up again, minimizing the possibility of power shortfalls during peak demand periods. This post investigates this claim. It finds that the wind did not pick up on the coldest nights at least during the February 2012 cold spell in the UK and that wind generation on any given night during the cold spell was essentially unpredictable. There is, in short, no guarantee that any future cold spell will be accompanied by increases in wind generation large enough to keep the lights on.
The Power Grid Is Far More Vulnerable To Cyber Attacks Than Most People Realize --In December of 2015, 230,000 people in Western Ukraine lost power after 30 substations were mysteriously shut off. Contrary to what most people assumed at the time, this wasn’t an innocuous power outage. The authorities would later admit that the loss of power was caused by a cyber attack, which marked the first time that malware was successfully used to attack a power grid. A similar, albeit more sophisticated cyber attack, occurred one year later just outside of Kiev. Given the current tensions between Russia and Ukraine, it’s widely believed that the Russian government was responsible for these incidents. However, there’s more to this story than meets the eye. A computer security company has been investigating these attacks, and has discovered the malware that was used to take down the grid. They’ve found that it’s far more dangerous and easier to use than anyone realized before.The danger of the malware is that it can automatically trip the breakers within a power system that keep the electrical lines from being overloaded. If one breaker is tripped, the load is shipped to another portion of the power grid. If enough are tripped, in the right places, it’s possible to create a cascading effect that will eventually overload the entire system, said Weatherford, who was formerly the chief security officer at the North American Electric Reliability Corporation, the regulatory authority for North American utilities.“In some cases, it could then take days to restart all the plants,” he said.Two things stand out about the malware, dubbed “Industroyer” by the researchers — it’s an order of magnitude easier to use than previous programs and it wasn’t actually deployed to do any real damage, meaning whoever’s behind the December attack might simply have been testing the waters. In other words, this malware can induce what’s often referred to as a cascading failure.This is what caused the massive blackout that occurred in the Northeastern US and Canada back in 2003. An overgrown tree branch in Ohio touched a power line, which caused that section of the grid to overload and shut down. The electricity had to be transferred to other power lines, which in turn also became overloaded. This chain reaction continued until 55 million people were without power. Cascading failure is the perfect example of just how fragile our power grid can be.
Subsidizing electric vehicles inefficient way to reduce CO2 emissions - Subsidizing the purchase of electric cars in Canada is an inefficient way to reduce greenhouse gas emissions that is not cost effective, according to a Montreal Economic Institute study released Thursday. “It’s just a waste,” said Germain Belzile, one of the authors of the study, which examined electric vehicle subsidies offered by Canada’s two biggest provinces Ontario and Quebec, which can rise to as much as a third of a vehicle’s purchase price, depending on the model. “Not only do these programs cost taxpayers a fortune, but they also have little effect on GHG emissions,” he said. Quebec is offering rebates of up to Can$8,000 for the purchase of new electric or rechargeable hybrid cars—which are significantly more expensive than their gas-guzzling counterparts—while Ontario is offering to refund Can$14,000 of the purchase price. The study estimates that these subsidies cost taxpayers Can$523 per tonne of GHG not emitted in Ontario and Can$288 in Quebec. By comparison, a cap and trade system for big polluters in Quebec and the US state of California, which Ontario is due to join soon, costs a mere Can$18 per tonne.
Newfoundland’s Hydroelectric Megaproject Is a Disaster 500 Years in the Making - It's another banner week in the fine province of Newfoundland and Labrador. We had a three day run of nice weather that got everyone burned to bits and we learned that the hydroelectric megaproject at Muskrat Falls is going to cost the province another billion dollars. For those of you playing the home game, we are now at an estimated cost of $12.7 billion, up from the $7.7 the Tory government promised us back when they sanctioned the project in 2012. We're over time and over budget and I will eat my hat and my first-born child if we get this piece of shit built without the final damage cracking lucky number 13. More than just cost overruns are at stake, of course. The best (and constantly shifting) current estimates suggest that the electricity bills of most Newfoundlanders will double or maybe triple whenever the project comes online, forcing larges swathes of the country's poorest province to start choosing between rent or groceries or power. The provincial government may not even feel the full sting of all this until 15 or 20 years down the line when we have to start paying for all this with interest, and this still doesn't take into account the concerns of the Indigenous groups and Labradorians who live in the areas directly affected who might have to contend with their homes flooding or their water poisoned or both. Then, of course, there is always the possibility that the geographical site of the dam itself is unstable and we run the risk of the North Spur dam collapsing, wrecking the area, bankrupting the province and maybe killing a bunch of people.
The World’s Largest Coal Mining Company Is Closing 37 Sites -- Coal India—a government-back coal company–is reportedly closing 37 of its "unviable" mines in the next year to cut back on losses.India is primed for an energy revolution. The country's ongoing economic growth has been powered by fossil fuels in the past, making it one of the top five largest energy consumers in the world. But it has also invested heavily in renewables, and the cost of solar power is now cheaper than ever. In some instances, villages in India have avoided coal-powered electricity altogether, and "leapfrogged" straight to solar power.Partly because of this shift, Coal India, which produced 554.13 million tonnes of coal in the 2016-2017 fiscal year (for comparison, the largest company in the US produced about 175 million in 2015) saw demand dip in recent months. This is not the first sign that coal is no longer the most economic option for emerging economies like India and China. Earlier this year, the heavily industrial state of Gujarat cancelled its proposed coal power plants. And a few weeks ago The Hindu reported that Coal India had identified another 65 mines in losses.India's energy situation is changing so fast that even expert predictions about its switch to renewables are wildly off: A study from last year claimed India would be building more than 300 coal plants in the next 10 years, but experts said the data was already outdated by the time the report was published, and that India would be moving toward renewables instead. "For the first time, solar is cheaper than coal in India and the implications this has for transforming global energy markets are profound," said Tim Buckley, Director of the Institute for Energy Economics and Financial Analysis (IEEFA) in a statement.
Regulators move to pull the plug on Mississippi coal plant(AP) — Mississippi utility regulators want to pull the plug on costly technology at a first-of-its-kind power plant, saying one of the nation's largest utilities should absorb more than $6.5 billion in losses and ratepayers should pay nothing more.Three Mississippi Public Service Commissioners said Wednesday that the Kemper County plant, meant to show coal could be burned cleanly, should burn only natural gas. An environmental activist who opposes coal burning said the decision could discourage other utilities from proposing similar projects.The Commission directed its lawyers to draft an order that it plans to adopt July 6. It would give Mississippi Power Co. 45 days from then to settle all rate matters regarding the $7.5 billion plant.Mississippi Power, a unit of Atlanta-based Southern Co., issued a statement saying it would review the order when issued, but declined to answer questions.The plant, originally supposed to cost $2.9 billion, is designed to take soft lignite coal and turn it into a synthetic gas that can be burned to generate electricity, capturing climate-warming carbon dioxide and other pollutants. But the Kemper County plant's cost has ballooned and it's running more than three years behind schedule. Its gasifiers have run intermittently in recent months, but Mississippi Power has yet to achieve reliable commercial operation.The outline of the deal sought by the three elected commissioners calls for Mississippi Power to run the plant on conventional natural gas, as it has mostly done since 2014, and for ratepayers to only pay for the $840 million in equipment that commissioners already approved. Southern shareholders, who have already taken $3.1 billion in losses, could absorb roughly another $3.5 billion.
Southern Company and Mississippi Power announce suspension of gasification operations at Kemper: Southern Company and Mississippi Power today announced the company is immediately suspending start-up and operations activities involving the lignite gasification portion of the Kemper County energy facility. The combined cycle plant has been serving customers with reliable and affordable electricity for almost three years. The facility will continue to operate using natural gas pending the Mississippi Public Service Commission’s decision on future operations. This action is being taken to preserve the safety and health of the workforce and safety of the facility, while still retaining the necessary workforce to operate the combined cycle power plant. “We are committed to ensuring the ongoing focus and safety of employees while we consider the future of the project, including any possible actions that may be taken by the Commission,” said Southern Company Chairman, President and CEO Thomas A. Fanning. “We believe this decision is in the best interests of our employees, customers, investors and all other stakeholders.” Southern Company and Mississippi Power believe this is the appropriate step to manage costs given the economics of the project and the Commission’s intent to establish a settlement docket to address Kemper-related matters including the future operation of the gasifier portion of the project.
In Blow to ‘Clean Coal,’ Flawed Plant Will Burn Gas Instead - The Southern Company on Wednesday effectively gave up on an ambitious “clean coal” project, announcing that a flawed coal-fired power plant in central Mississippi would now burn natural gas instead. The Kemper County plant, built to take advantage of a strip coal mine next door, was three years behind schedule and, at a cost of about $7.5 billion, $4 billion over its projected budget. Equipment meant to turn the coal into gas and remove at least two-thirds of the carbon dioxide from it to keep it out of the atmosphere never worked as designed. Last week, the Mississippi Public Service Commission issued an ultimatum about the troubled project, setting a deadline of July 6 to begin negotiations on its future and recommending that it run on natural gas. The commission had proposed that most of the billions of dollars in losses from the plant be absorbed by shareholders, not by electricity ratepayers.The lignite coal that is mined adjacent to the Kemper County plant emits more climate-warming carbon dioxide per unit of heat than other coal, and far more than natural gas. Southern had intended the plant to demonstrate how even the dirtiest coal could be cleaned up. But in their statement last week, the state regulators referred to it as “unproven technology” that put shareholders and customers at financial risk. The plant has been running on gas for most of the past three years as engineers tried to get the gasifying equipment to work properly. In all, only a tiny amount of carbon dioxide — about 92,000 tons — has been captured. A typical coal plant produces about three million tons of the gas per year.
Future coal production depends on resources and technology, not just policy choices - EIA projects that trends in coal production in the United States could range from flat to continuing declines through 2040. Electric power generation accounts for more than 92% of U.S. coal demand, and domestic coal production has declined significantly over the past decade as coal has been displaced by natural gas and renewables in electric generation. EIA’s Annual Energy Outlook 2017 (AEO2017) includes cases with alternative assumptions about U.S. environmental policy and levels of oil and natural gas resource development and technological advancement. Across these cases, the outlook for coal can vary considerably based on its relative economics compared with natural gas and renewables in the power sector. The AEO2017 also presented a version of the Reference case without the effects of the Clean Power Plan (No CPP case). After the release of AEO2017, EIA developed an additional case without the Clean Power Plan under High Oil and Gas Resource and Technology assumptions. The AEO2017 Reference case, which is designed to apply all current laws and regulations (including the CPP), forecasts U.S. coal production declining from 740 million short tons (MMst) in 2016 to 620 MMst in 2040. By 2040, U.S. coal production drops to roughly half the level of peak coal production reached by the United States in 2008. Coal generation and production are significantly higher in the No CPP case, which otherwise applies the Reference case resource and technology assumptions, as the existing fleet of coal-fired generators can be more fully utilized and fewer coal-fired generators are retired. As a result, in the No CPP case, coal production stabilizes at about 900 MMst from 2025 through 2040.
Trump’s Plans for a Nuclear Revival Will Begin With a Study -- President Donald Trump has a plan to help the aging fleet of U.S. nuclear reactors estimated to be losing nearly $3 billion a year: study the issue. At the culmination of the White House "Energy Week," Trump is set to announce a comprehensive review of U.S. nuclear regulation, stopping short -- for now -- of the big federal interventions advocates say are needed to revitalize the industry, which is struggling to compete against cheap natural gas and dispose of its radioactive waste. "I have no idea what a review will tell us that we don’t already know," said Mike McKenna, a Republican energy strategist with close ties to the administration. "For anyone who knows nuclear, there’s no doubt about what needs to be done. It’s a question of doing it -- not talking about it." In his speech, Trump is also set to describe how growing exports of oil and natural gas are creating domestic jobs, helping allies abroad and boosting the global influence of the U.S., according to a person familiar with the matter. Along with the nuclear review, Trump will highlight U.S. coal exports to Ukraine, the person said, declining to be identified before the announcement. The nuclear assessment is set to go further than other, more discrete reviews by analyzing an array of regulatory challenges and possible prescriptions for fixing them. Rescuing the nuclear industry is a costly, complex challenge for the Trump administration. Subsidizing at-risk nuclear reactors to keep them online through 2020 would require an estimated $2.9 billion annually, Bloomberg New Energy Finance estimates. And making deeper market changes to better compensate nuclear power plants for the reliable, zero-carbon electricity they offer depends on action by the Federal Energy Regulatory Commission, which lacks a working quorum.
Environmental groups challenge TVA nuclear reactor plan (AP) — Environmental groups are challenging the Tennessee Valley Authority's proposal to use a Tennessee nuclear reactor design site abandoned in the 1970s to develop new small modular reactors. According to the Chattanooga Times Free Press, the Southern Alliance for Clean Power, the Union of Concerned Scientists and the Blue Ridge Environmental Defense League have challenged the Oak Ridge project's site application. They say the reactors remain untested, unsafe and unneeded. The Nuclear Regulatory Commission is reviewing the application to determine if the site works for two or more reactors generating up to 800 megawatts of nuclear power. Sara Barczak, the high risk energy choices program director with the Southern Alliance for Clean Energy, compared the project to the Clinch River Breeder Reactor project that was planned for the site in the 1970s, but was scrapped amid escalating prices for the technology. "We are very concerned that history is once again repeating itself," Barczak said. "And we are concerned that billions of dollars could be spent on a technology that is unproven, untested and significantly more expensive than other types of power technology that are available to TVA." TVA says it's seeking the permit in case it wants to increase future nuclear power generation. Spokesman Jim Hopson says TVA hasn't decided if it will build the reactors.
Hinkley plant could cost $38 bln in electricity payment top-ups -- Britain’s deal with EDF to build the Hinkley Point C nuclear plant is risky and could lead to requests for more cash and electricity payment top-ups worth 30 billion pounds ($38 billion), a parliamentary watchdog said on Friday. “Delays have pushed back the nuclear power plant’s construction, and the expected cost of top-up payments … has increased from 6 billion pounds 30 billion pounds,” the report from the National Audit Office (NAO) said.The NAO is publishing its report just as the government has committed to help to curb energy costs as part of its new policy objectives.Hinkley Point C is Britain's first new nuclear plant to be built in decades. It has been plagued by delays and criticized for its guaranteed price for electricity, which is higher than current market prices.EDF's UK arm EDF Energy is building the 18 billion pound plant in southwest England with China General Nuclear Power Corporation (CGN), which has a 33.5 percent stake. Britain awarded the project a minimum price guarantee of 92.5 pounds per megawatt hour (MWh), inflation linked, for 35 years. Under the contract, the government will pay the difference between the wholesale electricity price and the minimum it has promised – so-called top-up payments. British spot wholesale electricity prices have fallen since the deal was struck in 2013, and currently trade around 40 pounds per MWh.
Ohio's fracking taxes debated again - - Ravenna Record Courier - - It wouldn't be a biennial budget debate without a little final talk of raising taxes on oil and gas produced via horizontal hydraulic fracturing. It was toward the end of the first gathering of the Conference Committee, the panel that will spend coming days haggling over a final version of the two-year spending plan, that there was a mention of the fracking and taxing issue. Not too long ago, fracking was a hot topic of discussion around the Statehouse, with frequent mentions and hopes of big boosts to the state economy, thanks to deep underground fuel deposits in eastern Ohio's shale deposits. Fracking-related oil and gas has helped that part of the state, with investments from companies in wells and increased production. But fracking talk in general and related tax debates have quieted considerably as of late, with clear indications that the governor and Republican lawmakers haven't found common ground on whether to raise rates on oil and gas produced through fracking. Gov. John Kasich included his latest severance tax proposal in the executive budget he offered in late January. Republican lawmakers, as they have on multiple occasions before, dutifully removed it and haven't said a whole lot about it since. That didn't stop the severance tax from making a brief appearance during Conference Committee, however. "You and I couldn't have a budget conversation if I didn't bring up my favorite [topic], the severance tax," said Rep. Jack Cera (D-Bellaire), in questions to state budget Director Tim Keen. Cera specifically asked about the balance of the severance tax fund and projections for growth moving forward. It's grown pretty substantially even at the low severance tax that we have," he said.
Enbridge wants to install 22 anchors on Line 5 - Enbridge Inc. is seeking permission to install 22 new screw anchor supports on its Line 5 pipeline under the Straits of Mackinac this year.The U.S. Army Corps of Engineers and the Michigan Department of Environmental Quality are reviewing the application, which is open to public comment until June 29. (click here to comment)The state is not required to hold a public hearing on the application, but it may schedule a meeting if there's enough public interest.Last year, the state received more than 4,000 comments on Enbridge's similar application to install four anchor structures on unsupported spans along the twin pipeline under the straits west of the Mackinac Bridge between McGulpin Point and Point La Barbe."This is the summer of Enbridge," said Joe Hass, district supervisor with the DEQ Water Resources Division office in Gaylord."The sooner we make a decision on having a meeting, the better."Enbridge calls the anchors are a preventative maintenance measure for its nearly-geriatric pipeline, which critics say poses to much risk to the Great Lakes and should be decommissioned before it ruptures and spills light crude oil.Enbridge says the 64-year-old line can operate indefinitely if maintained and points to recent high marks from a federal review of its past inspection reports as well as two successful pressure tests this month as evidence of its overall integrity.The structures clamp the pipeline to the lakebed in a location of tremendous currents between Lake Michigan and Lake Huron, which change the landscape of the bottom and wash away large areas of dirt under the pipes. Enbridge only got serious about addressing the erosion in 2001 after allowing unsupported spans of 140 feet or more to go unchecked for years, according to federal documents. The state's easement mandates support across any span longer than 75 feet. The company says it has installed 128 supports since 2002. Inspection reports show there have been numerous times the pipeline was out of compliance with the easement, as recently as last year.
Michigan official calls for shutting down oil pipeline - ABC News: Michigan's attorney general on Thursday called for shutting down twin oil pipelines beneath the waterway where Lakes Huron and Michigan meet, as the state released a consultant's report outlining alternative scenarios for the future of oil transport in the ecologically sensitive tourist destination. Republican Bill Schuette said a "specific and definite timetable" should be established for decommissioning the nearly 5-mile-long (8-kilometer-long) section of Enbridge Inc.'s Line 5 in the Straits of Mackinac, which environmental groups want removed but the Canadian pipeline company insists is in good shape. "The safety and security of our Great Lakes is etched in the DNA of every Michigan resident," Schuette said, adding that "the final decision on Line 5 needs to include a discussion with those that rely on propane for heating their homes, and depend on the pipeline for employment." The segment is part of Enbridge's sprawling Lakehead pipeline network, which transports oil and liquid natural gas to markets in the U.S. Midwest, East Coast and eastern Canada. Line 5 runs underground from Superior, Wisconsin, across Michigan's Upper Peninsula to the straits area, where it divides into two 20-inch pipes that rest on the lake floor. It continues south through the state's Lower Peninsula to Sarnia, Ontario, carrying about 23 million gallons (87 million liters) of light crude oil and liquid natural gas daily. Enbridge, based in Calgary, Alberta, says the pipeline delivers crucial supplies of oil for gasoline, propane and other refined products and is closely monitored.
First permit application revives 'fracking' debate in Illinois - stltoday.com: The first application for a drilling permit has renewed the fracking debate in Illinois four years after the controversial practice was approved. Woolsey Companies Inc., based in Wichita, Kan., is seeking permission to drill a mile-deep well near the southeastern Illinois community of Enfield, in White County. A second public comment period on the application is expected after the Illinois Department of Natural Resources found a well-location error in the original filing in May. The application is the first since then-Gov. Pat Quinn signed the state "fracking" law in June 2013. Regulations were not finalized until November 2014 following an extended fight involving the department, environmentalists and energy companies.DNR spokesman Tim Schweizer said Monday that Woolsey has indicated the application would be resubmitted with the corrected well location and other project details sought by the agency. "They are going to resend the application, and that restarts the clock," said Schweizer. "Other than that, it's gone pretty smoothly." In addition to correcting the location, the department has asked for more information on the operations plan, management of fracking chemicals, well safety and containment measures, traffic management at the site, restoration and topsoil preservation and project security bonds. Woolsey vice president of business development Mark Sooter said company officials expected the process to take time, especially since Woolsey is the first to apply in Illinois. "We plan on going forward with the permitting process," said Sooter. "There are 27 different forms and plans you have to submit, and there were some things we need to correct."
Twenty-Five Tanker Cars Derail In Plainfield, Causing Crude Oil Spill (CBS) — A freight train derailment Friday evening tied up traffic in southwest suburban Plainfield and caused a crude-oil spill. Several tankers of a Canadian National Ry. freight train derailed in “accordion” fashion at Illinois Route 59 and Riverwalk Court around 6:30 p.m. Plainfield Police Sgt. Mike Fisher says 25 cars carrying crude oil were involved, and three were leaking an estimated 40,000 gallons of crude. Emergency crews have been able to cordon off the spilled material and keep it from reaching the nearby DuPage River, he said. No one is believed to be in danger, though residents may smell the petroleum product, Fisher said. The Plainfield Fire Protection District has called in hazardous materials teams and foam trucks to minimize the chances of an explosion on the former Elgin, Joliet & Eastern Ry. freight line. The derailment does not impact Metra operations. There are a number of road closures because of the derailment, including Route 126 and Naper-Plainfield Road. The Plainfield Police Department tweeted that motorists should steer clear of the area.
Clogged oil arteries slow U.S. shale rush to record output | Reuters: A gallon of gasoline that allows a driver on the U.S. East Coast to travel about 25 miles has already navigated thousands of miles from an oil field to one of the world's largest fuel markets. If its last stop is one of the region's struggling refineries - an increasingly unlikely prospect - the crude used to produce the gas would have probably arrived by tanker from West Africa. That's because the region's five plants have no pipeline access to U.S. shale fields or Canada's oil sands. Or the journey to an East Coast gas pump might start instead in North Dakota's Bakken shale fields - which means it could take up to three months, including a stop at a Gulf Coast refinery. The same trip would have been even longer a month ago, before the opening of the controversial Dakota Access Pipeline. That line was nearly derailed last year by protesters. Its arduous path to approval provides one case study in the oil industry's struggle to open up a bottleneck holding back resurgent domestic oil production - an outmoded U.S. distribution system. The equally divisive Keystone XL pipeline provides a more poignant example: First proposed in 2008 to connect Canada's oil sands to Gulf Coast refineries, the line may now never get built - despite the enthusiastic backing of U.S. President Donald Trump. As permitting dragged on for years, oil prices crashed, dimming the prospects for investment in the oil sands. Top firms have since written down or sold off billions of dollars in Canadian production assets and decamped for U.S. shale fields. Pipeline construction often lags production booms by years - if proposed lines are built at all - because of opposition from environmentalists and landowners, topographic obstacles, and permitting and construction challenges. That forces drillers to limit output or ship oil domestically, usually by rail - which is more costly and arguably less safe. The crimped production, in turn, costs the economy jobs, keeps prices higher for consumers and stymies the nation's long-held geopolitical goal of reducing dependence on foreign oil.
Demand To Ship Gasoline On Top US Pipeline At 6-Year Low (Reuters) - The operator of the biggest U.S. fuel pipeline system said on Thursday demand to transport gasoline to the country's populous northeast is the weakest in six years, the latest symptom of a global oil market grappling with oversupply. Summer is typically when gasoline demand peaks in the world's biggest oil consuming country as motorists hit the road for vacation, and keeping their gas tanks full strains the capacity of U.S. refiners and pipelines. This year, so much fuel is stored in tanks in the Northeast that Colonial Pipeline Co said in a notice to customers that demand from refiners and fuel traders to bring gasoline through its pipeline to the region from refining hubs in the South was the worst in six years. For the first time since 2011, demand for the pipeline was below capacity for a five-day period starting early next week, Colonial said on Thursday. The news pushed down gasoline prices in the Gulf region, where the pipeline begins. Benchmark U.S. gasoline prices led the energy complex higher and were up about 2.1 percent shortly after midday, partly boosted by expectations that fewer barrels flowing into the East Coast would alleviate a glut. Typically, demand exceeds the pipeline's space, forcing refiners and traders to supplement delivery with tanker shipments or imports. "The only reason they wouldn't be full is clearly that inventory levels are high enough that there is no incentive to move product to New York," said Sandy Fielden, director of oil and products research, Morningstar in Austin, Texas. Even when inventories are high, shippers typically keep pumping full volumes just to ensure they keep their rights to the line space for when they really need it, said Fielden. "The situation is quite unusual," he said.
US exports record LNG volume in May, despite low profits -- US LNG export volumes climbed to a record high in May which came in spite of exceptionally low profit margins on spot cargoes sold into consumer markets in Europe and Asia.Last month, the US exported 17 LNG cargoes carrying the liquefied equivalent of 58.3 Bcf of gas, data compiled by Platts Analytics showed. Over roughly the same period, the profit margin for traders selling spot cargoes to West India and Northeast Asia fell to record lows at minus 26 cents/MMBtu and 4 cents/MMBtu, respectively, Platts Analytics data show. Compounding the puzzling coincidence, at least seven of the cargoes exported last month now appear to be sailing toward destinations in Northeast Asia, West India and the nearby Middle East region. Historical data collected by Platts Analytics on US export trends show offtakers Shell, Cheniere Marketing, Gas Natural and others having delivered large volumes to India, China, Jordan, Japan, Turkey and South Korea, implying that some of last month's deliveries to the Middle East and Asia were used to fulfill contractual obligations. Another six cargoes shipped from Sabine Pass in May appear to be en route to destinations in South America and Mexico, where shorter shipping distances may have provided exporters with a more robust margin for profit. In May, Platts' DES Brazil netforward price, which provides a price indication for demand in the South Atlantic, averaged $5.57/MMBtu, roughly on par with the prompt-month JKM price, Platts data show. Record-high export volumes in May come as Cheniere Energy continues to ramp up liquefaction capacity at the Sabine Pass terminal, which currently stands at 2.1 Bcf/d with Trains 1-3 having all reached substantial completion. Feedgas deliveries to the Louisiana Gulf Coast terminal, which exceed liquefaction capacity due to operational losses, have surpassed 2.4 Bcf/d on two occasions in April and May.
Trump to call for US `dominance’ in global energy production — Donald Trump will tout surging US exports of oil and natural gas during a week of events aimed at highlighting the country’s growing energy dominance. The president also plans to emphasise that after decades of relying on foreign energy supplies, the US is on the brink of becoming a net exporter of oil, gas, coal and other energy resources. As with previous White House policy-themed weeks, such as a recent one focusing on infrastructure, the framing is designed to draw attention to Trump’s domestic priorities and away from more politically treacherous matters such as multiple investigations into Russian interference in the 2016 election. With “Energy Week,” Trump is returning to familiar territory — and to the coal, oil, and gas industries on which he’s already lavished attention. Trump’s first major policy speech on the campaign trail, delivered in the oil drilling hotbed of North Dakota in 2016, focused on his plans for unleashing domestic energy production. The issue has also been a major focus during Trump’s first five months in office, as he set in motion the reversal of an array of Obama-era policies that discourage both the production and consumption of fossil fuels. Plans for the week were described by senior White House officials speaking on condition of anonymity because the details hadn’t yet been formally announced
Trump pushes 'energy week' and goal of exporting resources - The Blade: — With U.S. exports of oil and natural gas surging, President Donald Trump says the U.S. is on the brink of becoming a net exporter of oil, gas and other resources. The White House is launching its “energy week” with a series of events focused on jobs and boosting U.S. global influence. The events follow similar policy-themed weeks on infrastructure and jobs. The previous weeks were largely overshadowed by ongoing probes into whether Trump campaign officials colluded with Russia to influence the 2016 election, as well as scrutiny over Trump’s firing of James Comey as FBI director. Drawing fresh attention now is the Republican bid to scuttle the health care law despite a rebellion within Senate GOP ranks. Energy Secretary Rick Perry said Monday the Trump administration is confident officials can “pave the path toward U.S. energy dominance” by exporting oil, gas and coal to markets around the world, and promoting nuclear energy and even renewables such as wind and solar power. “For years, Washington stood in the way of our energy dominance. That changes now,” Perry told reporters at the White House. “We are now looking to help, not hinder, energy producers and job creators.” The focus on energy began at a meeting between Trump and India’s Prime Minister Narendra Modi, with U.S. natural gas exports part of the discussion. Trump is expected to talk energy Wednesday with governors and tribal leaders, and he will deliver a speech Thursday at the Energy Department..
US Energy Secretary Perry pushes plan to boost oil, gas production -- US Energy Secretary Rick Perry on Tuesday accused the Obama administration of hindering US fossil energy production and pushed the Trump administration's energy policy agenda focused on US "energy dominance." In a speech at the US Energy Information Administration's annual energy conference, Perry said that during the Obama administration production on federal lands and waters declined while oil and natural gas permits "were slow-walked or slow-talked and then they were left to wither on the vine." "Those days are over," Perry said. "We're done with that type of approach." During a White House press briefing later, Perry said that the Trump administration was "ending the bureaucratic blockade that has hindered American energy creation." Perry's statements Tuesday seem at odds with the oil and gas shale boom which took place under the last administration. During Obama's presidency, for example, US dry gas production climbed from about 20.6 Tcf in 2009 to a peak of nearly 27.1 Tcf in 2015, according to EIA data. US crude oil production climbed from about 5.35 million b/d in 2009 to a peak of nearly 9.42 million b/d in 2015, according to EIA.
Trump says the Atlantic, Arctic could soon be open to oil drilling - The White House is making a bid to overturn the Obama administration’s five-year plan forbidding oil and gas exploration in the Arctic and Atlantic oceans and will examine opportunities to drill almost anywhere off the U.S. coast.Interior Department officials said Thursday that opening most of the outer continental shelf to leasing is part of President Trump’s strategy to make the United States a global leader in energy production, stimulate coastal activity and create thousands of jobs. But as onshore oil and natural gas production has surged from horizontal drilling, helping to lower the price of petroleum, interest in offshore drilling has fallen.A barrel of petroleum sells for less than $45, and many oil companies balk at the massive investment in equipment needed to drill offshore when the price is lower than $85, analysts say. Vincent DeVito, Interior’s counselor for energy policy, said a 45-day comment period will start Monday with a request for public comment in the Federal Register. DeVito said stakeholders, such as state governors, would be contacted for their input, as will the Department of Defense, which frowns upon exploration near bases and areas where ships conduct training exercises. Royal Dutch Shell suspended drilling in the Arctic about two years ago when its oil exploration there produced a dry hole. The company said the result didn’t justify the massive risks and expense of drilling in the environmentally sensitive Arctic frontier.DeVito said the Obama administration’s plan, to keep more than 90 percent of the outer continental shelf off limits, isn’t feasible given a recent Trump administration analysis showing oil production there could create 300,000 jobs.“Our country has a massive energy economy, and we should absolutely wear it on our sleeves, rather than keep energy resources in the ground,” he said in a statement. “This work will encourage responsible energy exploration and production, in order to advance the United States’ position as a global energy force and foster security for the benefit of the American citizenry.”
White House announces plan to tap Glick for FERC post - In a move that could enable faster Senate action on pending nominees needed to restore a quorum at the US Federal Energy Regulatory Commission, the White House late Wednesday announced its intent to tap Democrat Richard Glick to serve on the commission. Glick is currently minority general counsel for the Senate Energy and Natural Resources Committee and has previously served as vice president of government affairs for Iberdrola's renewable energy, electric and gas utility, and natural gas storage businesses in the US. His likely nomination was quickly welcomed by Senate Minority Leader Chuck Schumer, Democrat-New York. "Richard Glick is a great pick and I'm glad the administration accepted our recommendation," Schumer said in a statement. "Once he is confirmed by the Senate, I look forward to working with him to support 21st century energy infrastructure, promote transparency, and encourage stakeholder input into FERC decision-making." Senator Maria Cantwell of Washington, the top Democrat on the Senate energy panel, echoed this sentiment. "Rich Glick has had an accomplished career working on many of the cutting-edge issues associated with the transformation of our energy sector. He will make an excellent addition to the Federal Energy Regulatory Commission," she said in a statement Thursday. Two Republicans previously nominated by President Donald Trump to serve at FERC were confirmed by the Senate energy panel but are idling in a queue of other nominees. Democrats had signaled their desire for a nominee from the minority to move alongside the two Republicans previously named.
A Look at Energy Markets After the First Five Months of Trump - As the White House kicks off “Energy Week,” here’s a look at how energy markets are faring so far this year -- and how the Trump administration stands to change them:
- COAL: President Donald Trump has killed a stream-water protection rule that threatened to curb coal operations, directed the Interior Department to lift a moratorium on new coal leases on federal land, and started chipping away at environmental regulations that made coal-fired power plants increasingly expensive to run. U.S. coal production is up in 2017 from the same period a year ago amid supply cuts in China and Australia that spurred a price rally for metallurgical coal (the kind used to make steel).
- CRUDE: Oil prices are tanking this year, in part because U.S. production keeps rising. West Texas Intermediate, the American benchmark, reached a high of $54.45 in February before sinking into a bear market last week amid concerns that a supply glut may stick around for years. Rigs drilling for oil in the U.S. are at their highest since April 2015, and more shale supplies are heading abroad than ever before. The Trump administration cleared the way for the controversial Dakota Access oil pipeline to start service, and granted a permit to build the Keystone XL crude pipeline from Canada into the U.S.
- NATURAL GAS: With Cheniere Energy Inc.’s liquefied natural gas export terminal in Louisiana now online, the U.S. is sending record volumes of the heating and power-plant fuel to countries including Mexico, China, Japan, Turkey and Spain. The White House has been ramping up efforts in recent months to promote overseas sales. POWER: Trump’s decision to withdraw from the Paris climate accord and gut the centerpiece of the Obama administration’s climate policy hasn’t stopped clean power from continuing to grow. While the White House works to dismantle the Clean Power Plan, which would’ve required electricity generators across the U.S. to curb emissions, solar and wind farms now make up 10 percent of America’s power supplies, their highest share yet and up from about one percent a decade ago.
U.S. exports of crude oil and petroleum products have more than doubled since 2010 -- U.S. crude oil and petroleum product gross exports have more than doubled over the past six years, increasing from 2.4 million barrels per day (b/d) in 2010 to 5.2 million b/d in 2016. Exports of distillate, gasoline, propane, and crude oil have all increased, but at different paces and for different reasons. Restrictions on exporting domestically produced crude oil were lifted in December 2015, and in 2016, the United States exported an average of 520,000 b/d. U.S. crude oil exports reached 1.1 million b/d in February 2017, the highest monthly level on record. While Canada remains the largest destination for U.S. crude oil exports, Canada’s share of total U.S. crude oil exports has declined, dropping from 92% in 2015 (427,000 b/d) to 58% in 2016 (301,000 b/d). Other leading destinations for U.S. crude oil exports in 2016 included the Netherlands, Curacao, China, Italy, and the United Kingdom. Beyond the lifting of crude oil export restrictions, other factors such as favorable price differentials, lower shipping costs, and rising domestic production have increased U.S. crude oil exports. U.S. production fell through the first nine months of 2016, but increased at the end of 2016 and has continued to increase through the first five months of 2017. U.S. crude oil exports in 2016 were 55,000 b/d greater than exports in 2015—a slower rate of growth compared with year-over-year changes in 2015 and 2014. U.S. exports of distillate also experienced slower year-over-year growth compared with recent years. In 2016, the United States exported 1.2 million b/d of distillate, the country’s largest petroleum product export. Between 2010 and 2016, U.S. exports of distillate grew by 81% (534,000 b/d), but most of this growth occurred between 2011 and 2013. The largest destination for U.S. distillate exports in 2016 was Mexico, averaging 182,000 b/d, followed by Brazil (125,000 b/d) and the Netherlands (108,000 b/d). U.S. exports of total motor gasoline have more than doubled since 2010, growing from 335,000 b/d in 2010 to 761,000 b/d in 2016. The growth in gasoline exports took place while domestic consumption, as measured by product supplied, was also increasing. Mexico is the top destination for U.S. motor gasoline exports, and the volume of gasoline trade is significant to U.S. refineries. Over the past five years, U.S. exports to Mexico accounted for between 44% and 53% of total U.S. gasoline exports.
Cheniere Gets Ready for ‘Next Round’ in Global Gas Export Market - Sixteen months after finishing a terminal and sending the first cargo of U.S. shale gas overseas, Cheniere Energy Inc. is already preparing for its next round of export projects. Cheniere is looking at new ways to finance more terminals that chill gas to a liquid and ship it across the globe, including skipping banks altogether and seeking out other capital sources, Chief Executive Officer Jack Fusco said in an interview at the company’s headquarters in Houston. The company has room to grow: It’s leased additional acres at its flagship Sabine Pass terminal in Louisiana and has the option to purchase more land at a Corpus Christi, Texas, site, where another export project is under construction. Cheniere’s looking to build more LNG plants even as supplies from the U.S. to Australia are flooding the global market, expanding a glut of the fuel and prompting investors to back new export facilities at the slowest pace since 1999. But a second round of projects is emerging on speculation that the slowdown will lead to a post-2020 construction boom that’ll benefit low-cost producers offering flexible contracts.“Our goal is to leverage the existing infrastructure to build whatever the next round requires,” Fusco said Monday. “We can do a better job financing and getting our financing costs down in the capital markets. We’re evaluating all those things to try to get ourselves much more competitive.” Fusco said the company is open to building LNG plants smaller than the ones operating at Sabine Pass, which can each produce 4.5 million tons of the fuel a year. Cheniere’s potential move to scale down has to do with “speed to market and what the customer needs,” he said.
In disaster's wake, BP doubles down on deepwater despite surging shale -- About 300 BP workers commute 150 miles here by helicopter, from the Louisiana coast to a deep-sea drilling platform that can produce more oil in a day than a West Texas rig can pump in a year. On the deck of Thunder Horse, they work two-week shifts, drink seawater from a desalination plant, and eat ribs and chicken ferried in by boat. On the ocean floor, robots provide remote eyes and arms as drills extract up to 265,000 barrels per day. "There's a whole city below us," said Jim Pearl, Marine Team Leader on the platform. This is just one of the four Gulf of Mexico platforms on which BP has staked its future in U.S. oil production. Seven years after its Deepwater Horizon explosion and oil spill, BP is betting tens of billions of dollars on the prospect that it can slash the costs of offshore drilling by half or more - just as shale oil producers have done onshore. The firm says it can do that while it continues to pay an estimated $61 billion in total costs and damages from the worst spill in history - and without compromising safety. BP's Gulf platforms are key to a global strategy calling for up to $17 billion in annual investments through 2021 to increase production by about 5 percent each year, Chief Executive Officer Bob Dudley recently told investors. "Our strategy is to take this investment that we spent so much money building, and keep it full" to the platform's capacity, Richard Morrison, BP's regional president for the Gulf of Mexico, told Reuters during the first tour of a BP Gulf drilling platform since the disaster. "We're also exploring for larger pools of oil."BP's deepwater double-down is all the more striking for the contrast to its chief competitors, who have cooled on offshore investments in light of the lower costs and quicker returns of onshore shale plays.
Bayou Bridge Pipeline opponents aim to build Standing Rock-like protest camp - Environmental advocates opposing the proposed Bayou Bridge Pipeline, have begun seeking building materials, sleeping bags and food supplies to create a protest camp like an encampment in opposition to the Dakota Access Pipeline.The Bayou Bridge project would be at the tail end of a network of pipelines designed to carry oil from North Dakota to Illinois and down to Texas and Louisiana. It would be built by the same company that built the Dakota Access line, Energy Transfer Partners. The pipeline plans call for the Dakota Access pipeline to run through Patoka, Ill, down to Nederland, Tex., and across to Lake Charles. New construction would carry the line across south Louisiana to St. James Parish.The protest group is modeling their new camp after the one established near the Standing Rock Sioux Tribe reservation in North Dakota, said Cherri Foytlin, with Bold Louisiana, an environmental advocacy group. The camp opened Saturday in Louisiana along the route of the proposed pipeline. Protesters are not disclosing the exact location of the camp."A camp is basically a tool in order to pool people together in a heartfelt, prayerful way and build community," Foytlin said. "We want to support the communities that would be affected by this pipeline should it come through." Permits through the state Department of Environmental Quality and the U.S. Army Corps of Engineers are still pending for the Bayou Bridge Pipeline's construction. In response to a request for comment about the protest, an Energy Transfer Partners spokeswoman emailed the following statement Monday (June 26): "As with building any infrastructure project, we respect there will always be a range of different opinions and concerns. It is always our goal to work closely with affected landowners, governments and the neighboring communities to foster long-term relationships and build the pipeline in the safest, most environmentally friendly manner possible."
Gas Takeaway Constraints Pose Challenge for Crude -- Drilling, well completions and multibillion-dollar investments in the Permian are being driven by the region’s potential for producing vast quantities of crude oil. But the Permian juggernaut isn’t only about crude — far from it. Over most of the past 12 months, the fastest-growing energy commodity in the Permian wasn’t crude oil, it was natural gas. And consider this: The U.S. play with the lowest breakeven prices for natural gas is not the Marcellus/Utica. It’s the Permian, where many of the most prolific areas have negative natural gas breakeven prices. And perhaps most important, constrained gas takeaway capacity poses a bigger threat to Permian crude production growth than constrained crude takeaway capacity, because if the gas produced in the play can’t be transported to market, crude production may need to be curtailed. Today we discuss highlights from RBN’s new Drill Down Report, which focuses on the all-important gas side of the U.S.’s hottest hydrocarbon production region. It’s easy — and perfectly understandable — to focus on the crude oil side of the Permian story. As we said in Part 1 of our Drill Down Report series on the Permian, With a Permian Well, They Cried More, More, More - Part 1, for the past two years the super-hot play has been the engine propelling U.S. crude oil production upward. The 70,000-square-mile Permian region in West Texas and southeastern New Mexico has the most favorable production economics of any U.S. play, and half of all the rigs drilling for crude in the U.S. are doing so within the Permian. Crude production there now tops 2.3 million barrels per day (MMb/d), or about one-quarter of total production in the Lower 48.
Understanding Permian Gas Takeaway Capacity at Waha Hub, Part 2 - Permian natural gas production has climbed 1.75 Bcf/d, or nearly 40%, in the past three years to more than 6.3 Bcf/d in 2017 to date, and it’s poised to grow to nearly 12 Bcf/d over the next five years. Note that’s a “dry” or “residue” gas number; gross gas production is a couple of Bcf/d higher. As Permian production growth occurs, pipeline takeaway capacity from the primary trading hub in the area — the Waha Hub — will become increasingly constrained, a trend that will drive pricing and flow dynamics into the early 2020s. How full are the takeaway pipelines now and how quickly will constraints emerge? Today we continue our series on the Waha Hub with a look at current takeaway capacity and flows from the hub.
Understanding Permian Gas Takeaway Capacity at Waha Hub, Part 3 -- Booming Permian natural gas production has increasingly stressed pipeline takeaway in recent months as volume rose to more than 6 billion cubic feet per day (Bcf/d) — up almost 1 Bcf/d from the year-ago level. The production surge has broadened price spreads not only between Waha and other regional hubs, but also within the Permian between Waha and its sister hub, the El Paso Pipeline-Permian price pool. Creative midstream solutions are aimed at relieving these constraints, both in the form of long-haul takeaway and intrabasin pipelines. Of the latter form, few projects have moved with the speed and size of WhiteWater Midstream’s Agua Blanca. Today we continue our series on the Waha Hub with a look at intrabasin Permian midstream gas flows and how Agua Blanca is expected to keep them moving.
Analysts: Water Needs, Spend To Escalate - -- Horizontal drilling and upsized completions have fast-forwarded the oil and gas industry’s demand for water. At the same time, the lower for longer oil price recovery has placed ever more pressure on operators to cut costs, including for water, according to a new report, “Water for U.S. Hydraulic Fracturing,” from Bluefield Research.The report forecasts that at a flat rig count of 650, 20.8 billion barrels (bbl) of water will be required for hydraulic fracturing from 2017 through 2026. Last year, fracturing consumed more than 1.3 billion bbl of water and produced 574 million bbl of water for disposal. Investors and industry players are positioning to play a role in this growing water market.With operators drilling faster, and employing longer laterals, completions now require as much as 12 million bbl of water per frack—triple the volumes of five years ago, the Bluefield authors said. They project that water management, including water supply, transport, storage, treatment and disposal, will total $136 billion from 2017 to 2026 for the U.S. hydraulic fracturing sector. High reuse rates in the Marcellus and scaling Permian activity—where water per frack ratios are the highest—drove treatment spending to about $198 million in 2016 with an annual spend of $307 million expected for 2017. […] Texas and Oklahoma led the U.S. completed horizontal well count from 2011 to 2017, making them the most active markets for hydraulic fracturing and water demand. Bluefield excluded DUCs (drilled but uncompleted wells) from its forecasts; at the end of March 2017, 5,512 DUCs remained, according to DOE estimates. In Texas, oil prices, financial stress and rain have “eased the regulatory pressures in some instances,” the report said, making cost of transport the top concern. Some producers are tapping alternative supplies to enhance sustainability. In Oklahoma, earthquake concerns due to salt water disposal practices are fueling recycling efforts.Annual water demand by basin is led by the Permian, with 45% overall, the Eagle Ford, 12%, the Marcellus, 12%, the Cana Woodford, 8%, and the Haynesville, with 8%.In basins with plentiful access to saltwater disposal wells, like those in Texas and Oklahoma, treatment and reuse remains below 10%. Pennsylvania and Ohio, which have limited disposal well options and more challenging topography, have seen transportation and disposal costs rise as high as $20/bbl, according to Bluefield. This has prompted E&Ps to buy injection well assets, and another “key area of investment” has been the networking of disposal wells with pipelines across shale plays. E&Ps are investing in projects connected to wastewater plants, water recycling facilities and pipeline transport.
Dallas Fed Energy Survey - - Business activity increased in the second quarter, albeit at a slightly slower pace, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index—the survey’s broadest measure of conditions facing Eleventh District energy firms—remained robust at 37.3, slightly below the 41.8 reading last quarter. Despite some deceleration, most other indexes also reflected expansion on a quarterly basis. Responses among oilfield services firms were particularly strong. Oil and gas production increased for the third quarter in a row, according to executives at exploration and production (E&P) firms. The oil production index was 10.2, down from 13.1 last quarter, and the natural gas production index declined seven points to 10.6. This suggests oil and gas production is rising at a slower pace than last quarter. The business activity index for oilfield services firms edged up to 49.3—its highest reading since the survey began in first quarter 2016. Utilization of oilfield services firms’ equipment increased, with the corresponding index at 45.4, up from 26.0 last quarter. Measures of selling prices and input costs suggested some pressure on margins for oilfield services firms. The index of prices received for oilfield services fell to 9.1 from 18.3, while the index of input costs surged to 37.0 from 23.6. Labor market indexes point to rising employment, employee hours, and wages and benefits. Growth in employment was driven primarily by oilfield services firms. The employment index was 40.3 for services firms versus 5.7 for E&P firms. The employee hours indexes showed a similar gap: 43.3 for services firms versus 8.7 for E&P firms. The aggregate wages and benefits index moved up again, to 22.8 from 17.1. The company outlook index posted a fifth consecutive positive reading but fell 25 points to 20.3. Uncertainty regarding the outlook rose again. Over 46 percent of firms reported increased uncertainty about the future, up from 33.8 percent last quarter. On average, respondents expect West Texas Intermediate (WTI) oil prices to climb to $48.79 per barrel by year-end, with responses ranging from $30 to $65 per barrel. Respondents expect Henry Hub natural gas prices will end the year at $3.01 per million British thermal units (MMBtu). For reference, WTI spot prices averaged $43.80 per barrel and Henry Hub spot prices averaged $2.89 per MMBtu during the survey collection period.
Dallas Fed: Business Activity for OFS Highest It's Been In 5 Quarters - Business activity for oilfield services companies increased in 2Q 2017 to its highest reading since 1Q 2016, according to findings from the Federal Reserve Bank of Dallas’ quarterly energy survey, released June 28. Survey respondents represented 138 energy firms (70 E&P and 68 oilfield services) in the Eleventh District (Texas, northern Louisiana and southern New Mexico). Labor market indexes overall (for oil and gas exploration and production firms and oilfield services firms) increased. This includes rising employment, employees hours, wages and benefits. Employment growth was driven by oilfield services firms. Through a set of special questions, the survey also revealed:
- 67 percent of respondents expect the oil market to come into balance in 2018 or sooner
- 55 percent of respondents believe OPEC will continue to limit its oil production beyond March 2018; 45 percent believe OPEC will not
- On average, respondents expect OPEC will produce 32.3 million barrels of crude oil per day in 2H 2017
- 87 out of 115 executives said they are looking to use their internal cash flow to finance increased activity
On average, respondents expect WTI crude oil prices will be $48.79 at year-end. This projection is lower than the Dallas Fed 1Q 2017 survey, in which respondents expected the price to be 453.49. WTI crude oil closed at $44.24 per barrel June 27.
U.S. shale producers are drilling themselves into a hole: Kemp (Reuters) - U.S. shale firms are drilling themselves into a deep hole despite warnings from industry leaders about the risk of flooding the market with too much crude.Drilling and production are rising. Prices are declining. Companies are barely breaking even or losing money. Costs are starting to rise. And share prices are sliding.Current oil prices are not sustainable according to Harold Hamm, the chief executive of Continental Resources, said in an interview on June 28.Prices need to be above $50 per barrel to be sustainable and below $40 would force producers to idle rigs, Hamm said ("Harold Hamm warns oil prices below $40 will idle U.S. drilling", CNBC, June 28)."While this period of adjustment is going on, drillers don't want to drill themselves into oblivion. Back up, and be prudent and use some discipline," he urged rival chief executives.Many of Continental's leases are in North Dakota's Bakken and Oklahoma, where wells are typically more expensive to drill and yield less oil than some other shale plays.The resurgence in shale drilling over the last year has been concentrated in the Permian Basin of Texas and New Mexico, where costs are much lower and yields higher.There are now almost 370 rigs drilling for oil in the Permian compared with 50 in the Bakken, according to oilfield services company Baker Hughes.The number of rigs drilling in the Permian has almost tripled since the end of April 2016, and the Permian now accounts for almost half of the rigs drilling for oil in the United States.But even in the Permian, shale firms have struggled to make money with oil prices stuck below $50, raising questions about the sustainability of the drilling boom.Many shale drillers claim they can drill wells profitability even with benchmark WTI prices below $50 as a result of significant cost reductions and improvements in efficiency. But most shale firms were still losing money or at best breaking even in the first quarter of 2017, even before the renewed slump in prices.
Fracking rarely linked to rise in seismic tremors, U of A study suggests - CBC.ca - Hydraulic fracking has almost no connection to seismic tremors in North America, except in one region, a study from the University of Alberta suggests. Researchers examined more than 50 years of earthquake-rate statistics from the top oil-producing regions in the United States and Canada, and found little correlation between rising oil production and rates of seismic activity.The two-year study revealed only one exception. In Oklahoma, where seismic rates have changed dramatically in the last five years, researchers found a strong link between increased fracking activity and a rise in tremors in the region. What we need to know first is where seismicity is changing as it relates to hydraulic fracturing or saltwater disposal," said geophysicist Mirko Van Der Baan in a media release. "The next question is why is it changing in some areas and not others. If we can understand why seismicity changes, then we can start thinking about mitigation strategies." Van Der Baan and his team compared seismic rates from the top hydrocarbon-producing states in the United States and the top three provinces by output in Canada: Oklahoma, North Dakota, Ohio, Pennsylvania, Texas, West Virginia, Alberta., B.C. and Saskatchewan.The study found no correlation between seismicity and increased oil and gas production, despite eight- to 16-fold i ncreases in production in some regions, challenging other studies which have found a definitive link.
With All the Fracking Going On, How Much Methane Is Leaking? - Natural gas is often considered the cleanest fossil fuel, but could it actually be dirtier than coal ? Watch as New York Times reporter Mark Bittman, in the above Year's of Living Dangerously video, investigates how much methane is leaking at fracking wells. Find out how the natural gas industry's claims compare to what scientists are reporting. See what happens when Gaby Petron, an atmospheric scientist with NOAA, converts her van into a mobile methane detector and sets out across northeastern Colorado for two years, taking thousands of readings to uncover the truth.
A New Problem for Keystone XL: Oil Companies Don’t Want It - Wall Street Journal - Keystone XL is facing a new challenge: The oil producers and refiners the pipeline was originally meant to serve aren’t interested in it anymore. Delayed for nearly a decade by protests and regulatory roadblocks, Keystone XL got the green light from President Donald Trump in March. But the pipeline’s operator, TransCanada Corp., is struggling to line up customers to ship crude from Canada to the U.S. Gulf Coast..
Another Pipeline Connection To The DAPL -- Watford City Area -- June 26, 2017 -- A "tip of the hat" to a reader for sending me this link to a press release: American Midstream Notice of Binding Open Season for Crude Oil Deliveries to Dakota Access Pipeline at Watford City. Data points:
- open season
- a newly constructed delivery point interconnecting into the DAPL in Watford City
- capacity: to accept over 40,000 bbls/day
- to commence service in August, 2017
“Timing way off” – BHP chair regrets $20bn US fracking spree – BHP Billiton Ltd. Chairman Jacques Nasser said the timing of its $20 billion spree into U.S. shale in 2011 was a misstep and that if the miner could turn the clock back it wouldn’t have invested in the assets. The comments from Nasser, who will pass over the chairman’s baton to its youngest director Ken MacKenzie on Sept. 1, follow similar remarks from Chief Executive Officer Andrew Mackenzie, who said in May the deals were poorly timed. “In terms of shale, if you had to turn the clock back, and if you knew what we knew today, you wouldn’t do it,” Nasser, who took up his role in 2010, said at a Sydney lunch briefing. “The timing was way off.” The world’s largest mining company has been been peppered with criticism since April, when restive investor Elliott Management Corp. went public with demands for a independent review of its oil division and castigated management decisions the fund claims have destroyed about $40 billion in value. BHP is considering further sales of its U.S. shale gas assets amid heightened scrutiny of the unit from shareholders. “We acknowledge that the acquisitions that took us into this business were poorly timed, that we paid too high a price, and that early on the very rapid pace of development was not optimal,” Mackenzie said on a call last month. “It was too quick. And we’ve learned that lesson.
After a Long Night, Gas-Weighted U.S. E&Ps See a New Dawn of Profitability -- After posting huge pretax operating losses in 2015-16, the nine U.S. natural gas-focused exploration and production companies (E&Ps) we’ve been tracking returned to profitability in the first quarter of 2017. This reversal of fortunes in peer group performance was driven mostly due to higher natural gas prices, which ended a massive flow of red ink that had principally resulted from big reserve write-downs. Now, with higher profits and cash flows, these producers are ramping up their 2017 capital budgets and planning for long-term production growth. Today we continue our series on the financial performance of 43 U.S. E&Ps, this time zeroing in on companies whose hydrocarbon reserves are mostly natural gas. We recently did an in-depth analysis of the ongoing transformation of the U.S. energy production sector in Piranha!, a market study of 43 U.S. E&Ps. Of that universe of companies, 21 focus on oil (60%+ liquids reserves), 13 are diversified producers (rough balance of liquids and gas reserves) and nine are gas-weighted producers (60%+ gas reserves). All major U.S. shale/unconventional plays are represented in the combined portfolios of these firms. After examining the 2017 capital spending plans of our three peer groups in a series of blogs, we reviewed the turnaround in financial results we saw across our 43-company universe in Recovery. Then, in Feelin’ Stronger Every Day, we cataloged the 180-degree turnaround in financial results for the Oil-Weighted peer group. Next, we drilled out into the performance of the Diversified E&P peer group in Back in Black. Today we turn our attention to the first-quarter 2017 financial results of the nine companies that make up the Natural Gas-Weighted peer group.
Trump’s anti-NAFTA stance is on a collision course with natural gas — Of all the industries thrown into question by President Trump’s promise to upend free trade with Mexico, natural gas is easily one of the most important. More than a quarter of Mexico’s electricity is powered by American natural gas, leaving it especially vulnerable to any upheavals from a trade battle with the United States. But selling natural gas to Mexico is also a godsend for the American energy industry, which is lobbying the White House to emphasize just how crucial the relationship with Mexico is. With billions of dollars at stake and zigzagging administration stances on trade, American energy companies are taking no chances. They are also setting their sights on an old friend in a unique position to help: Rick Perry, the former governor of Texas, who recently served on the board of a pipeline company that ships natural gas to Mexico and who is now Mr. Trump’s energy secretary. Under the North American Free Trade Agreement, which Mr. Trump has threatened to terminate unless he can get a “fair deal” for the United States, the authorization of natural gas exports is virtually automatic. But if the United States pulls out of the agreement, it will be up to the Energy Department to approve future gas exports considered to be in the national interest. That places Mr. Perry in a pivotal role at a tense time, and there is good reason to consider him a friend of the industry. As governor of Texas, he defended contentious practices like fracking to promote his state’s oil production and natural gas exports. Under his watch, production of natural gas in the state soared 50 percent. After he left office, Mr. Perry joined the board of Energy Transfer Partners, a company that has completed four gas pipelines to Mexico in the last two years. And when he ran for president in 2016, the company’s chief executive became the single biggest contributor to Mr. Perry’s ill-fated campaign. Kelcy Warren, Energy Transfer’s chief executive, donated more than $6 million of the $16.7 million raised by the 2016 Perry presidential campaign, according to Federal Election Commission data compiled by the Center for Responsive Politics. Most of the money was then returned to Mr. Warren when Mr. Perry dropped out of the race.
Trump's ANWR Move Could Spawn Epic Oil, Natural Gas Battle - Oil majors thirsty for reserves likely to line up for any lease sale. President Trump has uncorked yet another controversy over energy vs the environment and itpromises to be a heavyweight battle.The White House budget proposal includes a revenue line of almost $2 billion from selling oil and gas leases in the richly oil-prospective northeastern coastal plain of the Arctic National Wildlife Refuge (ANWR) in Alaska.Until the climate change debate came along, leasing and drilling in the ANWR (pronounced an-war) Coastal Plain was arguably the most ferociously contested item on the oil and gas industry’s wish list at the national level.Trump’s budget cites $2 billion in potential revenues from leasing the Coastal Plain, but given the dearth of onshore elephant-scale prospects worldwide and their dwindling oil and gas reserves bases, it’s likely that major oil companies would be scrambling to throw even more money than that at ANWR leases.Since the majors thrive on megaprojects like Kashagan, Prudhoe Bay and deepwater Gulf of Mexico, ANWR could be a perfect fit for them.It would also be an expensive venture and that likely will keep the smaller players from making much of an impact in ANWR. There is little doubt of the potential for oil on the ANWR Coastal Plain. The region lies between and is geologically analogous with two of the world’s most prolific oil and gas provinces, Alaska’s North Slope and Canada’s Mackenzie Delta.The US Geological Survey, in a 1998 estimate, reckoned that the Coastal Plain contains 4.3 billion to 11.8 billion barrels of technically recoverable oil and as much as 11 Tcf of natural gas, with a mean estimate of 7.7 billion barrels and 3.5 Tcf.Industry contends these are very conservative estimates. As much as 32 billion barrels of oil is in place.
LNG price row between India, US crimps Trump's export aims | Reuters: India's biggest importer of U.S. liquefied natural gas (LNG) is trying to re-negotiate prices with the U.S. seller, sources said, undermining plans by U.S. President Donald Trump to export more gas to the fast-growing Asian nation. At a joint news conference with Indian Prime Minister Narendra Modi at the White House this week, Trump said the United States looked forward to exporting more energy, including new major long-term contracts to purchase American natural gas. The effort is part of Trump's policy of seeking to assert power abroad through a boost in natural gas, coal and petroleum exports. He said on Thursday that the "golden era" of the U.S. energy business was now underway. But any new LNG agreements with India will depend on how GAIL and Cheniere of the United States deal with a long-term supply contract signed in 2011 for an estimated $22 billion. India's GAIL has deals to buy 5.8 million tonnes of U.S. LNG per annum for 20 years, mostly with Cheniere, but is now asking to re-negotiate the price. A commissioning cargo was sent last year, but supplies in earnest will only likely start in 2018. Two sources at state-run GAIL said they were trying to re-negotiate the contract. "At current U.S. prices, the landed cost of the LNG (in India) is not very attractive," said one of the sources on condition of anonymity, as he was not cleared to speak to media. Neither source gave any details on what price GAIL was seeking.
NYMEX July gas settles up 1 cent as rally continues on bullish weather -- The NYMEX July natural gas futures contract settled 1 cent higher at $3.037/MMBtu on Tuesday, as a bullish weather outlook continued to drive up prices. David Thompson, executive vice president of brokerage firm PowerHouse, said the increase was "most likely weather driven, as hotter waves [are] to be factored in." The most recent eight- to 14-day weather outlook from the National Weather Service called for warmer-than-average weather for most of the US, falling in line with its most recent three-month outlook, which projected a warmer-than-average summer for the entire country. US dry gas production dropped to 71.4 Bcf/d Tuesday, down 500 MMcf/d from Monday, according to data from Platts Analytics' Bentek Energy. The overall decline reflects day-on-day dips in production in the Rockies, Northeast, Southeast and Southwest regions. Dry gas production was expected to average 71.55 Bcf/d over the next 14 days, relatively in line with the 71.5 Bcf/d month-to-date average, according to Platts Analytics.
As Alberta oil production ramps up, worries grow about a ‘pipeline pinch’ | Calgary Herald -- While plans by Canadian companies from Suncor Energy Inc. to Canadian Natural Resources Ltd. to boost oil output are racing to fruition, the construction of three pipelines needed to move that product to market, including the infamous Keystone XL, is lagging years behind. The end result: Producers have little choice but to move those extra barrels by train, with costs two to three times higher than pipeline shipping. It’s an unwelcome added expense after oil plunged about 20 percent from this year’s peak. Futures prices have settled in below US$45 a barrel after many predicted it would rise to $60. “We’re not going to see significant new pipeline capacity until late 2019 or 2020,” said Nick Schultz, vice president for pipelines and regulatory matters at the Canadian Association of Petroleum Producers. In the meantime, the extra expense for shipping “impacts royalties and other things that impact the public.” During the Barack Obama administration, oilsands producers feared a future when they would have to rely heavily on costly railway shipments if he didn’t approve Keystone XL. That may start this year. Pipelines in Western Canada, which holds the world’s third-largest oil reserves, can carry about 3.3 million barrels of crude a day, according to CAPP. Meanwhile, the area is expected to produce 3.92 million barrels a day this year and 4.2 million next year as a number of large oil-sands projects come online. The looming bottleneck adds a new urgency to the industry’s calls for more capacity and may lend credence to its argument that the lack of lines hurts the nation’s economy.
Alberta a black hole for up-to-date fracking information - CBC News: There have been more than 1,000 hydraulic fracturing operations in Alberta since January. But finding out what's happening in any region of the province right now is next to impossible. Numbers provided to the CBC by the Alberta Energy Regulator (AER) show between January 2017 and June 30, 2017, there have been 1,127 fracking operations conducted. The AER says the holder of a drilling licence must inform the AER about its intentions to frack an oil or gas well five days before starting the work. But the industry-funded regulator doesn't disclose where current fracking operations are occurring on its website. Some of that information is available on the website FracFocus.ca, but only 30 days after the operation has wrapped up. The site is a project of the BC Oil and Gas Commission, and according to information on the site, it is "intended to provide objective information on hydraulic fracturing, fracturing fluids, groundwater and surface water protection and related oil and gas activities in Canada."AER spokesperson Ryan Bartlett said it would be difficult to maintain an up-to-date list of Alberta fracking activity on the AER website because the length of time needed to frack a well varies from as little as "a couple of hours or multiple days" at a stretch. "The exact start and finish dates tend to be dependent on a number of factors," said Bartlett. "It could be the weather, it could be availability of equipment."
Study claims fracking demand for water could violate First Nations’ rights - — The Canadian Centre for Policy Alternatives has released a study that claims that oil and gas exploration companies and their need for water is harming the environment and violating the rights of area First Nations. According to the study, Northeast B.C. has seen a sharp increase in water-intensive, natural gas fracking operations, and that those operations use more water than anywhere else on earth. The study cites an incident in August 2015, when Progress Energy used more than 160,000 cubic metres of water during a fracking operation, which triggered a 4.6 magnitude earthquake. In addition, the study adds that the amount and frequency of water use for fracking will increase if an LNG industry emerges in B.C. The study points out that industrial water use in Northeast B.C. has increased by approximately 50 percent since 2012. J. David Hughes, a former geoscientist with the Geological Survey of Canada, said in another CCPA report that if five LNG plants were to be operating in B.C., that the natural gas industry would need approximately 55 million cubic metres of water every year. That quantity is the equivalent of roughly half of the City of Calgary’s annual water consumption. The study also points to an incident in the Spring of 2010, when Apache Canada was found to have possibly bypassed water meters on pumping equipment to take industrial water from a lake northeast of Fort Nelson. Members of the Fort Nelson First Nation filed several requests for information with the OGC, which responded by requiring more frequent and stringent reporting of water use by industry. Shortly thereafter, the First Nation learned that Apache was part of a number of companies that applied with the NEB to export LNG from B.C. Appearing before the NEB panel, Fort Nelson First Nation leaders noted how increased gas industry activities “may result in signicant harm to freshwater and groundwater resources, delicately balanced muskeg ecosystems, and wildlife habitat and populations,” thereby harming the “traditional way of life” of FNFN members
Mexico leases ten offshore blocks -The National Hydrocarbon Commission of Mexico awarded 10 out of the 15 exploration blocks that were in its Round 2.1 lease auction this week. The awarded leases cover prospective oil and gas acreage in Mexico’s shallow waters in the Gulf of Mexico. “This was good news for Mexico, considering that Mexico was competing with many other countries bidding out 42 PSC blocks, like China, India, Malaysia, Indonesia, Egypt, and others,” said Haynes and Boone’s Ricardo Garcia-Moreno. “This round showed a lot of interest from majors around the world. Mexico is offering competitive terms and contracts, and people are responding.” Reuters reported that Russia’s Lukoil also took a block in this latest auction, as did a consortium of France’s Total SA and Royal Dutch Shell Plc. Energy Minister Pedro Joaquin Coldwell said in a press conference that the potential output from the blocks auctioned could total 170,000 BOEPD, and investments could eventually reach $8.2 billion, according to Reuters.
US Says It Has Issued Permits for Three US-Mexico Pipelines | Rigzone - The United States has issued permits for three NuStar Logistics, L.P. pipelines crossing the U.S.-Mexico border, the State Department said in a statement on Thursday. The permit for the New Burgos Pipeline authorizes construction, operation and maintenance of a new pipeline capable of delivering up to 108,000 barrels per day of refined petroleum products, crossing the U.S.-Mexico border near Peñitas, Texas, the State Department said. Two other permits were issued for existing pipelines crossing the border near Laredo and Peñitas, Texas to reflect a name change and authorize transport of a broader range of petroleum products, the State Department said. The U.S. Acting Assistant Secretary of State for Oceans and International Environmental and Scientific Affairs Judith G. Garber issued the permits. NuStar Logistics is a subsidiary of NuStar Energy L.P. , an American pipeline operator.
Trump Approves US-Mexico Pipeline 'That'll Go Right Under the Wall' -- President Donald Trump has approved the construction of a new U.S.-Mexico pipeline that will go "right under" the controversial border wall . According to The Hill , the New Burgos Pipeline will carry up to 108,000 barrels per day of refined petroleum products per day and cross the border between McAllen, Texas and Reynosa, Tamaulipas, Mexico. The project is a joint venture between NuStar Energy LP and PMI, an affiliate of Mexico's state-owned oil and gas company Petroléos Mexicanos. Trump made the remarks during his speech at the Department of Energy's "Unleashing American Energy" event on Thursday. Vice President Mike Pence , Interior Sec. Ryan Zinke , Energy Sec. Rick Perry and U.S. Environmental Protection Agency Administrator Scott Pruitt also stood on stage with the president. "[The pipeline] will further boost American energy exports, and that will go right under the wall, right?" Trump said, as he glanced over to his cabinet members and made a swooping motion underneath the imaginary structure with his arm. Some in the audience clapped and laughed at the gesture. "We have to dig down a little deeper under that section," he added. Trump's 17-minute speech centered around the theme of America's "energy dominance." But as Newsweek reported, he did not once mention the rapidly growing renewable energy sector, not even his now-infamous "solar" border wall proposal. Rather, he touted "clean, beautiful coal," reducing restrictions on natural gas, and expanding offshore oil and gas development. He dismissed concerns about fossil fuels as "a big beautiful myth" and "fake." Additionally, POTUS touted his executive order to push the Keystone XL and Dakota Access pipelines forward while falsely claiming that there was no opposition to his decision. He underscored his decision to withdraw the U.S. from the "one-sided" Paris climate agreement .
Argentina's YPF Says Technology Lowering Its Shale Costs (Reuters) - Longer horizontal wells and technology improvements will help Argentine state-run oil company YPF SA lower costs at its most productive shale field, but better infrastructure is still needed in the remote Vaca Muerta play, an executive said. The breakeven price at the Loma Campana field is $43 per barrel and falling while development costs are $12.90 per barrel and expected to fall to $10 next year, said Pablo Bizzotto, executive manager at YPF's unconventional resources unit. "Ten dollars is world-class compared with the Permian" shale field in Texas, he told reporters this week during a tour of windswept Loma Campana, where YPF produces 40,000 barrels of oil equivalent per day and co-investor Chevron Corp produces another 20,000. "If we can get there in Vaca Muerta, we're competitive," he said, referring to Argentina's Belgium-sized shale formation of which Loma Campana was the first productive field. The cost cuts are good news for Argentine President Mauricio Macri, who has sought to attract investment to Vaca Muerta to help close Argentina's costly energy deficit since taking office in late 2015. While the play is thought to have some of the world's largest shale oil and gas reserves, just two of its 19 concessions have moved from the pilot to production stage amid investor concerns over high labor costs and logistical difficulties in the distant Patagonian province of Neuquen. To address that, the government plans to invest $1.2 billion to renovate the 1,300 km (807.78 miles) of railroad tracks connecting Atlantic ports in Buenos Aires and Bahia Blanca to Anelo, the closest town to the oil fields, located in an isolated, flat desert region where materials needed for production arrive by truck. "It's much needed," Bizzotto said of the train, adding that logistics account for 50 percent of the cost of sand needed for hydraulic fracturing. "It will lower logistical costs for things that should not be transported via truck, like sand and tubes."
North Sea spot crude market suggests oil outlook may be too glum | Reuters: The North Sea crude oil market is finally showing signs of long-lost strength, suggesting that some of the pessimism that has driven down oil futures by 5 percent this month and created a record bet against a price rise may be unjustified. On Thursday, about 6 million barrels of North Sea Brent crude were being stored on ships, down from four-month highs of as many as 9 million last week, and trading sources said it seemed now refineries were starting to take in more cargoes. The uptick in demand has tilted the physical Brent market has into backwardation, where prices for prompt-loading cargoes were trading above those for delivery further in the future. This typically suggests the supply of oil for immediate delivery is harder to come by, but the North Sea market has been dogged in the last month by persistent oversupply that has seen traders store oil on ships rather than sell it. The floating fleet is starting to shrink partly because of a shift in the derivatives market that has made it more attractive to sell cargoes now, rather than hold out for higher prices further ahead. "Sentiment in the oil market remains morbid even though the physical market is perhaps showing some signs of emerging green shoots, thanks to Chinese teapots (refiners) slowly starting to come back to the market for crude," consultant Energy Aspects said. The Brent crude futures price has risen by 8 percent to two-week highs above $47 a barrel in the last six days, its longest stretch of gains since April, even though concern about rapidly expanding global supply has prompted a number of market watchers to urge caution over the longevity of this move upward.
UK wants to revive gas extraction in oldest part of North Sea oil basin - Britain wants oil and gas drillers to recover pockets of gas that are more difficult to reach in a part of the North Sea where drilling for fossil fuels started over 50 years ago. Britain’s oil regulator, the Oil and Gas Authority (OGA), said on Thursday that some 3.8 trillion cubic feet (tcf) of tight gas remain in the southern North Sea, one of the world’s oldest offshore gas extraction areas that has produced more than 40 tcf. The basin is estimated to have billions of barrels of oil left for extraction, worth around 200 billion pounds ($250 billion) for British government coffers, which the government is keen to see developed. The regulator on Thursday published an eight-step programme it wants oil companies to follow to tap the southern North Sea tight gas deposits, which were traditionally unpopular among explorers because they were difficult to access and therefore more expensive to develop. New technologies allowing extraction in less permeable geologies and efforts by explorers to share equipment mean tapping these resources is now more economic.
It's nonsense to say fracking can be made safe, whatever guidelines we come up with -- Can fracking be safe? A new study suggests how fracking – the process of extracting oil and gas trapped in rocks deep underground by blasting water into the rock at high pressure – can be conducted without causing earthquakes, which is one of the most well known concerns. While this kind of research can help produce guidelines to reduce the risks associated with fracking, ultimately, it makes no sense to talk of fracking being entirely "safe". You might as well ask whether you can ensure your journey to work is safe. There are rules designed to reduce the risks, such as speed limits and the highway code, but there will always be the chance of human error or equipment failure. Venturing onto the roads is an inherently unsafe business. Of course, that doesn't mean we should never do it. The risks involved in any industrial activity mean that we need to think carefully about to manage them, rather than trying to claim it is safe or not. Fracking or hydraulic fracturing involves pumping up to 16 Olympic swimming pools' worth of water, chemical additives and sand into shale rocks lying between 2km and 3km underground. This creates a dense network of small fractures in the rocks, releasing gas or oil that moves into the water stream and is pumped or carried to the surface. Earthquakes can occur when fracking takes place near a geological fault. If frack fluid is pumped into a geological fault, it can also slip more easily. Fracking can also change the stress on the fault, causing it to release, and a big enough fault shift will be felt as an earthquake. The new paper, published in Geomechanics and Geophysics for Geo-Energy and Geo-Resources, tries to predict how far from a geological fault it is safe to frack a well without causing an earthquake. Such research is important as it could lead to areas of land being ruled out for fracking, prevent earthquakes and, of course, save the fracking industry from a PR disaster.
Dutch Quakes Rattle Exxon, Shell -- WSJ -- For decades, the giant Groningen gas field beneath the flat, green farmland in the north of this country counted among the greatest prizes for Exxon Mobil Corp. and Royal Dutch Shell PLC. Then the earthquakes started. The exploitation of Groningen -- the biggest gas field in Europe -- has been causing tremors for over two decades, rattling a bucolic province with no previous history of quakes and exposing two of the world's biggest energy companies to a criminal probe and rising reconstruction bills. Amid a public outcry, the Dutch government has imposed increasingly strict limits that have more than halved Groningen's gas production since 2013. Now, authorities are proposing another 10% cut in hopes of further reducing earthquakes. And a Dutch public prosecutor is preparing to open a criminal investigation into responsibility for the earthquakes. Shell and Exxon are pushing back through their joint venture, Nederlandse Aardolie Maatschappij or NAM. The venture says cutting output even more is "out of proportion and not effective," and would create uncertainty about the legal framework for its operations. It warns that continuous changes to the production level may ultimately threaten the business's profitability. NAM said it is considering formally contesting the government's decision. It also expressed surprise at the Dutch court order to the prosecutor to open a criminal investigation this year, since the authorities had previously found no grounds for such action. The state will take a decision on whether to prosecute once the investigation is complete. Groningen was expected to be one of the world's largest gas producers for decades to come. Last year, it made up almost 10% of both Exxon and Shell's total gas production globally and its reserves are among the companies' largest undeveloped resources. Moreover, the field's profits have been lucrative for the Dutch government, which not only collects taxes from NAM but is also a 40% stakeholder in the field. Since production began, the field has generated almost EUR300 billion ($335 billion) for Dutch coffers. Exxon named restrictions on Groningen as a factor contributing to a nearly 4% decline last year in its global natural-gas output. Shell said Groningen issues were largely responsible for a decline of 636 billion cubic feet in proven reserve estimates for its European joint ventures, equivalent to nearly 2% of the company's total gas reserves at the end of 2016.
Dutch Groningen operator NAM appeals against 10% natural gas quota cut -- NAM, the operator of the Netherlands' Groningen natural gas field, has appealed to the Council of State, the country's top administrative court, against the government's decision last month to cut the field's annual quota by a further 10% to 21.6 Bcm from Gas Year 2017. "It is not acceptable that [the decision] allowed us to proceed with production, while indicating that it can not be determined that [production] is compliant with safety standards...This creates fundamental ambiguity," NAM director Gerald Schotman said in a statement Wednesday. "Therefore, NAM has asked the Council of State to review the decision on this point. It is crucial for us to know within what framework we must continue in our role as a producer," he added. The Administrative Jurisdiction Division of the Council of State is scheduled to hear the appeal July 13-14, alongside a slate of other appeals against the government's previous Groningen gas extraction policy. Economic Affairs Minister Henk Kamp made the decision to cut the Groningen quota by a further 10% in Gas Year 2017 (October 1, 2017-March 31 2018) from the 24 Bcm ceiling applying in the current gas year as a response to an unexpected upturn from October 2016 in earthquake activity within the field complex. The 10% quota reduction also applies to the cold-winter flex quota on the Groningen natural gas field, which has been cut to 27 Bcm from 30 Bcm. NAM, which is a Shell-ExxonMobil joint venture, is also facing an investigation into whether it has been criminally negligent in causing earthquakes in the Groningen region.
Europe set to be natural gas kingmaker as LNG booms (Reuters) - It's probably not quite here yet, but the trend is unmistakable; the world is moving to a globally-linked natural gas market and the rise of liquefied natural gas (LNG) is the key driver. Much of the increase in LNG capacity is because of the rapid boost to plants in Australia and the United States, as both countries take advantage of abundant local reserves of natural gas to muscle in on a market that until recently had been dominated by a few established producers and buyers.But it is perhaps ironic that while the action on the capacity side of LNG is an Australian and American story, the ultimate controlling player of the emerging global natural gas market is likely to be Europe.This is because Europe is likely to act as a "clearing house" for surplus LNG cargoes, given it has excess re-gasification capacity and the ability to use the fuel for a variety of purposes, from power generation to manufacturing to household heating.Europe is also the only region that can effectively arbitrage between LNG and pipeline prices, given its connection to Russian and other Eastern natural gas via pipelines.The continent is also best-placed to use market forces to find a price level for natural gas versus its competitors, given it still has substantial coal-fired power in some countries as well as being a leader in renewables such as wind and solar. LNG has traditionally been an opaque and tightly-controlled market, where a small number of exporters signed long-term, oil-linked contracts with an equally small number of buyers, who were more concerned about energy security than price. The major producers included Qatar, Indonesia and Malaysia, while the top buyers were concentrated in North Asia, namely Japan and South Korea, and also in Europe.It was inevitable that this situation would be disrupted once global energy giants such as Chevron, Royal Dutch Shell, ConocoPhillips and Exxon Mobil decided to pour some $200 billion into developing eight new LNG projects in Australia.Three of these are ground-breaking ventures based on using coal-seam gas as feedstock, one is the biggest floating LNG project and the rest are conventional offshore gas to onshore liquefaction plants.When the last of these new plants is operating, most likely by 2018, Australia will have around 80 million tonnes of annual LNG capacity, overtaking Qatar as the top exporter of the fuel. Not far behind Australia on the development scale is the United States, with 16 million tonnes of LNG capacity already operating at the Sabine Pass facility in the Gulf of Mexico.A further 60.5 million tonnes of annual capacity is under construction, and will arrive from late in 2017 to the end of 2019, with the bulk scheduled to be commissioned in 2018.
U.S. thirst for European gasoline stalls, casting shadow on demand | Reuters: Europe's steady exports of gasoline to the United States have slowed substantially this year as tanks filled in the world's largest consumer nation and once-meteoric demand growth slowed. The drop in gasoline shipments to the densely populated U.S. East Coast is forcing European exporters to turn to less steady buyers in West Africa and compete with refineries elsewhere in the United States to export to Latin America and Asia. Deliveries to the U.S. Atlantic Coast from Northwest Europe this month are set to fall 35 percent compared with the 400,000 barrels per day (bpd) that sailed on the route in June 2016, according to U.S.-based ship-tracking firm ClipperData. May imports, at 246,000 bpd, were down nearly 20 percent versus year-earlier levels. "Fears of a replay of last year's gasoline glut are deterring U.S. importers," said Matt Smith, director of commodity research at ClipperData. "This trend looks set to continue, at least through early July, leaving higher volumes of gasoline to remain within Northwest Europe, as well as ticking higher to Asia." Starting in 2015, U.S. gasoline demand grew substantially, clocking in 260,000 bpd higher that year and expanding by another 130,000 bpd last year, according to the U.S. Energy Information Administration. But demand was down 2.7 percent in the first quarter of this year, and the four-week average was also lower year-on-year despite hitting all-time highs in two of the past five weeks.In another sign of the slowdown, three oil tankers, the Atlantic Pegasus, the Ardmore Seavantage and the CPO China, are ballasting - or sailing with no product inside them - from Europe to the United States. Tankers often sail empty from one market to another when freight rates in the destination are strong, but it is highly unusual for the United States not to need European gasoline over the peak-demand summer months.
'We've Made History': Ireland Joins France, Germany and Bulgaria in Banning Fracking - Ireland is set to ban onshore fracking after its Senate passed legislation on Wednesday that outlawed the controversial drilling technique.The Petroleum and Other Minerals Development (Prohibition of Onshore Hydraulic Fracturing) Bill 2016 now awaits Irish President Michael D. Higgins' signature. The president is expected to sign it into law " in the coming days ."The Emerald Isle will join three other European Union member states, France, Germany and Bulgaria that have banned the practice on land.Fine Gael TD Tony McLoughlin introduced the private member's bill—meaning it was not introduced by the government—last year. The bill passed Ireland's Parliament in May. 'We've made history," McLoughlin tweeted after the vote and called it one of the "proudest moments in my political career."
Nord Stream 2: US sanctions threat raises the stakes for European Gas Relations (video & transcript) Germany and Austria called on the US to stay out of European energy matters after the US Senate proposed new sanctions against investors in Russian energy pipelines. In this video,Stuart Elliott looks at how the controversy around Nord Stream 2 has moved to a new, unprecedented level, and how the natural gas pipeline is likely to be built regardless of interference from Washington.
European Gas Security 2017 | Energy Matters --On 22nd June, The Telegraph published an interesting article called Germany’s gas pact with Putin’s Russia endangers Atlantic alliance where Ambrose Evans-Pritchard made many of the correct observations but also managed to make some odd comments too. The article focussed on proposals to build Nord Stream II that would pipe more Russian gas directly into Germany, bypassing Belarus and Ukraine. This will clearly enhance German and European gas security, and yet Evans-Prichard manages to say:The Nord Stream 2 venture creates a sweetheart arrangement with Germany while undermining the security and economic interests of Eastern and Central Europe, and leaves Ukraine at the mercy of Kremlin blackmail. “It does nothing whatsoever to supply the EU with gas. It deprives the East Europeans of political leverage and rewards an aggressor state,” said Professor Alan Riley from the Institute for Statecraft.I find these comments to be totally bizarre. Evans-Prichard seems to have forgotten that it was Ukraine stealing gas that crossed its territory that led Russia to periodically cut supplies to the whole of Europe. And I seem to recall that it was Western meddling in the Ukrainian elections that led directly to the civil war. Bypassing land pipeline routes that cross either Ukraine or Belarus of course improves European gas security. Evans-Prichard goes on to say:What the project does is to erode Ukraine’s $2bn revenue from pipeline fees and to leave the country vulnerable to a Gazprom squeeze. It stops Ukraine transporting gas to Slovakia and then buying it back at EU prices to escape punitive tariffs. It enables Russia to play a divide-and-rule game that splits the EU, and that sweetens Germany with preferential pricing. It really is a bizarre 1939-style pact. I wanted to use the Evans-Prichard article to set the scene for an evolving geopolitical game in Europe where energy and the behaviour of Germany takes centre stage. There are two main themes: 1) Europe’s indigenous gas supplies are in decline, and 2) gas imports from “unsavoury countries” are on the rise. Let me begin by looking at indigenous European gas supplies. All charts are from Global Energy Graphed, BP Gas Europe, are based on the BP 2017 Stat Review and are produced by Neil Mearns.
EU prolongs energy sanctions against Russia to January 31, 2018 --The EU has again prolonged energy, financial and other economic sanctions against Russia for its role in the conflict in Ukraine, this time to January 31, 2018, the EU Council said Wednesday. The EU imposed energy sanctions in July 2014 when it limited Russia's access to European technology and services for developing Arctic, deepwater and unconventional oil resources. In September it expanded these to target Russia's largest oil producer Rosneft, Gazprom's oil subsidiary Gazprom Neft, and national pipeline operator Transneft, restricting the companies' access to EU capital markets. EU sanctions normally expire after a year, and can be reviewed and changed at any time if all 28 EU countries agree. EU leaders decided in March 2015 to keep the sanctions in place until the Minsk peace deal to resolve the conflict is implemented fully. This had been expected by the end of 2015, but has not yet happened.
3 Out Of 4 US Energy Firms Were Hacked In 2016 -- Hackers have targeted Russian oil giant Rosneft, the company said on Tuesday, just as Deloitte released a report on cyber-attacks targeting U.S. oil companies. A “powerful hacker” attacked the company’s server in an assault that, according to TASS news agency, could be related to ongoing legal proceedings. A Russian court recently froze assets of a holding company called Sistema as part of a suit lodged by Rosneft and Bashneft. The two companies are trying to recover $2.9 billion lost during Sistema’s 2014 restructuring. Russian companies are not the only ones facing the new frontier in corporate espionage. U.S. consulting major Deloitte released a report on Monday that said American energy companies showed “limited strategic appreciation” for cyber-threats. Analysts said three of every four U.S. oil and gas companies experienced a cyber-attack in 2016, but only a few firms said the computerized attacks posed a major security risk. "Whether hackers use spyware targeting bidding data of fields, malware infecting production control systems, or denial of service that blocks the flow of information through control systems, they are becoming increasingly sophisticated and, specifically alarming, launching coordinated attacks on the industry," the report said. Low crude prices have caused energy companies to focus their spending on operations that maximize value for shareholders, instead of investing in protective cyber security measures.On the most vulnerable aspects of the oil and gas supply chain, Deloitte wrote:“Among the upstream operations, development drilling and production have the highest cyber risk profiles; while seismic imaging has a relatively lower risk profile, the growing business need to digitize, e-store, and feed seismic data into other disciplines could raise its risk profile in the future.”
Shell lifts force majeure on Nigerian Bonny Light crude oil exports - Shell has lifted the force majeure on exports of Nigeria's main export crude, Bonny Light, a company spokesman said Friday. Related Platts price assessment: West African crude oil price Shell had declared the force majeure on Bonny Light liftings on June 8 following the shutdown of the Trans Niger Pipeline after a sabotage attack on the line by suspected oil thieves. "The force majeure on Bonny Light exports was lifted effective 12:00 hrs [local time] on Wednesday, June 28, after the repair of the sabotage leak on the SPDC JV's Trans Niger Pipeline," the spokesman said. Bonny Light is produced in Nigeria from Chevron and Shell concessions. Cargoes are loaded from the Shell-operated Bonny Light terminal, which can accommodate VLCCs. Bonny Light has an API gravity of 35.3 degrees and sulfur content of 0.15%. The resumption of Bonny Light exports would push Nigeria's output to more than 2 million b/d, coming on the back of the resumption of deliveries from the Forcados oil terminal in late May after being out for several months. Oil theft in Nigeria has remained a major headache for both Nigeria and the producers in the area, even as the government has been able to check the activities of militants in the main producing Niger Delta region through peace talks.
Oil Tanker Inferno Kills at Least 140 - A lorry carrying fuel has burst into flames near the Pakistani city of Ahmedpur East, killing at least 150 people, local officials say.Villagers had gathered, reportedly to collect fuel leaking from the crashed tanker, when it caught fire. Dozens are being treated in hospital.It appears the tanker blew a tyre while rounding a sharp bend in the road.The fire was sparked by a passer-by lighting a cigarette, a rescue services spokesman told the BBC."The incident, which was a minor [one], turned into a major blast," Jam Sajjad said.Prime Minister Nawaz Sharif is cutting short a visit to London in response to the incident, the Pakistani government news agency, APP, reported.Army helicopters were dispatched to ferry casualties to hospitals, army spokesman Maj Gen Asif Ghafoor said in a tweet. There are fears that the death toll could rise further.Some of the victims may only be identified by DNA sampling, as the bodies were so badly burned in the incident, reports say. Police sources told APP that the tanker had been transporting 25,000 litres (5,500 gallons) of fuel from Karachi to Lahore.
China's Natural Gas Output, Imports Surge, Beating Target --China is ramping up both imports and domestic production of natural gas, with the combined rate of growth running well ahead of the government's target for boosting the use of the cleaner-burning fuel. Official data for domestic production, imports via pipelines and imports of liquefied natural gas (LNG) show the total amount of natural gas available in China in the first five months of the year was the equivalent of 72.01 million tonnes of LNG. This was up nine percent, or 5.94 million tonnes, on the 66.07 million tonnes that were either pumped domestically or imported in the first five months of 2016. China has set a target of increasing the share of natural gas in energy consumption from 5.9 percent in 2015 to 10 percent in 2020, an average annual increase of 4.1 percent. So far this year, China's output and imports of the fuel are running at more than double the annual rate needed to reach the official target. The biggest gainer has been imports of LNG, which are up 38.4 percent in the first five months of 2017 to 12.86 million tonnes, while pipeline imports have dropped 4.4 percent to 12.65 million tonnes. Domestic natural gas production has been a strong gainer, rising almost 7 percent in the January to May period to 62.88 billion cubic metres, equivalent to 46.5 million tonnes of LNG. The rise in natural gas output stands in sharp contrast to the decline in crude oil production, which fell to the lowest on record in May as output declines from older fields. Natural gas has also outperformed coal, with domestic output of the polluting fuel up 4.3 percent to 1.4 billion tonnes in the first five months of the year.
China pumps cash into African floating LNG projects in strategic push | Reuters: China plans to pour almost $7 billion into floating liquefied natural gas (FLNG) projects in Africa, betting on a largely untested technology in the hope that energy markets will recover by the time they start production in the early 2020s. Western banks are wary due to the depressed state of the shipping and gas markets, as well as the technical difficulties of pumping gas extracted from below the ocean floor, chilling it into liquid form on a floating platform and transferring it into tankers for export. China, however, is making a strategic push into FLNG, aiming to become the lowest cost seller of the complex floating plants and lead the global rollout of a technique that remains in its infancy, with only one project in commercial production so far. The country needs gas as a cleaner alternative to coal under a drive to improve air quality in its cities, and has already lent $12 billion to Russia's conventional Yamal LNG project in the Arctic as U.S. sanctions scared away Western banks. It has also lent or committed almost $4 billion to three FLNG schemes off the African coast. In two more African projects costing a total of $3 billion, it plans not only to provide the funding, but also build the production platforms. "We see a real commitment to FLNG in China both from the construction side and from the LNG consumption side where decreasing costs mean potentially lower cost LNG," said Steve Lowden, chairman of Jersey-based NewAge which is planning FLNG projects off Congo Republic and Cameroon. China already dominates the global market for solar panels and is a major supplier of coal-fired power plants, aided by easy money, cheaper labour and state support.Now, with Beijing pushing President Xi Jinping's "Belt and Road" vision of expanding trade links between Asia, Africa and Europe, it is turning to FLNG to bring high technology work to its shipyards and create jobs - a strategic priority.
PAJ chief dismisses likelihood of OPEC to make additional oil output cut soon - Petroleum Association of Japan president Yasushi Kimura said Monday that he does not expect OPEC to make an additional production cut soon as the group should be monitoring oil markets, following its May decision with non-OPEC producers to extend their agreement by nine months. "Even if OPEC makes additional cuts right now, it would not have much impact," Kimura told a press conference in Tokyo. "Without a clear impact, it would be difficult for OPEC to move... Judging from the current situations, they would likely be monitoring situations for the time being as they just extended it [the output cut deal] by nine months." Kimura's comments came as Iranian oil minister Bijan Zanganeh said Wednesday that OPEC ministers had already been holding discussions about increasing the cuts given the state of the oil market, although some members maintain that the recent extension of the deal needs more time to play out. Kimura also said that global oil demand growth, however, should exceed supply growth as current oil price levels should support steady growth in oil demand -- another factor OPEC is monitoring closely. "At this price level, global oil demand should steadily increase," said Kimura, adding that the speed of global oil demand growth should exceed the pace of incremental production from the US and others.
Hedge funds abandon all hope in OPEC: Kemp -- Hedge funds and other money managers appear to have entered their own special version of hell and abandoned all hope that OPEC will rebalance the oil market, slashing formerly bullish bets on crude futures and options.Hedge fund managers cut their net long position in the three main futures and options contracts linked to Brent and WTI by 109 million barrels in the week to June 20 (http://tmsnrt.rs/2sI1qoh).Funds have cut their net long position by a total of 161 million barrels over the last three weeks, taking it down to just 389 million barrels, the lowest since Aug. 9, 2016 (http://tmsnrt.rs/2sIaTMH).Fund managers now hold just two long positions for every one short position, which ranks among the most bearish positions since oil prices started to tumble in the middle of 2014 (http://tmsnrt.rs/2tcPA76).Extreme bearishness extends to refined fuels, where hedge funds have a net short position of 27 million barrels in U.S. heating oil and a near-record net short position in U.S. gasoline of 21 million barrels.The hedge fund community placed enormous faith in OPEC’s ability to accelerate oil market rebalancing through cuts announced late in 2016 in association with key non-OPEC producers.Fund managers accumulated a record net long position of almost 1 billion barrels by the middle of February only to suffer a sharp reversal in prices starting early the next month.The accumulation of long positions for a second time in April was similarly rewarded with a brutal sell off in oil prices, leaving many fund managers struggling with large losses for the year.OPEC’s decision to leave production unchanged last month, rather than cut more deeply, has sparked a third sell off, and extinguished any remaining bullishness and emboldened short sellers.Hedge funds have embarked on a new cycle of short-selling in Brent and WTI, the eighth since the start of 2015, which has added to the downward pressure on prices.Fund managers have added 77 million barrels of extra short positions in WTI and 59 million barrels in Brent since June 6, according to data from regulators and exchanges. Hedge funds have added short positions faster and more aggressively than during any previous short-selling cycle in the last three years (http://tmsnrt.rs/2tcWJoa).
Hedge funds hold near-record short positions in petroleum: Kemp (Reuters) - Oil prices have been rising gently during the past four trading sessions despite concerns about the continued rise in the U.S. rig count and enormous excess inventories.Front-month Brent futures prices are up by about $2 a barrel since touching a low of $44 on June 21, which could herald a break in the downtrend that had been in place since late May.Rising prices most likely reflect hedge funds covering some short positions rather than a fundamental reappraisal of the outlook for supply, demand and inventories.Hedge fund managers have become progressively more bearish about petroleum prices in recent weeks (http://tmsnrt.rs/2ti1hd0).By June 20 hedge funds had amassed 480 million barrels of short positions in the five main futures and options contracts linked to crude, gasoline and heating oil, up from only 350 million barrels on June 6.Fund managers have only held a larger number of short positions in petroleum once before, in January 2016, when their combined shorts in the five contracts totalled 484 million barrels.The position in January 2016 coincided with the trough of the oil price cycle and marked the start of the recovery.The question is whether the large number of shorts now will mark a similar turning point. In crude, hedge fund long positions still outnumbered short positions by a ratio of 2.1 to 1 on June 20, but this was one of the lowest ratios recorded in recent years (http://tmsnrt.rs/2shAw3n and http://tmsnrt.rs/2shpefo).The ratio of long to short positions has often been correlated with the rise and fall in oil prices (http://tmsnrt.rs/2sMlpCw and http://tmsnrt.rs/2sM5RyI).The attempt to accumulate a large number of long positions tends to push prices higher, while efforts to accumulate short positions has the opposite effect.But once the positions have been established, the existence of large concentrations of long or short positions and a stretched ratio have often signalled the price trend is about to reverse. With so many shorts now in crude, gasoline and heating oil, the risk of a short-covering rally when fund managers attempt to lock in some of their profits has increased significantly.And with relatively few long positions left to close, the downside threat from further liquidation has been reduced. From a pure positioning perspective, the balance of risks in the oil market has therefore shifted to the upside, with the probability of a short-covering rally now much greater than further liquidation-driven price falls.
Oil up almost 2 percent on weaker dollar, short-covering --Oil prices rose nearly 2 percent and hit a one-week high on Tuesday, boosted by a weaker dollar, short covering and expectations that crude inventories in the United States may decline for a third consecutive week. It was the fourth straight session of gains for oil, which also got some support after the chief executive of U.S. shale oil producer Pioneer Natural Resources Co said Saudi Arabia likely will move to boost oil prices to prop up its finances. Prices pared gains after hours when an industry group's reported an unexpected rise in U.S. crude inventories. With the end of the quarter approaching, brokers said investors were covering short positions. Brent crude futures, the international benchmark for oil prices, gained 82 cents, or 1.79 percent, to settle at $46.65 per barrel. U.S. crude futures ended the session up 86 cents, or about 1.98 percent, at $44.24 per barrel. Brent touched a one-week high of $47.06. U.S. crude hit its highest since June 19 at $44.44. "I think in the market, over the last four weeks or so, every news item has been uniformly bearish, even the technical situation has been bearish and a lot of the entrenched bulls were really throwing in the towel," said Andrew Lebow, senior partner at Commodity Research Group in Darien, Connecticut. "The downside momentum was clear and today it just got to a level where it's been arrested for the time being." After settlement, American Petroleum Institute data showed U.S. crude inventories rose 851,000 barrels in the week to June 23 to 509.5 million. Analysts had forecast a decline of 2.6 million barrels.
WTI/RBOB Tumble After Unexpected Inventory Builds --"There is still hope that inventories will draw and crude runs will remain high," noted one research director ahead of the API data as WTI rose for a 4th day (back above $44), the longest rally in over a month. With tropical storm Cindy likely impacting the data, API showed asurprise crude build (exp -2.25mm) and notable gasoline build which sent WTI/RBOB prices reeling. API
- Crude +851k (-2.25mm exp)
- Cushing -678k
- Gasoline +1.351mm (unch exp)
- Distillates +678k (+350k exp)
Figures will be tricky to interpret because of impact from tropical storm Cindy, but taken as reported the biggest headline was the surprise build in crude and gasoline is most worrisome for the bulls... Following last week's API/DOE data - which showed modest draws - the initial reaction was a kneejerk higher before tumbling. WTI was limping lower into tonight's print...
Oil stays below $47 as U.S. inventory report revives glut worries - Oil edged lower toward $47 a barrel on Wednesday after an industry report said U.S. inventories increased, reviving concerns that a three-year supply glut is far from over. The American Petroleum Institute (API) said on Tuesday U.S. crude inventories rose by 851,000 barrels last week, while analysts expected a decline. Inventories of gasoline and distillates also increased, the API said. "There appears to be no end to the bearish news on the oil market," said Carsten Fritsch, analyst at Commerzbank. "This is likely to add fuel to doubts that any process of market tightening is underway." Brent crude was down 9 cents at $46.56 a barrel at 1033 GMT. It reached a seven-month low of $44.35 on June 21. U.S. crude fell 17 cents to $44.07. A rise in U.S. stocks would suggest global supplies are still ample despite the effort led by the Organization of the Petroleum Exporting Countries to cut output by 1.8 million barrels per day (bpd) from January 2017. Top exporter Saudi Arabia and the other producers are trying to get rid of a supply glut which prompted prices to slide from above $100 a barrel in mid-2014. "The U.S. crude oil stock build is not huge but it is still a build and that does not go in the direction of the Saudi rebalancing,"
U.S. shale CEO sees Saudi Arabia moving to lift oil prices | Reuters: Saudi Arabia likely will move to boost oil prices after a recent drop in order to prop its own national finances, the chief executive of U.S. shale oil producer Pioneer Natural Resources Co said on Tuesday. Oil prices have tumbled in recent weeks despite moves by Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries last month to quell a global supply glut brought on in part by resurgent U.S. shale output. "I personally believe (the oil price) where we are right now is not sustainable. It comes in the form of two words: Saudi Arabia. They cannot have a scenario, which is $43 or $44 (per barrel) oil, and sustain their national budgets," Tim Dove, Pioneer's CEO, said at the JPMorgan Energy Equity Investor Conference in New York. Despite the supply glut, Pioneer has no plans to stop drilling new wells, Dove said. "We're not going to not drill, because this very well may be the time where the well costs are as low as they're ever going to be," he said. Pioneer, one of the largest oil producers in the Permian Basin of West Texas and New Mexico, has hedged most of its 2017 oil production but has not been about to hedge more than roughly a third of is 2018 output since OPEC's meeting last month, Dove said. "We can pare away and still be profitable even in a $45 (per barrel) environment," he said. "We may just dial back at the margin in that scenario and not be a significant over-spender."
OPEC: Deeper crude oil output cuts? -- OPEC and its associated non-OPEC producers’ decision in May to extend their production cuts for an additional nine months through to end-March 2018 has not been met with overwhelming enthusiasm by the oil market. In fact, quite the contrary; the price of Dated Brent sunk from above $53/barrel in May to just $44.46/b June 23, although it has rebounded slightly in recent days to $46.47/b June 28. If this slump is sustained, it may prove enough to stem the rise in the US oil rig count, although it is too soon to see any impact. Yet this is hardly the dynamic that OPEC wished to set in motion. Related podcast: Saudi Arabia’s new crown prince and the outlook for the kingdom’s oil sector If the rise in the US rig count does stall, it will merely reaffirm the responsiveness of US shale production to the oil price. If OPEC decides further cuts are necessary, and prices firm again, there is little to suggest that US rigs will do anything other than return to the field. The number of US drilling rigs targeting oil rose by another 11 in the week ending June 23 to 758, according to Baker Hughes data, the highest level since October 2015, when drilling activity was contracting sharply. As a result, the current outlook, according to the US Energy Information Administration, is for an increase in non-OPEC production this year of 700,000 b/d and then 1.4 million b/d in 2018. Moreover, there is more bad news from within, although it represents good news for the two countries concerned. Neither Nigeria nor Libya are subject to output restrictions because of their internal security situations. Both have seen a rebound in oil production and Libya’s looks particularly robust, at least in volume terms.
OPEC should let oil prices rebalance the market: Kemp -If all oil producers try to maximise their output, the result is a glut of crude that depresses prices and proves ruinous for everyone. If one producer acts as swing producer and restricts output unilaterally, others increase their production to fill the gap, and the only result is a loss of market share. The only rational strategy is to avoid trying to manage production and allow prices to adjust to rebalance the market. Saudi Arabia would likely move to boost oil prices to protect its own finances, according to Tim Dove, chief executive of Pioneer Resources (“U.S. shale CEO sees Saudi Arabia moving to lift oil prices”, Reuters). Despite the glut, Pioneer has no plans to curb its own drilling. “We’re not going to not drill because this very well may be the time where the well costs are as low as they’re ever going to be,” Dove said. "We can pare away and still be profitable even in a $45 (per barrel) environment," he said. "We may just dial back at the margin in that scenario and not be a significant over-spender." The gist of his argument was that someone would have to cut production to lift prices, but it would not be Pioneer, one of the most prominent shale drillers in the Permian Basin. Similar logic holds for all producers, but if they all carry on drilling, the result will be continued oversupply and a decline in prices. Dove seemed to think Saudi Arabia would act as a swing producer again, and in the process deliver a windfall for shale firms in the form of higher prices. But acting as a swing producer simply to protect rival shale firms from a renewed price drop would not be a rational strategy for Riyadh. The only rational strategy is to eschew the swing producer role and allow prices to decline to the point where the shale drilling boom is curbed. In this game, acting as a swing producer is futile, and the only winning move is not to play - as Saudi Arabia discovered the hard way during the 1980s and is rediscovering now. Since the start of the year, Saudi Arabia has given up market share, only to watch other producers increase their own output, and end up with prices no higher than before. Further production cuts by Saudi Arabia and the rest of OPEC would likely result in the same self-defeating outcome.
Why The Oil Price Implosion Didn’t Drag Global Markets Down - Energy stocks have been the worst performing sector in the S&P 500 index so far this year. Last week, oil slipped into a bear market, but the benchmark U.S. index is holding up, and has gained 8 percent year to date. The correlation between the S&P 500 and oil prices has dropped to the lowest since January this year, mainly because energy stocks have lost much of their significance in the index. The oil price crash that started in 2014 wiped out much of the profits of oil and gas companies, dragging down their share prices and erasing billions of the energy firms’ market capitalizations. Thus, the energy sector’s importance and weighting in the S&P 500 dropped earlier in June to below 6 percent, the lowest level since 2004, Bloomberg data shows. According to Siblis Research, energy accounted for 12 percent of the S&P 500 sector weightings in the years 2010 and 2011. Energy stocks’ importance started to drop, touching a 6.5 percent weighting in 2015 when the oil price crash was in full swing. Last year, the energy sector’s influence inched up to around 7.5 percent of the S&P weightings. Now it is below 6 percent, the lowest in more than a decade. The energy sector now has less influence in the S&P 500 index than the combined weights of Apple and Alphabet, CNBC has calculated. Meanwhile, the S&P 500 has gained more than 8 percent year to date, at a time when the WTI 1st front-month contract has shed more than 22 percent since the beginning of the year. In its market commentary on U.S. equities performance in May 2017, S&P said that the S&P 500 posted seven new closing highs, and gained 1.16 percent in May, bringing the year to date return to 7.73 percent. By sector, “energy was again the big decliner, falling 3.96% in May as oil prices closed the month down. Year-to-date, the sector was off 13.58%, the worst of any group, as its one-year return was in the red, off 3.49%,” S&P said in its market overview for last month. The energy sector’s influence in S&P 500 is so low now that the industry’s projected earnings are expected to have little impact on the S&P 500 earnings, S&P Global portfolio manager Erin Gibbs said on CNBC’s ‘Trading Nation’ last week.
$30 Oil Could Spark Contagion In Energy Markets - If oil prices continue to fall, the financial damage could start to become a concern. A new analysts from Deutsche Bank finds that the high-yield energy market could start to suffer from contagion if oil prices drop to the mid-$30s. At $35 per barrel, for example, the debt-to-enterprise value jumps to over 55 percent for a lot of high-yield energy companies. The result could be a surge in yields that put a lot of pressure on companies. Yields are already up 1 percentage point over the past month, corresponding with the plunge in oil prices. But if prices fall further, yields could rise to more worrying levels. For now, the recent gains in oil prices from the ten-month lows hit last week could ease concerns. But if oil traders are just taking a breather before another downturn, then there could be trouble ahead for the high-yield market. The pain suffered by sub-investment grade energy companies could bleed over into broader junk bonds. “Oil weakness to this point is problematic directly to energy valuations but is not yet a cause for credit-loss concerns in energy or the broader high-yield market,” Deutsche Bank analysts said in a recent research note. “We are getting closer to the point where this narrative could begin to change.” The investment bank went on to add: “We would become mindful of implications for the broader high-yield market if oil were to drop under $40, and particularly if it were to head toward $35.” If yields spike, it will be a lot more difficult for struggling energy companies to access the debt markets. Ultimately, that could put them in a bind. “The high-yield bond market is waking up,” Ryan Kelly of PGIM, the investment management arm of Prudential Financial Inc., told the Wall Street Journal. “There’s been a change in tone.”
WTI/RBOB Jump On Gasoline Draw As US Crude Production Tumbles Most Since August - Last night's unexpected API builds kneejerked prices lower but a weaker dollar helped levitate WTI/RBOB into the DOE print. While tropical depression Cindy may have affected the data, DOE reports a small build in crude (expectations for a draw) but all eyes were on gasoline which drew 894k, well below API's build levels and expectation of no change. Production in the Lower 48 fell 55k b/d - the biggest drop since Aug 2016 (likely impacted by Cindy). DOE:
- Crude +118k (-2.25mm exp)
- Cushing -297k (-600k exp)
- Gasoline -894k (unch exp)
- Distillates -223k (+934k exp)
Figures will be tricky to interpret because of impact from tropical depression Cindy,and notably the Colonial Pipeline shipping demand fell to its lowest level in six years indicating the East Coast is well-supplied and the economics to ship from the Gulf Coast are unattractive.The levels are de minimus for sure...but enough to spike WTI/RBOB withg their extreme positioning... As Bloomberg's Javier Blas notes, forget about crude oil, look at gasoline. The glut in crude appears to be shifting into products as refiners run their plants at record pace. As the 10-year seasonal chart below shows, U.S. gasoline stocks remain above the highest level for this time of the year. But demand for gasoline continues to slide - very unseasonably... Tropical Depression Cindy will likely have had some impact on U.S. oil production last week, as Bloomberg's Brad Gilbert notes that shutting in about 3 percent of the most recently reported lower 48 production number on 06/21 and 06/22. That being said, the impact should still be small and against increasing production, lower 48 production this weeks looks like it could drop by about 60,000 barrels a day as a result. And it did - Lower 48 Production fell 55k b/d last week - the biggest drop since Aug 2016...
Goldman Sachs slashes oil price projection amid US shale surge: show chapters Goldman Sachs slashes oil price projection amid US shale surge 12 Hours Ago | 00:55 Goldman Sachs has downgraded its forecast for oil prices over the next quarter amid a sudden uptick in shale drilling and an unexpected surge in production from Libya and Nigeria. The investment bank now points to a three-month average of $47.50 per barrel for WTI crude, down from its previous estimate of $55.00 a barrel. "The fast ramp-up in shale drilling and the unexpectedly large rebound in Libya/Nigeria production are on track to slow the 2017 stock draws," Goldman Sachs analysts said in a research note published late Wednesday. The rebound in production from Libya and Nigeria — two countries which were exempt from OPEC's historic November deal to curb output – could offset inventory declines in the third quarter of this year, the Goldman analysts warned. "This creates risks that the normalization in inventories will not be achieved by the time the OPEC cut ends next March. We expect this will leave prices trading near $45 (a barrel) until there is evidence of a decline in the U.S. horizontal oil rig count, sustained stock draws or additional OPEC production cuts," they said in the note.OPEC delegates have indicated they will not rush to implement further cuts to crude output. However, pressure from investors amid a relentless global supply overhang could prompt the group to consider further steps to support the market at its upcoming meeting in Russia next month. The U.S. Energy Information Administration (EIA) reported crude stocks increased by 118,000 barrels last week. Meanwhile, production levels fell by 100,000 barrels per day in what was the largest decline in weekly output in almost a year.
Oil futures rise after EIA data shows less US output, product draws -- Oil futures rose Wednesday, with NYMEX August crude up 50 cents to $44.74/b as traders focused on a weekly decline in US production estimates and data showing fewer crude imports coming from Saudi Arabia this month. Energy Information Administration data released Wednesday showed US crude stocks rose 118,000 barrels to 509.213 million barrels. Analysts surveyed Monday by S&P Global Platts expected a draw in US crude stocks of 3.25 million barrels in the week that ended June 23. US crude stocks would have drawn by 1.4 million barrels if barrels from the Strategic Petroleum Reserve hadn't been released into the commercial system, said Jenna Delaney, senior oil analyst at Platts Analytics. One bullish factor contained in the EIA data was imports from Saudi Arabia, which have fallen this month, she said. "The market had been watching for production cuts in Saudi Arabia to show up in lower imports to the US, which is viewed as a constructive factor in bringing the global market into balance," Delaney said. The four-week moving average of US crude imports from Saudi Arabia fell 114,000 b/d to 856,000 b/d, the lowest level so far this year.
Oil extends gains to sixth day on dip in U.S. output - Oil futures ended slightly higher on Thursday, extending crude's rally to a sixth straight session after a decline in weekly U.S. crude production temporarily eased concerns about deepening oversupply. U.S. crude futures CLc1 settled up 19 cents at $44.93 a barrel after hitting a two-week high of $45.45 in late-morning trading. The market retreated from highs after Societe Generale became the third investment bank to cut its outlook for oil prices in the last week. Crude prices hit a 10-month low last week but have rebounded more than 5 percent, stretching their bull run to the longest since April. Brent crude futures LCOc1 ended up 11 cents at $47.42 a barrel, after touching a two-week high of $48.03 earlier in the session. "After the steep drop in oil prices of recent weeks, I believe that especially hedge funds saw nice buying momentum and lower U.S. crude production was the trigger to act," said Hans van Cleef, senior energy economist at ABN Amro. Analysts were not sure whether bearish sentiment had abated in the oil market, given larger-than-usual inventories in the United States for both crude oil and key products like gasoline. "It does feel as if a wave of selling has ebbed for now," wrote analysts at Credit Suisse. They added, however, that the rebound in prices reflected technical buying rather than a change in fundamentals. In recent weeks, funds have been unloading long speculative positions, reducing bets on higher prices while brokerages including Goldman Sachs and Societe Generale have cut their 2017 forecasts for crude prices.
Citi: Oil Prices Have Bottomed And Are Now Set To Soar - One day after Goldman issued a confused, rambling note in which the bank cuts its 3-month WTI price target by $7.50 from $55 to $47.50 saying "Spot WTI oil prices at $43/bbl are now back to November pre-OPEC deal levels, down from $52/bbl just a month ago and vs. our prior 3-mo $55/bbl forecast. How did it go so wrong?" yet kept a bullish long-term outlook (underscored by a bullish follow up note by Goldman's commodity head, Jeffrey Currie because Goldman is always hedged) and on the same day that Socgen likewise cut its Q3 and Q4 Brent forecasts by $7.50 to $50 and $52.50 (and 2018 by $6 to $54) on a weaker supply-demand outlook, oil bulls were in urgent need of reassurance. So, courtesy of Citi, the one bank that will never stray too far from its bullish bets on crude (perhaps due to its role as OPEC's impresario to the hedge fund world), and its head technician Tom Fitzpatrick, here is the explanation why oil is now due for a rebound, or as Citi puts it... "Oil hits the floor and is now set to soar!"
- o We believe that WTI Crude has posted a short term bottom. Previous short term bottoms have typically seen strong upside follow through with an average low to high rally of 22% over three weeks.
- o The present price action on WTI Crude is also very similar to that seen in October/November of last year and in that instance, we saw a rally of nearly 23% in the 3 weeks after the low was posted.
- o We are very focused on the price action seen in October and November of last year where we fell for 5 weeks from a high of $51.93 to a low of $42.20. This time, we also fell for 5 weeks from a high of $52.00 and hit a low of $42.05 last week.
- o The bounce after the November low saw WTI rally to $51.80 over three weeks and a similar move this time around looks likely to us. Such a move would also be consistent with the rebounds off prior lows.
- o Previous short term bottoms in WTI Crude have been followed by aggressive rebounds in the 3 weeks that follow. On average these rebounds have resulted in a move higher by 22%. If last week’s low is a short term bottom (which is our bias), a bounce like the average one see over the last 18 months would suggest a move up to $51.29, in line with what we would expect to see if we follow the November 2016 bounce highlighted above.
Analysis: No OPEC solace in tight medium sour crude oil market, as light sweet glut weighs -- Saudi Arabia's energy minister Khalid al-Falih, as well as his predecessor Ali al-Naimi, has long maintained -- in the face of criticism and even ridicule in some corners -- that the kingdom does not consider US shale producers as direct competitors in a finite oil market. In terms of the physical market, the ministers are correct. US shale oil is typically light and sweet, while Saudi Arabia and most of OPEC's key Middle East members largely produce grades that are sourer and heavier, and many refineries worldwide are not technically nimble enough to drastically alter their crude slates. But even as supplies of the heavier sour grades have tightened substantially following OPEC's production cut agreement, the recent output surge in the US, in addition to Libya, Nigeria and even Kazakhstan, has left the world awash in light sweet oil, which now serves as the swing barrel in the global market. Major futures benchmarks ICE Brent and NYMEX crude are based on relatively light sweet grades from the North Sea and the US, respectively, but often stand in as the global oil price. Given this, OPEC and its 10 non-OPEC partners in the 1.8 million b/d production cut agreement face a dilemma, as those benchmark prices continue to languish, without reflecting the tightness in the medium sour market. A further cut, as some ministers have begun to discuss, would seem to only expand the heavy/light imbalance in the market, particularly if Saudi Arabia were to take on the bulk of the cuts, as it has under the current OPEC/non-OPEC cut agreement. And it would risk further deterioration of OPEC's Middle Eastern members' global market share. To wit: China's refineries in May imported record amounts of crude from Russia and Angola, according to state data, as observers said the country appears to be moving away from heavy Middle Eastern grades due price rises following the OPEC cuts.
Libya's oil output nears 1 million bpd, highest in four years: source | Reuters: Libyan oil production is fluctuating between 950,000 barrels per day (bpd) and "close to" 1 million bpd, rising from around 935,000 bpd earlier this week, a Libyan oil source with direct knowledge of the matter told Reuters on Thursday. Production has been fluctuating mainly due to technical and power generation problems, the source said, declining to be named because he was not authorized to speak to the media. At near one million bpd, Libya has succeeded in beating a production target the National Oil Corp (NOC) announced recently by a month, the source added. The source said that production should stabilize at the higher end of the range "very soon". Also on Thursday, oil began to be pumped from storage tanks at Al-Majid field, which has been closed for eight months because of power problems, said Omran al-Zwai, a spokesman for Arabian Gulf Oil Company (AGOCO), an NOC subsidiary that operates the field. The field, with an output of about 5,000 bpd, is expected to reopen fully on Saturday, Zwai said. Oil from Al-Majid is pumped to Zueitina, one of three eastern terminals that was blockaded until September last year. Libya, a member of the Organization of the Petroleum Exporting Countries, has been exempted from OPEC-led supply cuts as it tries revive its battered oil industry. It had produced more than 1.6 million bpd before a 2011 uprising, and average production has not exceeded 1 million bpd since July 2013.
OilPrice Intelligence Report: How Real Is This Oil Price Rally? - Oil prices posted strong gains this week, largely from speculators closing out short bets. Hedge fund and other money managers had built up a record volume of bearish bets on crude over the past month, and it appears that a liquidation of them has driven crude prices higher. The big question is whether or not that gains will continue. Dennis Gartman of The Gartman Letter told CNBC that the latest rally is a “dead cat bounce” that won’t last. But others are hoping that the recent selloff went too far and that the gains are here to stay. The weekly EIA data provided a huge boost to the morale of oil bulls this week, showing a massive drop in U.S. oil production by 100,000 bpd. To be sure, the release is one data point, and should be taken with a grain of salt. But if the EIA posts successive production declines in the weeks ahead, it would go a long way to easing the fear among oil traders. The production decline allowed traders to look past the lack of an inventory drawdown – oil prices moved up on the news. This week, Goldman Sachs lowered its three-month estimate for WTI prices from $55 per barrel to $47.50, citing higher production from Libya and Nigeria, as well as the ramp up in U.S. shale drilling. Nonetheless, the investment bank says that the oil market is still moving towards balance, even if slowly. Inventories are falling, demand is rising, and OPEC could do more to cut – and Goldman says it should. . Reuters reports that low prices are likely to lead to higher crude purchases from Asia. Oil has piled up in the Atlantic Basin, leading to fears of too much supply, but lower prices will spark greater demand. It is a small sign that things might not be as bad as they seem. Libya’s output has broken a new multi-year high, rising above 950,000 bpd, according to Reuters. That’s up from 935,000 bpd last week. A Libyan source told Reuters that production is fluctuating and coming “close to” 1 million barrels per day. Rising Libyan output is undermining the effectiveness of the OPEC deal.
Baker Hughes U.S. Rig Count Falls for First Time in 6 Months - As oil prices hover above $45 per barrel, the count of active drilling rigs in the United States has fallen by one to 940, with oil-directed rigs dropping by two to 756 units and natural gas-directed rigs climbing by one to 184, Baker Hughes (BHI) reported Friday, June 30. The drop in Baker Hughes count is the first in 24 weeks, or six months and comes at a time when oil has felt significant pressure due to a persisting global oversupply and dangerously high levels of U.S. shale activity. West Texas Intermediate crude contracts for August delivery were trading up about 1.3% around the time of the 1 p.m. Baker Hughes report to $45.51 a barrel, while global benchmark Brent crude futures were up slightly less than 1% to $47.85. Baker Hughes total U.S. rig count is up 509 rigs from this time last year when it stood at 431, with oil rigs up 415, gas rigs up 95 and miscellaneous rigs down one. Meanwhile, the U.S. offshore count is down one rig from last week to 21 overall. The offshore count is up two rigs year-over-year.
US Oil Rig Count Drops For First Time In 24 Weeks As Trump Unveils US-Mexico Petroleum Pipeline -- Last week saw US crude production decline by the most since Aug 2016 (perhaps affected by 'Cindy') and given the lagged response to WTI prices, many expected the oil rig count to drop this week. As WTI heads for its 7th up-day in a row - the longest streak in 6 months - it is supported as the US oil rig count dropped 2 to 756, the first drop in almost 6 months. “Is it possible we’d have our first negative number in 24 reports? Unlikely but it’s possible” when you see production down 3 of the past 7 weeks, Bob Yawger, director of the futures division at Mizuho Securities USA in New York, says by telephone
- *U.S. GAS RIG COUNT UP 1 TO 184 , BAKER HUGHES SAYS :BHI US
- *U.S. OIL RIG COUNT DOWN 2 TO 756 , BAKER HUGHES SAYS :BHI US
Lower 48 Production fell 55k b/d last week - the biggest drop since Aug 2016... Total U.S. crude output dropped 100k b/d to 9.25m b/d last week, biggest drop in almost a year and 3rd decrease in the last 7 weeks, according to EIA report Wednesday We suspect the drop is related to shut-ins from tropical depression Cindy and will recover quickly. It appears President Trump is confident that the Lower 48 will keep pumping asOilPrice.com's Tsvetana Paraskova reports, to boost American energy exports, the administration of U.S. President Donald Trump has approved the construction of a new petroleum pipeline from the U.S. to Mexico that “will go right under the wall,”President Trump said on Thursday.
Oil Caps Longest Rally This Year as Oversupply Anxiety Eases - Oil posted the longest run of gains in six months after U.S. shale explorers paused a record drilling expansion in a sign the boom may be slowing down. Futures added as much as 2.7 percent in New York, advancing for a seventh session. Shale explorers broke the longest stretch of uninterrupted growth in three decades as rigs targeting crude fell by 2 this week, bringing the total to 756, according to Baker Hughes Inc. data reported Friday. The rig count has more than doubled from a low of 316 in May. While prices have surged this week, oil in New York and London are still set for a loss in June -- a month in which prices typically gain. Crude futures tumbled into a bear market last week on concerns that rising global supply is offsetting cuts from the Organization of Petroleum Exporting Countries and its partners. Bank of America Corp. became the latest in a string of banks to cut its outlook for prices this year and next. "I don’t think everyone’s quite ready to write off the OPEC/non-OPEC accord just yet," "And given how far we’ve fallen, you’re seeing bargain hunting by some."West Texas Intermediate for August delivery gained $1.11 to settle at $46.04 on the New York Mercantile Exchange. Oil is down about 9 percent this quarter. Brent for August settlement, which expires Friday, closed 50 cents higher at $47.92 a barrel on the London-based ICE Futures Europe exchange. The global benchmark is down about 9 percent this quarter and traded at a premium of $1.85 to WTI. The rig count drop follows a report Wednesday that U.S crude output fell by the most in almost a year last week amid field maintenance in Alaska and tropical storm Cindy, while gasoline inventories fell for a second week. OPEC and its partners aren’t worried about the market recovery and don’t plan to discuss deeper cuts, said United Arab Emirates Energy Minister Suhail Al Mazrouei.
Only $60 Oil Can Save the Aramco IPO --The OPEC deal is in crisis. All oil price gains derived from the 1.2 million-barrel cut’s initial announcement and implementation have been wiped out, and No. 1 OPEC producer Saudi Arabia’s attempt to draw down American inventories has fallen flat, due in part to insubordination from the No. 2 producer, Iraq, along with upticks in production from Nigeria, Libya, and U.S. shale.The KSA had a clear opportunity to drastically change the direction of oil prices last month, when the Organization of Petroleum Exporting Countries (OPEC) met in Vienna to discuss the duration and scope of the output cut extension. Though Riyadh agreed to continue the deal three months longer than analysts expected (the new deal ends in March 2018, as opposed to December 2017 as many expected), the bloc leader did not heed recommendations to deepen the cuts, keeping production at 32.5 million bpd.In addition, Nigeria and Libya got a pass that allows them to produce as much as they can for the next nine months, despite the African duo’s booming recovery worth hundreds of thousands of barrels.In April and May, Saudi Arabia cut exports despite the fact that the OPEC deal does not limit export volumes. But new ClipperData says that June numbers could reveal a reversal in that downward trend, as KSA appears ready to ship more oil.The royal family – especially newly crowned heir to the throne Mohammed bin Salman – needs oil prices near $60 for Saudi Aramco’s 2018 IPO to generate the income it needs. At the time of this article’s writing, Brent was trading up at $47.78.One month after OPEC’s failure to toughen production quotas, the bloc remains uncertain about deeper cuts. Reuters reported on Tuesday that the monitoring committee for the deal, plus Saudi Arabia and Russia, would officially discuss the deal’s progress next at the end of July. That’s an extra two months of market standstill.The IPO isn’t moving along as quickly as originally planned. Riyadh’s financial planners are behind in preparing Aramco and world markets for what is expected to be the largest IPO in history. The team was supposed to reach a decision on a foreign bourse for the listing by the end of Ramadan, but Eid-ul-Fitr passed days ago, and the victor has yet to be named—just murmurs that Bin Salman is at odds with top planners who prefer London over New York. And while the Saudis may not be deliberately procrastinating on the listing, holding out for higher oil prices, the current low oil prices certainly aren’t rushing things along.
Dana Gas and an Existential Crisis for Islamic Finance -- The very foundations of the Islamic finance world were shaken a few weeks ago when Dana Gas declared that $700 million of its Islamic bonds (sukuk) were invalid and obtained a preliminary injunction against creditor enforcement from a court in the UAE emirate of Sharjah. Like Marblegate on steriods, Dana made this announcement as a prelude to an exchange offer, proposing that creditors accept new, compliant bonds with a return less than half that offered by the earlier issuance.Dana shockingly claimed that evolving standards of Islamic finance had rendered its earlier bonds unlawful under current interpretation of the Islamic prohibition on interest and the techniques Dana had used to issue bonds carrying an interest-like investment return. I had expected to read that Dana had used an aggressive structure like tawarruq (sometimes called commodity murabahah) that pushed the boundaries of what the Islamic finance world generally countenanced, but no. The structure Dana had used was totally mainstream, a partnership structure called mudarabah. Dana asserted that the mudarabah structure had been superseded by other structures, such as a leasing arrangement called ijarah, though in Islamic law as in other legal families, there are often multiple permissible ways of achieving a goal, not just one. And when an issuer prepares an Islamic finance structure like this, it invariably gets a sign-off from a shariah-compliance board of respected Islamic law experts (sometimes several such boards). For Dana Gas to suggest that its earlier board was wrong to the tune of $700 million, or worse yet that Islamic law had somehow changed in a few years through an abrupt alteration of opinion by the world of respected Islamic scholars is ... troubling.
Deposed Saudi Prince Is Said to Be Confined to Palace — The recently deposed crown prince of Saudi Arabia, Mohammed bin Nayef, has been barred from leaving the kingdom and confined to his palace in the coastal city of Jidda, according to four current and former American officials and Saudis close to the royal family. The new restrictions on the man who until last week was next in line to the throne and ran the kingdom’s powerful internal security services sought to limit any potential opposition for the new crown prince, Mohammed bin Salman, 31, the officials said, speaking on the condition of anonymity so as not to jeopardize relationships with Saudi royals. It was unclear how long the restrictions would remain in place. An adviser to the Saudi royal court referred queries to the Information Ministry, whose officials could not immediately be reached for comment on Wednesday. A senior official in the Saudi Foreign Ministry reached by telephone on Wednesday night described the account as “baseless and false.” The Saudi monarch, King Salman, shook up the line of succession last week with a string of royal decrees that promoted his favorite son, Mohammed bin Salman, to crown prince and removed Mohammed bin Nayef, 57, from the line of succession. The elder prince was also replaced as interior minister by a 33-year-old nephew, marking the end of a career that had won him deep respect in Washington and other foreign capitals for his work dismantling Al Qaeda’s networks inside the kingdom after a string of deadly bombings a decade ago.
Egypt's Sisi hands control of two Red Sea islands to Saudi Arabia (Reuters) -Egyptian President Abdel Fattah al-Sisi has ratified a maritime demarcation agreement that sees the country cede sovereignty over two uninhabited Red Sea islands to Saudi Arabia, the government said on Saturday. The Red Sea islands deal has become political sensitive for Sisi, who counts on Saudi Arabia as a key ally, after the proposed agreement fueled widespread public criticism and street protests among Egyptians angered over national sovereignty. Egypt's parliament last week backed the plan that cedes control of Tiran and Sanafir islands to Saudi Arabia, but the deal has also become subject to a legal tussle between different courts over jurisdiction. "President Abdel Fattah al-Sisi has ratified the maritime demarcation agreement between the Arab Republic of Egypt and the Kingdom of Saudi Arabia," the cabinet said in a statement. This week the constitutional court chief temporarily suspended all court decisions on the agreement until the constitutional court makes a ruling on which institution has the final say in the matter. Sisi's government last year announced the maritime agreement with Saudi Arabia, an ally which has given billions of dollars of aid to Egypt. The Egyptian and Saudi governments say the islands are Saudi but have been subject to Egyptian protection.Google Maps Saudi Arabia helped Sisi with aid since he toppled President Mohamed Mursi of the Muslim Brotherhood in 2013.
UAE sees 'parting of ways' if Qatar does not accept Arab demands | Reuters: A senior United Arab Emirates official said on Saturday that if Qatar did not accept an ultimatum issued by fellow Arab states which imposed a boycott this month on the tiny Gulf Arab nation, there would be a "parting of ways". The 13-point list of demands from Saudi Arabia, Egypt, Bahrain and the UAE include closing the Al Jazeera satellite television network, curbing relations with Iran, shutting a Turkish base in Doha and paying reparations. The demands are apparently aimed at dismantling Qatar's two-decade-old interventionist foreign policy, which has reflected the clout generated by its vast natural gas and oil wealth but incensed conservative Arab peers over its alleged support for Islamists they regard as mortal threats to their dynastic rule. Doha said it is reviewing the list of demands and that a formal response will be made by the foreign ministry and delivered to Kuwait, but added that the demands are not reasonable or actionable. "The alternative is not escalation, the alternative is parting of ways, because it is very difficult for us to maintain a collective grouping," UAE Minister of State for Foreign Affairs Anwar Gargash told reporters. He said diplomacy with Qatar remained a priority, but added that mediation efforts to resolve the dispute had been undermined by the public disclosure of the demands. "The mediators' ability to shuttle between the parties and try and reach a common ground has been compromised by this leak," he said. "Their success is very dependent on their ability to move but not in the public space." Gargash said that if Qatar fails to comply within the 10-day timeline set out in the ultimatum, it will be isolated. But he did not make clear what more could be done since the four Arab nations have already cut diplomatic relations with Doha and severed most commercial ties.
Furious Qatar Balks At Saudi Ultimatum As UAE Warns Of "Parting Of Ways" - One day after Saudi Arabia and its Gulf ally states finally released a long-awaited, 10-day ultimatum containing 13 demands from Qatar as a precondition for the resumption of diplomatic ties and an end of Qatar's economic and naval blockade, the small Gulf nation balked and said the ultimatum is neither "reasonable" nor "realistic", and infringes on its sovereignty and foreign policy. “This list of demands confirms what Qatar has said from the beginning – the illegal blockade has nothing to do with combating terrorism, it is about limiting Qatar’s sovereignty, and outsourcing our foreign policy” said Sheikh Saif Al Thani, director of Qatar’s government communications office, in a statement to Bloomberg. As a reminder, the full list contained such demands as reducing diplomatic representation with Iran, shutting down the Turkish military base that is being established (Turkey has already balked at the threat), severing ties with terrorist organization, shutting down Al Jazeera and all affiliated channels, and so on. The demands are explicitly aimed at dismantling Qatar's two-decade-old interventionist foreign policy, which has reflected the clout generated by its vast natural gas and oil wealth but incensed conservative Arab peers over its alleged support for Islamists they regard as mortal threats to their dynastic rule.Al Thani dismissed the demands and said that while the list is "currently under review", it is only “out of respect for our brothers in Kuwait” whose emissary delivered the Saudi-led demands Friday. Al Thani said that the demands do not meet the US and UK criteria for “reasonable and realistic measures.” “The State of Qatar is currently studying this paper, the demands contained therein and the foundations on which they were based, in order to prepare an appropriate response,” the ministry told Channel News Asia.
Middle East At Point Of No Return As Saudi-Qatar Rift Deepens --Saudi King Salman’s decision to appoint his son Mohammed Bin Salman (MBS) as the new crown prince did not come as a surprise. For months, the power struggle between former crown prince Mohammed Bin Nayef (MBN) and MBS happened in plain sight, and a confrontation was imminent. However, King Salman made his own calculations and decided to remove MBN in favor of MBS, providing a continuation of his own family line in the future. Over the last week, the media has been overwhelmed with assessments of the House of Saud and the role MBS will play or has been playing. The family feuds in the House of Saud are notorious, whenever a king dies an internal power struggle will emerge, regardless of what strategies have been implemented before.At present, the Young Prince of Riyadh, Mohammed Bin Salman, has been given the key to power. This has happened at a very difficult time for not only the Kingdom, but also for the whole Gulf region and its neighbors. The choice made by King Salman to promote his son is a remarkable one but could, from a Saudi perspective, be the only viable choice. The need for a 180 degree change in the economic and social policy which keeps Saudi Arabia a strategic regional player is essential. Without radical changes, such as those presented in Vision 2030 or the Aramco IPO project, the Kingdom’s future could be bleak, as the era for “Rentier States” is over.The challenges MBS faces are enormous. Due to lower hydrocarbon revenues, he will need to change an oil-based economy into a more open, liberal and high-tech economy, capable of taking on global competition in these fields. By opening up the Kingdom via Vision 2030 and the expected billions of dollars from IPO revenues, this could become a reality, not a fata morgana.
No negotiations over Qatari demands: Saudi FM - Saudi Arabia said on Tuesday there will be no negotiations over the demands made to Qatar to stop supporting extremism, Al-Ekhbariya TV reported.Saudi Foreign Minister Adel Al-Jubeir was referring to a list of demands Qatar would need to fulfill to ease concerns of Arab states over the country’s role in extremism funding.Al-Jubeir reiterated Saudi Arabia's demands as US Secretary of State Rex Tillerson held talks with the Qatari foreign minister on the Gulf states crisis.Saudi Foreign Minister Adel Al-Jubeir, who was also in Washington, was unbudging amid attempts by US and Kuwaiti diplomats to mediate the row which has left Qatar isolated under a trade and diplomatic embargo set by its Gulf Arab neighbors.“Our demands on Qatar are non-negotiable. It’s now up to Qatar to end its support for extremism and terrorism,” Jubeir said via Twitter.Riyadh has laid down a list of 13 demands for Qatar, included the closure of Al-Jazeera, a downgrade of diplomatic ties with Iran and the shutdown of a Turkish military base in the emirate. Shortly after Jubeir’s comments, Tillerson met with Qatar’s top diplomat Sheikh Mohammed bin Abdulrahman Al Thani. He was to meet later with Kuwait Foreign Minister Sheikh Sabah Khaled Al-Sabah, who has sought to work resolve the standoff. State Department Spokeswoman Heather Nauert said talks would continue through the week.
By demanding the end of Al Jazeera, Saudi Arabia is trying to turn Qatar into a vassal state - So serious has the Saudi-Qatar crisis now become that the Qatari Foreign Minister is reportedly planning an emergency trip to Washington in the next few days in the hope that the Trump regime can save his emirate. For Mohamed bin Abdulrahman Al-Thani knows very well that if Qatar submits to the 13 unprecedented – some might say outrageous – demands that Saudi Arabia, Bahrain, the United Arab Emirates and Egypt have made, it will cease to exist as a nation state. Al Jazeera television editors, supported by a phalanx of human rights and press freedom groups, have denounced the 10-day warning that the Qatar satellite chain must close – along with Middle East Eye and other affiliates – as a monstrous intrusion into freedom of speech. One television executive compared it to a German demand that Britain closes the BBC. Not so. It is much more like an EU demand that Theresa May close the BBC. And we know what she would say to that. But the British Prime Minister and her Foreign Secretary, while obviously anxious to distance themselves from this very dangerous – and highly expensive – Arab dispute, are not going to draw the sword for Qatar. Nor are the Americans, when their crackpot President decided that Qatar was a funder of “terrorism” a few days after agreeing a $350bn arms deal with Saudi Arabia. But surely, say the Qataris, this can’t be serious. They don’t doubt that Field Marshal President al-Sisi of Egypt, who loathes Al Jazeera, is principally behind the demand that it close down, but one of the four Arab states must have deliberately leaked the list to Reuters and the Associated Press. If so, why would Qatar’s enemies wish to reveal their hand so early? Surely such demands would be only the first negotiating position of the four Arab nations. It’s hard to see how the Qataris can respond. If they really did close their worldwide television network and other media groups, break off relations with the Muslim Brotherhood – al-Sisi’s target, although his real enemy is Isis – and the Taliban and Hezbollah, downgrade their relations with Iran, close Turkey’s military base and expose their account books for international Arab scrutiny for the next 12 years, then Qatar becomes a vassal state.
Saudi Arabia Is Weakening US Influence In The Middle East -- In a series of almost unprecedented events among Washington's regional allies, the crisis between Saudi Arabia and Qatar seems to worsen by the day. The long-awaited list of demands presented to Doha by Riyadh seem to be intentionally impractical, as if to oblige Qatar to plead guilty to the crimes alleged by the Saudi kingdom or face the consequences, still unknown. The surreal requests start with demands to close the international television network Al Jazeera, as well as halt the financing of the Muslim Brotherhood. At the heart of the issue remains the question of political and diplomatic relations with Iran, the bane of the Saudi royal family’s existence. The House of Thani that controls Qatar has until July 3 to accept all the demands presented. At the moment, Doha seems to be sending mixed messages, announcing that it wants to evaluate the Saudis’ proposals, but also letting it be known that most of the demands are «not reasonable». Another interesting tidbit concerns the removal of Muhammed bin Nayef by the Saudi king as his successor to the throne. Prince Mohammad bin Salman, the young 31-year-old nephew, replaces Muhammed bin Nayef, the former Crown Prince and major ally of the CIA and European and American governments. Mohammad bin Salman is currently the most controversial figure in the Middle East. Responsible for the devastating war in Yemen and the desperate financial state of Riyadh’s finances, he oscillates between his Vision 2030 and an anti-Iranian preoccupation that is likely to bring his kingdom to bankruptcy. In Yemen, he waged a military campaign costing in the tens of billions of dollars, only to lose against the poorest Arab country in the world. His irrational anti-Iranian stance has even led him to risk a conflict within the GCC (thanks to the precious lobbying role of the UAE ambassador to the US, Yousef al-Otaiba) over the excessive freedom of Doha's foreign policy.
Qatar Looks to Iran and Iraq - For decades, Qatar has carefully navigated the geopolitical dynamics shaping relations among its three larger neighbors: Saudi Arabia, Iran, and Iraq. Qataris have usually perceived one of these three Persian Gulf powers as the primary threat and responded by growing closer to the other two. At this juncture amid the Qatar crisis, Doha will likely deepen its relations with Iran and Iraq to counter-balance pressure from Saudi Arabia and other Sunni countries that took action against the Arabian emirate in early June. On June 29, Qatar’s Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani told reporters in Washington that Iran is the Gulf state’s neighbor, so Doha and Tehran must invest in a constructive bilateral relationship. In the list of 13 demands issued by Saudi Arabia, the United Arab Emirates (UAE), and Bahrain was a requirement that Qatar sever relations with Iran. The Qataris’ deeply rooted foreign policy strategy of hedging bets on both Saudi Arabia and Iran has irked Riyadh and other Arab capitals in the Gulf to a point where these Gulf Cooperation Council (GCC) members are telling the peninsula nation that its neutrality is unacceptable and it must demonstrate fidelity to the kingdom. Qatar has thus far signaled that it has no intention of capitulating to Saudi/UAE demands. Riyadh and Abu Dhabi, meanwhile, have threatened to uphold their actions until Doha complies with their requirements for restored diplomatic and economic relations. To offset the Saudi/UAE-led action, Qatari officials must assess the potential benefits and risks of shifting closer to Tehran’s orbit of regional influence.
Bizarre Tanker Cooperation Prompts Questions If Qatar, Saudi Feud Is Staged -- Either the blockade of Qatar by Saudi Arabia and its allies (recall the Saudi ultimatum expires on July 3) and the whole Qatar "crisis" is the most staged and produced diplomatic stunt since last summer's Turkish "coup", or for some unknown reason, the worse the diplomatic relations between Qatar and Saudi Arabia get, the more they cooperate in the only industry that matters for Saudi Arabia. According to a Bloomberg report, even as Saudi Arabia leads three other Arab nations in accusing Qatar of links to terror groups and being too close to Iran, one thing has become increasingly clear in the oil market: tensions have yet to reach a point where the world’s biggest crude exporter is disrupting its tiny neighbor’s shipments. Specifically, despite the sudden feud, Qatar has maintained longstanding practice of loading crude onto tankers with Saudi Arabia and U.A.E. tracking of tankers compiled by Bloomberg shows. The number of tankers that are filling with Qatari crude along with that of Saudi Arabia or the United Arab Emirates has actually increased since tensions escalated on June 5, according to Bloomberg calculations. The three countries’ joint loadings of crude remain largely unaffected since the dispute that broke out June 5. Since then, 17 tankers have loaded crude in Qatar and either Saudi Arabia or the U.A.E., or both. There were 16 over an equal period before June 5. The full table of co-loadings is shown below, courtesy of Bloomberg data:]
Russia quietly begins building third military base in Syria - Over the past few days, the Russian army has quietly started construction of a new military base in the countryside near Damascus, from scratch, tasked with manning and administering a “deconfliction zone” in the Syrian south, similar to four others agreed upon earlier in the year by Moscow, Ankara and Tehran.The first zones applied to Homs, Idlib, and the suburbs of Damascus, while the new one will encompass territory extending from Daraa, 13 kilometers north of the Syrian-Jordanian border, to the border itself, including the strategic city of Quneitra on the Golan Heights and al-Suwayda, a mainly Druze city.Whoever patrols it will also shoulder responsibility for purging the region of “non-Syrian” forces, in reference to al-Qaeda, Jabhat al-Nusra, ISIS and Hezbollah.The Jordanian government, a staunch and longtime ally of the United States, is keen on ridding the border region of these non-state players, asking that they are pushed back into Syrian territory by 30km to 50km. The Russians had originally wanted to restore the Syrian army to the southern front, but this was vetoed by the Americans, Jordanians and Israelis, who argued that a return of government troops would mean the return of Iranian and Hezbollah forces as well.
China takes delivery of first shipments of American beef in 14 years - CNBC --China let through the first shipments of beef from the United States in 14 years on Friday, after the two nations agreed to resume the trade in May, state media reported. The imports were brought in by Cofco Meat Holdings from U.S. meat processor Tyson Foods, China National Radio reported on Friday, citing Beijing Entry-Exit Inspection and Quarantine Bureau. China officially allowed U.S. beef imports from Tuesday this week after the two sides settled the conditions for exports last week. Under the new rule, boneless and bone-in beef from cattle under 30 months of age will be eligible for imports. Beef destined for China must also be from cattle that can be traced to its birth farm, according to the rule. Chinese importers are racing to bring in American beef to meet increasing demand for premium meat in the $2.6 billion beef import market. Cofco's imports, the first to have landed in China, will be sold on Cofco's e-commerce platform Womai.com, according to CNR. Arrivals of U.S. beef could erode sales of Australian beef in China's lucrative premium meat market, as U.S. beef is expected to be cheaper because of low grain prices in the nation.
Chinese Satellite Data Hint At Ominous Manufacturing Slowdown - Chinese factory activity contracted last month for the first time in nearly a year when the Caixin PMI dipped below 50, the threshold for growth. And now, early indicators for the month of June – including one satellite-based measure - suggest that there’s more pain ahead for the manufacturing sector in the world’s second-largest economy.A reading published by San Francisco-based SpaceKnow Inc. which uses commercial satellite imagery to monitor activity across thousands of industrial sites signaled deterioration in the country’s manufacturing sector for the first time since August.The gauge, known as the China Satellite Manufacturing Index, fell to 49.6, below the 50 break-even level. The index incorporates satellite data from thousands of industrial sites across China.Satellite imagery has often proved eerily presceint in the recent past: In the US, satellite data analyzing activity in retailers' parking lots pointed to significant activity weakness at core US retail locations, even as sentiment indicators were suggesting an uptick in sales following the election.Meanwhile, small- and medium-sized enterprises showed the lowest level of confidence in 16 months, and conditions in the steel business remained lackluster,according to Bloomberg.
China PMIs Unexpectedly Accelerate Despite Ongoing Employment Contraction -- Validating the recent surge in iron ore, which has jumped more than 18% from 2017 lows hit just two weeks ago on speculation the PBOC may be willing to flirt with another round of inflation, overnight Beijing reported an unexpectedly strong bounce in its manufacturing and service sectors. China’s NBS June manufacturing PMI came in at 51.7 for June, above both the previous reading of 51.2 and expectations of a 51 print, remaining comfortably above the 50-point expansion line. This was the second highest level of 2017, on the back of improving market sentiment and industrial upgrading, according to an NBS statement posted on its website, despite an ongoing troubling contraction in the employment subindex. Unlike the Caixin PMI, the official index tracks mostly larger, state-owned enterprises. Two key sub-indices both increased from the previous month, although ominously the employment index declined for one more month and remained in contraction territory:
- The production sub-index went up to 54.4 in June, higher than 53.4 in May.
- The new order sub-index also increased to 53.1 in June from 52.3 in May.
- The employment index slightly declined to 49.0 in June, from 49.4 in May.
China’s debt surpasses 300 percent of GDP, IIF says, raising doubts over Yellen’s crisis remarks: Global debt has hit a record level in the first quarter of this year, mainly driven by emerging markets, raising questions of whether there will be another financial crisis in the near future. Data from the Institute of International Finance showed that global debt reached $217 trillion in the first quarter of this year, or 327 percent of gross domestic product. "The debt burden is not distributed evenly. Some countries/sectors have seen deleveraging while others have built up very high debt levels. For the latter, rising debt may create headwinds for long-term growth and eventually pose risks for financial stability," the IIF said in its Global Debt Monitor report on Tuesday. On Tuesday, U.S. Fed Chair Janet Yellen told an audience in London that banks are in a "very much stronger" position and another financial crisis is unlikely "in our lifetime." According to the IIF, despite the fact that debt levels have slowed down in mature economies, emerging market debt rose 5 percentage points from a year ago. "Total debt in emerging markets (excluding China) has increased by some $0.9 trillion to over $23.6 trillion in the first quarter of 2017—mainly driven by Brazil (up $0.6 trillion to $3.6 trillion) and India (up $0.2 trillion to 2.9 trillion)," the IFF said in its report. China poses a great risk in itself with households accelerating their borrowing. "The household debt-to-GDP ratio hit an all-time high of over 45 percent in the first quarter of 2017 —well above the Emerging Market average of around 35 percent. In addition, our estimates based on monthly data on total social financing suggest that China's total debt surpassed 304 percent of GDP as of May 2017," the IIF noted. On the other hand, there's been a steady decline in euro area private sector debt, from $103.4 trillion in the first quarter of 2016 to $97.7 trillion in the first quarter of this year. The IIF warned that there's over $1.9 trillion of emerging market bonds and syndicated loans maturing through to the end of 2017, with redemptions in USD making for about 15 percent of the total.
China, U.S. agree on aim of 'complete, irreversible' Korean denuclearization -- China and the United States agreed that efforts to denuclearize the Korean Peninsula should be "complete, verifiable and irreversible", Chinese state media said on Saturday, reporting the results of high level talks in Washington this week. "Both sides reaffirm that they will strive for the complete, verifiable and irreversible denuclearization of the Korean Peninsula," a consensus document released by the official Xinhua news agency said. U.S. Secretary of State Rex Tillerson had said on Thursday that the United States pressed China to ramp up economic and political pressure on North Korea, during his meeting with top Chinese diplomats and defense chiefs. China's top diplomat Yang Jiechi and General Fang Fenghui met Tillerson and Defense Secretary Jim Mattis during the talks. Yang later met with U.S. President Donald Trump in the White House, where they also discussed North Korea, Xinhua reported. The consensus document also highlighted the need to fully and strictly hold to U.N. Security Council resolutions and push for dialogue and negotiation, which has long been China's position on the issue. Military-to-military exchanges should also be upgraded and mechanisms of notification established in order to cut the risks of "judgment errors" between the Chinese and U.S. militaries, the statement also said. Chinese state media described the talks, the first of their kind with the Trump administration, as an upgrade in dialogue mechanisms between China and the United States, following on from President Xi Jiping's meeting with Trump in Florida in April. Xi and Trump are next expected to meet again in Hamburg during the G20 Summit next month.
China's CNPC suspends fuel sales to North Korea as risks mount-sources: (Reuters) - China National Petroleum Corp has suspended sales of fuel to North Korea over concerns the state-owned oil company won't get paid, as pressure mounts on Pyongyang to rein in its nuclear and missile programmes, three sources told Reuters. It's unclear how long the suspension will last. A prolonged cut would threaten critical supplies of fuel and force North Korea to find alternatives to its main supplier of diesel and gasoline, as scrutiny of China's close commercial ties with its increasingly isolated neighbour intensifies. CNPC and the Ministry of Commerce did not respond to requests for comment. China's Foreign Ministry declined immediate comment. North Korea's embassy in Beijing declined to comment. A source with direct knowledge of the matter said CNPC decided to put fuel sales on hold "over the last month or two" and described it as a "commercial decision". "It's no longer worth the risks," said the source. Chinese and international banks are stepping up compliance checks on companies dealing with countries on the U.S. sanctions list, such as North Korea, he said. The North Korean agents who mostly buy the diesel and gasoline have been unable recently to pay for the supplies -- CNPC normally requires upfront payments, the source said. Reuters was unable to determine if the agents have started facing credit problems with Chinese and international banks worried about sanctions compliance issues.
China builds new military facilities on South China Sea islands: think tank - China has built new military facilities on islands in the South China Sea, a U.S. think tank reported on Thursday, a move that could raise tensions with Washington, which has accused Beijing of militarizing the vital waterway. The Asia Maritime Transparency Initiative (AMTI), part of Washington's Center for Strategic and International Studies, said new satellite images show missile shelters and radar and communications facilities being built on the Fiery Cross, Mischief and Subi Reefs in the Spratly Islands. The United States has criticized China's build-up of military facilities on the artificial islands and is concerned they could be used to restrict free movement through the South China Sea, an important trade route. Last month, a U.S. Navy warship sailed within 12 nautical miles of Mischief Reef in a so-called freedom of navigation operation, the first such challenge to Beijing's claim to most of the waterway since U.S. President Donald Trump took office. China has denied U.S. charges that it is militarizing the sea, which also is claimed by Brunei, Malaysia, the Philippines, Taiwan and Vietnam. Trump has sought China's help in reining in North Korea's nuclear and missile programs, and tension between Washington and Beijing over military installations in the South China Sea could complicate those efforts. China has built four new missile shelters on Fiery Cross Reef to go with the eight already on the artificial island, AMTI said. Mischief and Subi each have eight shelters, the think tank said in a previous report. In February, Reuters reported that China had nearly finished building structures to house long-range surface-to-air missiles on the three islands. On Mischief Reef, a very large antennae array is being installed that presumably boosts Beijing's ability to monitor the surroundings, the think tank said, adding that the installation should be of concern to the Philippines due to its proximity to an area claimed by Manila.
Moon beams confidence on U.S.-South Korea trade - -- Heading into his first face-to-face meeting today with President Donald Trump, South Korean President Moon Jae-in talked up the benefits of trade between his country and the United States and even urged U.S. businessmen to begin planning for the day when they can do business in North Korea. The newly installed leader, in a speech Wednesday night at the U.S. Chamber of Commerce, did not specifically mention the U.S.-Korea free-trade agreement, which Trump has called “a horrible deal” and threatened to terminate unless South Korea agrees to unspecified changes. However, Moon did seem to want to cast the agreement in a more favorable light, calling the United States and South Korea “inseparable economic companions” and noting that trade between the two countries has grown by 12 percent over the past five years, even though overall global trade has fallen by 12 percent over the same period. He also expressed hope his visit would “elevate our bilateral economic partnership to the next level. Moon, who was elected last month after the impeachment of the previous president, said he hoped to bring peace to the Korean peninsula by working closely with the United States to resolve the nuclear issue in North Korea. “During the process of realizing my government’s plan, you’ll be able to invest in Korea with no concerns. And furthermore, you could also gain an opportunity to invest in North Korea at some point,” Moon said.
The Knives Are Out for South Korea’s Robber Barons - South Korea’s corporate emperors aren’t quite as ruthless as the commandants north of the border — North Korea’s supreme leader can command his half-brother to be murdered and his uncle by marriage to be executed — but they’ve dug out their own cultish strongholds in dynastic groups called chaebol (“wealth clan”), which have been, and still are, the engines of South Korea’s economic miracle. Here they live out the royal drama of past centuries, commanding familiar names like Samsung and Hyundai.Like many aristocratic cultures, chaebol are marked by an unmistakable streak of militarism. The businesses designing your smart phones, cars, and the parts inside them are separated into highly regimented units that adhere to an extraordinarily rigid corporate hierarchy. On a personal level, chaebol scions are also given to thuggish outbursts, like the Hanwha chairman who was convicted of hiring gangsters for a revenge attack and personally wielding a steel pipe, and the Korean Air heiress who assaulted her airline’s flight attendant and halted takeoff because her first-class nuts were served in a bag and not on a plate. (The former was off with a presidential pardon; both walked free from their sentences early.) South Koreans have a word for this type of abuse: gapjil. It’s the right to bully people lower on the hierarchy, to punish the weak with impunity, to treat yourself like royalty. Chaebol groups like Samsung played a remarkable role from the 1960s to 1980s in moving authoritarian South Korea out of poverty. But increasingly they are cultural relics in a developed democracy that has recently been swept with mass protests and the removal of its former president, Park Geun-hye — the daughter of a former dictator who helped build the chaebol system — in March over a wide-reaching political scandal. Of course, obsolescence isn’t necessarily a prelude to disappearance. Chaebol are still central to the Korean economy (even if they impair its long-term growth), and they remain tolerated by the public (even if they help corrupt the country’s culture and politics). It’s no accident that Korean leaders have repeatedly promised to pass new regulations that would cut the chaebol down to size, only to pass the buck to their successors.
Exclusive: U.S. warship stayed on deadly collision course despite warning - container ship captain | Reuters: A U.S. warship struck by a container vessel in Japanese waters failed to respond to warning signals or take evasive action before a collision that killed seven of its crew, according to a report of the incident by the Philippine cargo ship's captain. Multiple U.S. and Japanese investigations are under way into how the guided missile destroyer USS Fitzgerald and the much larger ACX Crystal container ship collided in clear weather south of Tokyo Bay in the early hours of June 17. In the first detailed account from one of those directly involved, the cargo ship's captain said the ACX Crystal had signaled with flashing lights after the Fitzgerald "suddenly" steamed on to a course to cross its path.The container ship steered hard to starboard (right) to avoid the warship, but hit the Fitzgerald 10 minutes later at 1:30 a.m., according to a copy of Captain Ronald Advincula's report to Japanese ship owner Dainichi Investment Corporation that was seen by Reuters. The U.S. Navy declined to comment and Reuters was not able to independently verify the account. The collision tore a gash below the Fitzgerald's waterline, killing seven sailors in what was the greatest loss of life on a U.S. Navy vessel since the USS Cole was bombed in Yemen's Aden harbor in 2000. Those who died were in their berthing compartments, while the Fitzgerald's commander was injured in his cabin, suggesting that no alarm warning of an imminent collision was sounded.
U.S. likely to bar Japan investigators from interviewing warship crew, official says | Reuters: The United States will likely bar Japanese investigators from interviewing USS Fitzgerald crew manning the guided missile destroyer when it was struck by a cargo ship in Japanese waters killing seven American sailors, a U.S. navy official said. The Philippines-flagged container ship ACX Crystal and the U.S. warship collided at night just south of Tokyo Bay on June 17. The U.S. deaths were the greatest loss of life on a U.S. Navy vessel since the USS Cole was bombed by militants in Yemen's Aden harbor in 2000. No one was hurt on the cargo ship. At least six investigations are being carried out, including two U.S. Navy internal hearings and one by the United States Coast Guard (USCG). The Philippines government is also conducting an investigation. The U. S. Coast Guard, which is investigating on behalf of the National Transportation Safety Board, has interviewed the crew of the container ship. But the U.S. navy official, who declined to be identified, said warships were afforded sovereign immunity under international law and foreign investigators were not expected to get access to the U.S. crew. "It's unlikely Japanese or Philippine authorities will have direct access to crew members," said the U.S. official.
Japan's Bond Market Grinds To A Halt: "We'll Go Days When No Bonds Trade Hands --The Bank of Japan may or may not be tapering, but that may soon be moot because by the time Kuroda decides whether he will buy less bonds, the bond market may no longer work.As the Nikkei reports, while the Japanese central bank ponders its next step, the Japanese rates market has been getting "Ice-9ed" and increasingly paralyzed, as yields on newly issued 10-year Japanese government bonds remained flat for seven straight sessions through Friday while the BOJ continued its efforts to keep long-term interest rates around zero. The 10-year JGB yield again closed at 0.055%, where it has been stuck since June 15m and according to data from Nikkei affiliate QUICK, this marks the longest period of stagnation since 1994, Because what comes after record low volatility? Simple: market paralysis. And that's what Japan appears to be experiencing right now as private bondholders no longer dare to even breathe without instructions from the central bank. Meanwhile, the implied volatility of JGBs tumbled to the lowest level since January 2008 for the same reason we recently speculatedmay be the primary driver behind the global collapse in volatility: nobody is trading. This means that trading in newly issued 10-year debt has become so infrequent that broker Japan Bond Trading has seen days when no bonds trade hands. It's not just cash bonds that find themselves in trading limbo: trading in short-term interest rate futures has also thinned and on Tuesday of last week the Nikkei reports that there were no transactions in three-month Tibor futures - the first time that has happened since such trading began in 1989. The three-month Tibor, or Tokyo interbank offered rate, has not moved in the nine months since the end of September 2016. There were just a few trades last Friday, and it was only a matter of time until the number hit zero. The absence of volatility makes it hard to profit from bets on the direction of interest rates. Alternatively, the death of trading means volatility has crashed to all time lows. Trading in even shorter-term contracts is also ebbing. The Tokyo Financial Exchange announced on Thursday that starting at the end of July it will suspend trading of futures based on Japan's uncollateralized overnight call rate, the interest that financial institutions charge each other for loans with a one-day maturity. The exchange will consider restarting trading if it can confirm demand.
The high-tech jobs that created India’s gilded generation are disappearing — They were going to be India’s gilded generation. When P.R. Sujoy became a software engineer, he thought his life was made. It was a job his father, a former government employee who prized stability above all, could brag about to nosy relatives. It came with a highflying salary, enough for a mortgage and to start a family. So when his company suddenly asked him to resign, Sujoy refused. “I’m an IT guy. That’s all I do,” he said. Eventually he was fired, and Sujoy became one more worker in India’s IT sector facing an uncertain future. Information technology services account for 9.5 percent of the country’s gross domestic product, according to the India Brand Equity Foundation (IBEF), but now, after decades of boom, the future of the industry seems precarious. Since May, workers’ groups have reported unusually numerous layoffs. The Forum for IT Employees (FITE) estimates that 60,000 workers have lost their jobs in the past few months. “Employees are being rated as poor performers so companies can get rid of them,” said FITE’s Chennai coordinator, Vinod A.J. IT companies and some government officials say the numbers have been exaggerated, but industry experts say the country’s digital wunderkinds have much to fear.
‘Cow economics’ are killing India’s working class - When Prime Minister Narendra Modi addressed the Indian parliament for the first time in June 2014, his inaugural speech focused on integrating and protecting India’s Muslims. “Even the third generation of Muslim brothers, whom I have seen since my young days, are continuing with their cycle-repairing job,” he said, referring to one of the many menial jobs to which Indian Muslims are often relegated. “Why does such misfortune continue?” But instead of “bring[ing] about change in their lives,” as Modi promised, his government has made life harder for India’s Muslims by cracking down on the leather and beef industries. Muslims and Dalits (the marginalised group once known as “untouchables” in the Hindu caste system) are among the poorest in India, and they have very little access to property. By tradition and due to a lack of other opportunities, many work in the leather sector, which employs 2.5 million people nationwide. Over the past three years, this trade has increasingly made Muslims and Dalits the targets of so-called cow vigilantism – attacks perpetrated by Hindus on cow traders in the name of religion. And legislation adopted in May, which amends the 1960 Prevention of Cruelty on Animals Act, is set to victimise these populations economically. Among other changes, the new rules mandate that cows, camels and buffalo may be sold to farmers only for agricultural purposes, not for slaughter. In the northern state of Uttar Pradesh, India’s most populous state, one out of every 1000 work in cow-related industries, including slaughterhouses and the leather industry. The town of Kanpur recently saw several slaughterhouses close down, putting out of work over “400,000 employees linked to leather industries”, according to a Reuters report. The supply of local hides has declined precipitously, leading to a decrease in Indian sales of leather and leather products. From April 2016 to March 2017, total leather exports dropped 3.23% from the previous year, to US$5.67 billion from US$5.9 billion. India also does enormous trade in meat. Last financial year, annual production was estimated at 6.3 million tonnes and exports totalled US$3.32 billion, according to a report in the Economic Times. That’s down from US$4.15 billion the year before.
Brazilian President Temer Officially Charged With Corruption -- Just over a month after O Globo newspaper first brought the world's attention to the fact that Brazil's President Michel Temer was 'allegedly' involved in "hush money" payments, then vehemently denied by him; and just a week after the police confirmed it had evidence that Temer received bribes, O Globo, reports citing court documents, that President MichelTemer was formally charged with corruption by Prosecutor-General Rodrigo Janot. As we noted last week, almost exactly one month after Brazil's stock market crashed, and the Real plunged after the country's never-ending political drama made a triumphal return following accusations that president Michel Temer had encouraged a "hush money" bribe to former House Speaker Eduardo Cunha in return for not getting dragged into the Carwash scandal, Brazil’s federal police force said it has found evidence that the embattled president received bribes to help businesses, Brazil's O Globo reported.Then earlier today, Brazil’s federal police confirmed it had found evidence that President Michel Temer allegedly committed three crimes, according to local media reports. As Bloomberg reports,Federal police sent full report to the Supreme Court regarding allegations gathered through plea bargains from executives at meat-packer JBS.In the report, police found evidence of corruption, obstruction of justice and failure to report a crime.Police also said there was no evidence of tampering with the audio of the meeting of Temer and the then-head of JBS, Joesley Batista, secretly recorded by the latter.While Temer has repeatedly denied the accusation, Bloomberg reports that the accusations are based on JBS's Joesley Batista's plea bargain.Brazil’s Temer was officially charged with corruption by the chief prosecutor on Monday evening, in a highly-anticipated development that may put the embattled president of Latin America’s largest economy on trial.
The End Of A Growing Consumer Base... And The Beginning Of The Decline -- In 1960, the core population (25-54yr/olds) of the OECD nations (US, Canada, Mexico, Chile, most the EU, UK, Turkey, Israel, Japan, S. Korea, Australia, NZ) was a couple million larger than the combined core of CRB (China, Russia, and Brazil). Since that time, OECD population growth has slowed to a crawl and it was CRB's growth that drove the global consumer base to new heights. However, 2017 is a monumental year when those counting will notice something missing...growth. A simple count of the core populations in the nations that consume over 70% of earths crude oil and nearly 80% of all global exports shows that the core populations of the OECD and the combined CRB begin outright shrinking as of 2018 (chart below).
BIS Warns on Household Debt --From the Bank of International Settlements (BIS): Excessive indebtedness has been one of the root causes of financial crises and the ensuing deep recessions. In recent years, the focus has been on household debt, as excessive leverage by the household sector was at the heart of the Great Financial Crisis. It is well recognised that household borrowing is an important aspect of financial inclusion and can play useful economic roles, including smoothing consumption over time. At the same time, rapid household credit growth has featured prominently in financial cycle booms and busts. For one, household debt – or debt more generally – outpacing GDP growth over prolonged periods is a robust early warning indicator of financial stress.
- Furthermore, there is growing evidence that household indebtedness affects not only the depth of recessions but growth more generally. In an influential paper, Mian et al (forthcoming) find that an increase in the household debt-to-GDP ratio acts as a drag on consumption with a lag of several years.
- BIS research reinforces this conclusion. For instance, based on a panel of 54 advanced and emerging market economies over the period 1990–2015, Lombardi et al (2017) find that rising household indebtedness boosts consumption and GDP growth in the short run, but not in the longer run. Specifically, a 1 percentage point increase in the household debt-to-GDP ratio is associated with growth that is 0.1 percentage point lower in the long run.
- Drehmann et al (forthcoming) shed light on a possible mechanism behind these empirical regularities. When households take on long-term debt, they increase current spending power but commit to a pre-specified path of future debt service (interest payments and amortisations).
- A simple framework captures this accounting relationship. It highlights two key features. First, if borrowing rises persistently over several years and debt is longterm, as is typically the case, the debt service burden reaches its maximum only after the peak in new borrowing. The lag can be of several years and increase with the maturity of debt and the degree of persistence in borrowing. Second, cash flows from lenders to borrowers reach their maximum before new borrowing peaks. They turn negative before the end of a credit boom, since the positive cash flow from new borrowing is increasingly offset by the negative cash flow from rising debt service. Empirically, these simple accounting relationships suggest a transmission channel whereby excessive credit expansions lead to future output losses.
The adverse effects of excessive credit growth can also be magnified by the economy’s supply side response. For example, banks’ stronger willingness to extend mortgages may feed an unsustainable housing boom and overinvestment in the construction sector, which may crowd out investment opportunities in higher-productivity sectors. Borio et al (2016), for example, report evidence that credit booms tend to go hand in hand with a misallocation of resources – most notably towards the construction sector – and a slowdown in productivity growth, with long-lasting adverse effects on the real economy.
Next global crash could come "with a vengeance", central bankers at the Bank for International Settlements have warned, citing debt fears in China and other emerging markets | City A.M.: Risks building up in China and other emerging markets could trigger the next global financial crash, an influential group of central bankers has warned. China and other developing economies such as Thailand are beginning to show the same signs of tensions seen in the US and UK before the global financial crisis of 2007-08, according to the annual report of the Bank for International Settlements (BIS). An abrupt end to the current period of growth could come "with a vengeance," said Claudio Borio, head of the BIS monetary and economic department. “Leading indicators of financial distress point to financial booms that in a number of economies look qualitatively similar to those that preceded the global financial crisis,” Borio added. The BIS, sometimes known as the central bank for central banks, warned of deep problems looming over the world economy. Major central banks may be forced to raise interest rates to combat inflation, “smothering” growth, while debt build-ups and the rising tide of protectionism threaten to bring the current global expansion to an end. Borio said: “That end may come to resemble more closely a financial boom gone wrong, just as the latest recession showed, with a vengeance.” China and other emerging market economies avoided much of the worst of the crash, but they could be vulnerable to a perfect storm of multiple big risks. Rising debt levels in China could make it more vulnerable to rising interest rates or a shock from lower demand. While the last global financial crisis was triggered by sub-prime debt lent to American households, the Chinese debt load is spread through both corporates and households. Chinese corporate debt has almost doubled since 2007 to reach 166 per cent of GDP, while household debt jumped in the last year to 44 per cent of GDP. Meanwhile the BIS’s so-called credit-to-GDP gap indicator shows debt is building up far above long-term averages. The measure, an “early warning indicator” for a country’s banking system, shows China, Hong Kong and Thailand are extended far beyond other major economies.
Push on with the 'great unwinding', BIS tells central banks | Reuters: Major central banks should press ahead with interest rate increases, the Bank for International Settlements said on Sunday, while recognizing that some turbulence in financial markets will have to be negotiated along the way. The BIS, an umbrella body for leading central banks, said in one of its most upbeat annual reports for years that global growth could soon be back at long-term average levels after a sharp improvement in sentiment over the past year. Though pockets of risk remain because of high debt levels, low productivity growth and dwindling policy firepower, the BIS said policymakers should take advantage of the improving economic outlook and its surprisingly negligible effect on inflation to accelerate the "great unwinding" of quantitative easing programs and record low interest rates. New technologies and working practices are likely to be playing a roll in suppressing inflation, it said, though normal impulses should kick in if unemployment continues to drop. "Since we are now emerging from a very long period of very accommodative monetary policy, whatever we do, we will have to do it in a very careful way," BIS's head of research, Hyun Song Shin, told Reuters. "If we leave it too late, it is going to be much more difficult to accomplish that unwinding. Even if there are some short-term bumps in the road it would be much more advisable to stay the course and begin that process of normalization." Shin added that it will be "very difficult, if not impossible" to remove all those bumps. Good communication from central bankers will be important, but even more crucial is the need for banks to be strong enough to cope with any turbulence. The BIS identified four main risks to the global outlook in the medium-term. A sudden flare-up of inflation which forces up interest rates and hurts growth, financial stress linked to the contraction phase of financial cycles, a rise in protectionism and weaker consumption not offset by stronger investment. The first seems unlikely for now at least, with Shin saying that the BIS, like many, had been surprised that inflation and wage growth has remained so subdued as growth in major economies has picked up. The question for central bankers, therefore, is whether new technologies and working practices had fundamentally changed the inputs in their economic models and whether it is right to keep such a heavy focus on keeping inflation at certain levels -- near 2 percent for likes of the European Central Bank and U.S. Federal Reserve. "Inflation is certainly not the only variable that matters ... and we should keep one eye at least on financial developments," Shin said.
Global borrowing hits record as big central banks prepare to tighten credit | Reuters: Global debt levels have climbed $500 billion in the past year to a record $217 trillion, a new study shows, just as major central banks prepare to end years of super-cheap credit policies. World markets were jarred this week by a chorus of central bankers warning about overpriced assets, excessive consumer borrowing and the need to begin the process of normalizing world interest rates from the extraordinarily low levels introduced to offset the fallout of the 2009 credit crash. This week, U.S. Federal Reserve chief Janet Yellen has warned of expensive asset price valuations, Bank of England Governor Mark Carney has tightened controls on bank credit and European Central Bank head Mario Draghi has opened the door to cutting back stimulus, possibly as soon as September. Years of cheap central bank cash has delivered a sugar rush to world equity markets, pushing them to successive record highs. But another side effect has been explosive credit growth as households, companies and governments rushed to take advantage of rock-bottom borrowing costs. Global debt, as a result, now amounts to 327 percent of the world's annual economic output, the Institute of International Finance (IIF) said in a report late on Tuesday. One of the most authoritative trackers of global capital flows, the IIF report highlighted "rollover" risks, especially in emerging markets that have borrowed in hard currencies such as euros and dollars. Such debts will become costlier to service if Western interest rates rise and currencies strengthen.While U.S. interest rates have already been raised four times, the euro has surged to one-year highs after Draghi's comments on Tuesday, while German 10-year government bond yields - the benchmark for euro area borrowing - have doubled over the past two days DE10YT=RR.
Global Debt Hits A New Record High Of $217 Trillion; 327% Of GDP -- The Institute of International Finance is perhaps best known for its periodic - and concerning - reports summarizing global leverage statistics, and its latest Q1 report was the most troubling yet, because what it found was that in a period of so-called "coordinated growth", global debt hit a new all time high of $217 trillion, or over 327% of global GDP, up $50 trillion over the past decade. So much for Ray Dalio's beautiful deleveraging, oh and for those economists who are still confused why r-star remains near 0%, the chart below has all the answers. Not surprisingly, China continues to be the biggest source of global debt growth, with the country's total debt load now surpassing 300%. While much of the debt issuance at the financial sector level has moderated in recent years, supplanted by outside money created by central banks, debt in the non-financial sector has continued to grow, and as of Q1 2017, hit an all time high of 242% of GDP. An interesting observation by the IIF: despite the recent dollar strength (if not so much in the past quarter), dollar bond issuance in Emerging Markets has been on a tear over the past year. Another notable observation: while the EM bond universe has increased by $2.5 trillion to $18.4 trillion since 2016, only 25% of this debt is tradeable via benchmark bond indices. What is more troubling, however, is the IIF's observation that despite the relentless foreign portfolio inflows into EM, the credit quality of many emerging markets has deteriored rapidly in the past year. This is an especially acute problem because there is over $1.9 trillion in EM bonds and loans coming due by the end of 2018. Should the EM sector fall out of favor with investors, and if the debt can not be rolled over, it could result in substantial liquidity events across the EM space. Finally, here is perhaps the most troubling chart of all: for all those wondering how oil-exporters in the Gulf region have funded their budgets, and maintained their economies from sliding into recession or social disorder, the answer is shown below: a dramatic increase in new debt issuance.
Global ransomware attack causes turmoil - Companies across the globe are reporting that they have been struck by a major ransomware cyber-attack. British advertising agency WPP is among those to say its IT systems have been disrupted as a consequence. The virus, the source of which is not yet known, freezes the user's computer and demands an untraceable ransom be paid in the digital Bitcoin currency. Ukrainian firms, including the state power company and Kiev's main airport, were among the first to report issues. The Chernobyl nuclear power plant has also had to monitor radiation levels manually after its Windows-based sensors were shut down. In a statement, the US National Security Council said government agencies were investigating the attack and that the US was "determined to hold those responsible accountable". The US Department of Homeland Security advised victims not to pay the ransom, saying there was no guarantee that access to files would be restored. The Russian anti-virus firm Kaspersky Lab said its analysis showed that there had been about 2,000 attacks - most in Ukraine, Russia and Poland. The international police organisation Interpol has said it was "closely monitoring" the situation and liaising with its member countries. Experts suggest the malware is taking advantage of the same weaknesses used by the WannaCry attack last month. "It initially appeared to be a variant of a piece of ransomware that emerged last year," said computer scientist Prof Alan Woodward. "The ransomware was called Petya and the updated version Petrwrap.
New Cyberattack Spreads Across Europe, Hits Rosneft, Maersk -- A new cyberattack similar to WannaCry is spreading from Europe to the U.S. and South America, hitting port operators in New York, Rotterdam and Argentina, disrupting government systems in Kiev, and disabling operations at companies including Rosneft PJSC, advertiser WPP Plc. and the Chernobyl nuclear facility.More than 80 companies in Russia and Ukraine were initially affected by the Petya virus that disabled computers Tuesday and told users to pay $300 in cryptocurrency to unlock them, Moscow-based cybersecurity company Group-IB said. About 2,000 users have been attacked so far, according to Kaspersky Lab analysts, with organizations in Russia and the Ukraine the most affected.Rob Wainwright, executive director at Europol, said the agency is "urgently responding" to reports of the new cyber attack. In a separate statement, Europol said it’s in talks with "member states and key industry partners to establish the full nature of this attack at this time."Kremlin-controlled Rosneft, Russia’s largest crude producer, said in a statement that it avoided “serious consequences” from the “hacker attack” by switching to “a backup system for managing production processes.”U.K. media company WPP’s website is down, and employees have been told to turn off their computers and not use WiFi, according to a person familiar with the matter. Sea Containers, the London building that houses WPP and agencies including Ogilvy & Mather, has been shut down, another person said. “IT systems in several WPP companies have been affected,” the company said in emailed statement. “With there being no global kill switch for this one, we’ll continue to see the numbers rise in different parts of the world as more vulnerable systems become more exposed,” said Beau Woods, deputy director of the Cyber Statecraft Initiative at the Atlantic Council in Washington. Most vulnerable are places “where the operators are a lot of the times at the mercy of manufacturers and providers of those technologies and there’s a long time between existence of a fix and implementation of a fix.”
NSA Software Behind Latest Global Ransomware Attack --"It's like WannaCry all over again," said Mikko Hypponen, chief research officer with Helsinki's cybersecurity firm F-Secure, when discussing today's latest outbreak of the WannaCry-like ransomeware attack, which as we reported earlier started in Ukraine, and has since spread to corporate systems across the world, affecting Russian state oil giant Rosneft, the international shipping and energy conglomerate Maersk, and the UK public relations company WPP, before jumping across the Atlantic and going global, by infecting the US-based division of global pharma giant Merck, which this morning confirmed it has been hit by the "Petya" attack. “We confirm our company’s computer network was compromised today as part of global hack,” Merck said in a statement on Tuesday. “Other organizations have also been affected. We are investigating the matter and will provide additional information as we learn more.”We confirm our company's computer network was compromised today as part of global hack. Other organizations have also been affected — Merck (@Merck) June 27, 2017Merck employees were instructed to disconnect all mobile devices from the company network and advised not to speak to reporters or post messages on social media accounts.Computers at Merck facilities in Pennsylvania and New Jersey locked up Tuesday morning around 8am local time, according to the Inquirer.Back in mid-May, when WannaCry spread with tremendous speed around the globe, many said that it's only a matter of time before the virus returns in a more advanced, weaponized version. Sure enough, cyber security experts quoted by Reuters said those behind the attack appeared to have exploited the same hacking tool used in the WannaCry ransomware attack that infected hundreds of thousands of computers in May before a British researcher created a temporary kill-switch.
The Petya ransomware is starting to look like a cyberattack in disguise -- The haze of yesterday’s massive ransomware attack is clearing, and Ukraine has already emerged as the epicenter of the damage. Kaspersky Labs reports that as many as 60 percent of the systems infected by the Petya ransomware were located within Ukraine, far more than anywhere else. The hack’s reach touched some of the country’s most crucial infrastructure including its central bank, airport, metro transport, and even the Chernobyl power plant, which was forced to move radiation-sensing systems to manual.The ostensible purpose of all that damage was to make money — and yet there’s very little money to be found. Most ransomware flies under the radar, quietly collecting payouts from companies eager to get their data back and decrypting systems as payments come in. But Petya seems to have been incapable of decrypting infected machines, and its payout method was bizarrely complex, hinging on a single email address that was shut down almost as soon as the malware made headlines. As of this morning, the Bitcoin wallet associated with the attack had received just $10,000, a relatively meager payout by ransomware standards.“There’s no fucking way this was criminals.”
It leads to an uncomfortable question: what if money wasn’t the point? What if the attackers just wanted to cause damage to Ukraine? It’s not the first time the country has come under cyberattack. (These attacks have typically been attributed to Russia.) But it would be the first time such an attack has come in the guise of ransomware, and has spilled over so heavily onto other countries and corporations. Because the virus has proven unusually destructive in Ukraine, a number of researchers have come to suspect more sinister motives at work. Peeling apart the program’s decryption failure in a post today, Comae’s Matthieu Suiche concluded a nation state attack was the only plausible explanation. “Pretending to be a ransomware while being in fact a nation state attack,” Suiche wrote, “ is in our opinion a very subtle way from the attacker to control the narrative of the attack.”
New computer virus spreads from Ukraine to disrupt world business | Reuters: A computer virus wreaked havoc on firms around the globe on Wednesday as it spread to more than 60 countries, disrupting ports from Mumbai to Los Angeles and halting work at a chocolate factory in Australia. Risk-modeling firm Cyence said economic losses from this week's attack and one last month from a virus dubbed WannaCry would likely total $8 billion. That estimate highlights the steep tolls businesses around the globe face from growth in cyber attacks that knock critical computer networks offline. "When systems are down and can't generate revenue, that really gets the attention of executives and board members," said George Kurtz, chief executive of security software maker CrowdStrike. "This has heightened awareness of the need for resiliency and better security in networks." The virus, which researchers are calling GoldenEye or Petya, began its spread on Tuesday in Ukraine. It infected machines of visitors to a local news site and computers downloading tainted updates of a popular tax accounting package, according to national police and cyber experts. It shut down a cargo booking system at Danish shipping giant A.P. Moller-Maersk (MAERSKb.CO), causing congestion at some of the 76 ports around the world run by its APM Terminals subsidiary.. U.S. delivery firm FedEx said its TNT Express division had been significantly affected by the virus, which also wormed its way into South America, affecting ports in Argentina operated by China's Cofco. The malicious code encrypted data on machines and demanded victims $300 ransoms for recovery, similar to the extortion tactic used in the global WannaCry ransomware attack in May.
Cyber attack hits property arm of French bank BNP Paribas | Reuters: A global cyber attack has hit the property arm of France's biggest bank BNP Paribas (BNPP.PA), one of the largest financial institutions known to be affected by an extortion campaign that started in Russia and Ukraine before spreading. The worldwide attack has disrupted computers at Russia's biggest oil company, Ukrainian banks and multinational firms with a virus similar to the ransomware that infected more than 300,000 computers last month. The attack hit BNP's Real Estate subsidiary, a BNP Paribas spokeswoman told Reuters, after a person familiar with the matter had said that some staff computers were blocked on Tuesday due to the incident. "The necessary measures have been taken to rapidly contain the attack," she said. BNP Paribas Real Estate provides advisory, property and investment management and development services mostly in Europe. It employed 3,472 staff at end of last year, with operations in 16 countries, and had 24 billion euros ($27.26 billion) in assets under management. Many of the companies affected globally by the cyber attack had links to Ukraine although there is no indication that this was the case for BNP. It owns a bank in the country, UkrSibbank.
McAfee CEO Says Ransomware Attacks Are Just Beginning - Chris Young, McAfee's chief executive officer, discusses the spread of ransomware attacks across the globe with Bloomberg's Emily Chang on "Bloomberg Technology." (Source: Bloomberg)
NATO Chief Says Recent Cyber Attacks Are A Call To Arms -- A major global cyber attack which struck particularly hard in Ukraine on Tuesday could potentially trigger NATO’s Article 5 mutual defense commitment, according to NATO chief Jens Stoltenberg.On Tuesday, computer systems around the world were subjected to ransomware cyber attacksthat spread from Ukraine and Russia, across Europe to the United States and then on to Asia.The attack appeared to be a modification of the “WannaCry” cyber attack in May which hit more than 200,000 users in more than 150 countries.According to NATO’s Jens Stoltenberg, the attack means that the NATO alliance must step up its defense against cyber attacks and that the military alliance’s Article 5 mutual defense commitment could potential be sparked over such an event.Article 5 provides that if a NATO Ally is the victim of an attack, each and every other member of the Alliance will consider the attack against all members and will take the actions it deems necessary to assist the ally attacked.Stoltenberg said the “attack in May and this week just underlines the importance of strengthening our cyber defenses and that is what we are doing.”“We exercise more, we share best practices and technology and we also work more and more closely with all allies,” he told reporters ahead of a NATO defense ministers meeting in Brussels on Thursday.In July 2016, NATO allies reaffirmed defensive mandates and recognized cyberspace as a domain of operations in which NATO must defend itself as effectively as it does in the air, on land and at sea.
Italy Commits $19 Billion for Veneto Banks in Largest State Deal - Italy orchestrated its biggest bank rescue on record, committing as much as 17 billion euros ($19 billion) to clean up two failed banks in one of its wealthiest regions, a deal that raises questions about the consistency of Europe’s bank regulations. The intervention at Banca Popolare di Vicenza SpA and Veneto Banca SpA includes state support for Intesa Sanpaolo SpA to acquire their good assets for a token amount, Finance Minister Pier Carlo Padoan said Sunday after an emergency cabinet meeting in Rome. Milan-based Intesa can initially tap about 5.2 billion euros to take on some assets without hurting capital ratios, Padoan said. The European Commission approved the plan. The agreement bolstered bank stocks across Europe, with Intesa leading gainers, while putting into question the effectiveness of European rules meant to ensure that private investors share the burden of bank bailouts. Just a few weeks ago, Spain’s struggling Banco Popular Espanol SA was wound down without state aid. Italy, which wants to avoid imposing losses on bondholders because many of them are mom-and-pop investors, is still in talks with European authorities to save Banca Monte dei Paschi di Siena SpA, the world’s oldest bank, through a so-called precautionary recapitalization. In recent months, “bank intervention is specific to each troubled bank situation on its own conditions, with government and regulatory decisions on how to intervene influenced by multiple major macro factors,” said David Hendler, founder of Viola Risk Advisors, a credit analysis firm in New York state. “For global bank investors, the European banking sector and how to invest in it is very confusing, not uniform, and difficult to predict.”
A Tangled Tale of Bank Liquidation in Venice -The long and troubled journey of Veneto Banca and Banca Popolare di Vicenza (BPVI) has come to an end. The conclusion of the story highlights once again a pattern that has characterised the Italian approach to banking problems over the past years. The distinctive features of this approach are a desire to postpone solutions to long-lived problems (like MPS) and a tendency to subordinate economic to political logic. This raises questions at both the Italian and the EU level.Veneto and BPVI were due to launch a capital raise in April 2016. If the operation had failed – as it was widely anticipated – the banks would have been put into resolution and subject to the required bail-in. On 11 April, the creation of a new bank-funded backstop was announced. This fund – named Atlas – ended up becoming the majority shareholder in the two banks.By acting as an underwriter of last resort, Atlas prevented bank resolution in the short run, but it also spread the risk across the balance sheets of the rest of the Italian banking sector. The cost of that is now evident, as some of the participating banks have been writing off the value of their stakes in Atlas (in some cases at a loss). And in any case, Atlas did not end the two banks’ problems. Both announced in 2017 that they would need yet more capital.This raised the thorny question of how to deal with retail bondholders. Initially, the government tried to obtain a precautionary recapitalisation. This option is based on the assumption that the banks are systemic, as the aim is “to remedy a serious disturbance in the economy of a member state and preserve financial stability”.But the extraordinary public support allowed in precautionary recapitalisation cannot be used to offset losses that the institution has incurred or is likely to incur in the near future. So, in order to do a precautionary recapitalisation and be able to spare the retail senior bondholders, it would have been necessary to find private capital willing to plug the hole. But no Italian bank was eager to do it.
Italy's Newest Bank Bailout Cost As Much As Its Annual Defense Budget - Two more Italian banks failed over the weekend– Banco Popolare di Vicenza and Veneto Banca. The Italian Prime Minister himself stated that depositors’ funds were at risk, so the government stepped in with a bailout and guarantee package that could cost taxpayers as much as 17 billion euros.That’s a lot of money in Italy - around 1% of GDP. In fact it’s basically as much as the 17.1 billion euros they spent on national defense last year (according to an estimate by Italian think tank IAI).You don’t have to have a PhD in economics to figure out that NO government can afford to spend its entire defense budget every time a couple of medium-sized banks need a bailout.That goes especially for Italy, whose public debt level is already 132% of GDP… and rising. They simply don’t have the money.Moreover, the European Union actually has a series of new rules collectively known as the “Bank Recovery and Resolution Directive” which is supposed to prevent failing banks from being bailed out with taxpayer funds.Here’s the thing– Italy has LOTS of banks that are on the ropes. So with taxpayer resources exhausted (and technically prohibited), who’s going to be on the hook next time a bank goes under? Easy. By process of elimination, the only other party left to fleece is the depositor.
Europe's Banking Union Fails Its Latest Test - The European Commission's decision to let Italy spend up to 17 billion euros ($19 billion) to clean up the mess left by two failed banks is bad news -- and not just for Italy's taxpayers. It's also a setback for the euro zone's putative banking union, and for the European Union's efforts to supervise anti-competitive state aid.Over the weekend, the Italian government wound down Banca Popolare di Vicenza and Veneto Banca, two regional lenders struggling under the weight of non-performing loans. Intesa Sanpaolo, a rival, bought the banks' good assets for one euro, and was promised another 4.8 billion euros in state aid to deal with restructuring costs and bolster its capital ratio. Italy's taxpayers get to keep the bad loans, which could end up costing them another 12 billion euros (though the government believes it will be much less).The deal makes a mockery of the EU's plan for banking union, designed during the sovereign debt crisis to ensure all member states deal with bank failures the same way. The Single Resolution Board -- whose purpose is to take the politically difficult decision of whether to close a bank out of the hands of governments -- chose not to intervene. Italy's government then chose not to impose losses on senior creditors, as the EU's rules would have required, but to provide a taxpayer bailout instead. Strictly speaking, all this is legal. The SRB can choose to step back if it believes a bank is not significant for financial stability. Italy's bankruptcy rules don't require senior creditors to be bailed-in. And the commission was within its rights to rule that the state aid was lawful, on the grounds that it will lessen any damage to the regional economy. Lawful it may be; good policy it certainly is not. The outcome seriously undermines the credibility of the banking union project, leaving great uncertainty about the rules that will prevail next time. In addition, Italy's government, the European Central Bank and the SRB all took way too long to deal with the banks in question, compounding the eventual cost to taxpayers. And the commission has allowed Intesa to benefit from a huge public subsidy, which will put the bank in a stronger competitive position.
Will Macron’s Marchers take power? – Piketty - With over 350 seats, the MPs elected on the « La république en marche » (LREM) ticket will have an overwhelming majority in the Assemblée Nationale (Parliament). Will they use it to be in the forefront of reform and renewal of French politics? Or will they simply play a passive role, rubber stamping and obediently voting the texts that the government sends them?It happens that they will shortly be faced with their first real-life test with the question of deduction of income tax at source. The government wishes to postpone the implementation until 2019, perhaps forever, for reasons which are totally opportunist and unjustified. This big step backwards is bad news for the alleged intention to reform and modernise the French fiscal and social system proclaimed by the new government (a general intention that is unfortunately rather vague once we enter into the details: see What reforms for France), and leads us to fear the worst for what is to come. Now, contrary to what has been stated, the government cannot take this sort of decision without a vote in Parliament which should therefore take place in the coming days or weeks. There are two possibilities. Either the LREM MP’s force the government to maintain this crucial reform and its application as from January 2018, as was already voted by the outgoing Parliament in the autumn of 2016 in the context of the 2017 Finance Act. It will then be clear that the new MP’s are ready to play their role fully in future reforms and oppose the executive when necessary. The other option is to follow in the steps of the conservatism of the government, which, unfortunately, seems to be the most likely outcome. This would alert us to the fact that with this new majority and this new authority we are dealing with reformers who are mere paper tigers. ...
Macron’s Mission: Save the European Union From Itself - The French capitalist elite that sponsored Macron’s meteoric rise is acutely aware that the European Union is in serious trouble. They chose Emmanuel Macron to save it. His success or failure depends on whether he can persuade the rest of the EU, notably Germany, to let it be saved. The EU is in serious trouble politically, because the elites love it, and ordinary people do not. A poll published June 20 by the Chatham House Royal Institute of international affairs found a “simmering discontent” with the EU among ordinary Europeans. Over 70% of people classified as decision-makers and opinion influencers – leading politicians, journalists, CEOs and leaders of major civil society organizations such as university presidents – welcomed European integration as beneficial, whereas only 34% of ordinary citizens agreed. On immigration, 57% of the elite consider immigration good for their country compared to 34% of the rest of the population. In short, the “decision-makers and opinion influencers” agree with the decisions they have been making and the opinions they have been advocating, while most other people are not convinced. The elites have long been able to live comfortably with popular discontent. But economic troubles threaten to wreck the whole setup. Throwing together countries with deeply rooted differences in social philosophy and practice, binding them together with a common currency and rules that prohibit adaptation, does not work. As the spearhead of globalization, Europe’s dogmatic enforcement of both competition and “free movement” of goods and capital is enabling foreign capital – Chinese, Qatari, U.S., etc. – to buy up much of its productive resources piece by piece. Instead of growth, the euro has brought stagnation. The reign of unlimited “competition” promotes beggar-thy-neighbor practices rather than solidarity. Germany has lowered its labor costs, and continues to maintain large export surpluses with its neighbors, whose own budgets are broken by the trade imbalance. Concentration of wealth and lowered income decreases consumption and causes businesses to failure and tax revenues to shrink. The European Union finds itself on the edge of a perilous downward spiral.
France must find new cuts to tackle deficit -auditor-- France's new government must rein in spending by billions of euros in coming months to live up to its deficit-cutting promises, the public audit office said on Thursday. Elected last month on pledges to reform the economy, President Emmanuel Macron faces a first major test to find the extra savings deemed necessary by the Cour des Comptes, after the last government overspent the budget in its final months. Unless cuts are made, the public sector deficit will come to 3.2 percent of economic output this year, exceeding the previous Socialist-led government's 2.8 percent target. New savings of up to five billion euros ($5.7 billion) would be required if Macron's government is to respect its pledge to post a deficit of 3.0 percent or less this year, honouring an EU-agreed limit for the first time in a decade.
Euro zone inflation eases less than expected, core measure up -- Euro zone inflation eased in June because of more moderate energy price rises, but the slowdown was less than expected by markets and the core measure of price growth the ECB keenly watches increased by more than anticipated. The European Union's statistics office Eurostat estimated that consumer prices in the 19 countries sharing the euro rose 1.3 percent year-on-year in June, decelerating form 1.4 percent in May and 1.9 percent in April. But economists polled by Reuters had expected a steeper deceleration to 1.2 percent. They also expected inflation excluding unprocessed food and energy -- the two most volatile components -- at 1.0 percent, the same as in May. But in fact core inflation accelerated to 1.2 percent in June, Eurostat data showed. The European Central Bank wants to keep headline inflation below, but close to 2 percent over the medium term and has been buying billions of euros worth of government bonds on the secondary market to inject cash into the economy and spur faster rice growth.
Why Google's Record $2.7 Billion EU Fine Is Such a Big Deal - NBC News: Google was slapped with a record $2.7 billion fine on Tuesday by European regulators over charges the company unfairly elevated its Google shopping business over competitors' advertisements. The European Union's ruling gives Google 90 days to make changes or risk paying fines as steep as 5 percent of Alphabet's average daily turnover. The ruling does not impact the company's operation in the United States."Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors," Margarethe Vestager of the European Commission said in a statement. "What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation," she said. The fine is more than double the previous record of $1.2 billion levied against chipmaker Intel in 2009. It's also significant since it's approximately 3 percent of parent company Alphabet's turnover. European regulators have been aggressively going after American technology companies over allegations of unfair business practices. Two other Google cases are still under scrutiny by the European Commission and could spell more trouble for the company. Google's AdSense software, which is used to place advertisements on Google and third party websites, is being investigated over concerns the company placed unfair restrictions "on the ability of certain third party websites to display search advertisements from Google's competitors," A second case alleges Google abused its Android market dominance by placing restrictions on Android manufacturers and mobile network operators.
NATO allies boost defense spending in the wake of Trump criticism - — NATO allies of the United States plan to boost their defense spending by 4.3 percent this year, Secretary General Jens Stoltenberg said Wednesday, a response in part to intense pressure from President Trump that the nations invest more in their militaries.Trump has repeatedly castigated NATO allies for their dependence on the U.S. military for their defense and has at times called into question the basic U.S. security guarantees that have underpinned European stability since World War II.The increase is “a clear demonstration that our alliance stands united in the face of any possible aggression,” Stoltenberg told reporters at the NATO headquarters, a day ahead of a meeting of NATO defense ministers. “We have really shifted gears. The trend is up, and we intend to keep it up.”The increase — an estimate for 2017 — will boost military spending by non-U.S. NATO members to about $295 billion, which is still far less than the United States spends alone. Some of the spending increases were locked in before Trump’s election in November. NATO released only a portion of its updated numbers Wednesday, but its previous estimates for 2016 put the U.S. share of NATO defense spending at 72 percent. The spending increases come after years of budget cuts up to 2014, as European nations trimmed spending on the belief that after the breakup of the Soviet Union, they no longer need to be ready to fight a war on their own soil.
Germany Tells Erdogan His Bodyguards "Not Welcome" At Next Week's G-20 Summit -Ahead of the G-20 summit to be held in Hamburg next week where Turkey will be present, Germany has warned Turkey that members of President Recep Tayyip Erdogan's security detail who were involved in a bloody melee in Washington last month "are not welcome in Germany." The reason for the snub - which won't go over too well with Erdogan - is that last month numerous Turkish security officials, including several of Erdogan's personal guards, brawled with protesters outside the Turkish ambassador's residence in Washington, landing 9 protesters in the hospital. Quoted by CNN, Martin Schafer, a spokesperson for the German Foreign Ministry, said Monday: "Some foreign security services of the Turkish delegation did not abide by the law and therefore those people are not welcome in Germany for the foreseeable future."Die Welt adds that the German Foreign Ministry received a list of 50 people who were to accompany Erdogan to the G20 summit, some of whom were involved in the incident in Washington, and responded that the Ministry told Turkey not to bring those bodyguards to the summit. While Schafer refused to confirm or deny the report, he made it clear that everyone attending the summit must respect German law. "The Turkish side just like all other guests who travel to Germany must abide by German law," he said. "This is what our Turkish partners also know."
Leaked Police Report Exposes 23 Muslim-Controlled "No Go Zones" In Sweden: Plagued With Violence, Sexual Assaults, & Gun Crimes -- Though European leaders and their US-based counterparts have vehemently denied their existence, a leaked report from the Swedish police confirms that there are at least 23 Muslim-controlled “No-Go Zones” and some 60 “vulnerable areas” where non-muslim citizens of the country can no longer visit safely. As noted in the RT video below, the areas are plagued with violence, sexual assaults and gun crimes, and things have gotten so bad that police and emergency services personnel refuse to enter. According to the Swedish National Police Commissioner: We see developments in our country which are not always going in the right direction… We have more than 60 vulnerable areas in and around major cities in Sweden.. and we see criminality there and we need to turn around these developments in those areas… and we need the assistance of other parts of our society. Call us crazy, but maybe not allowing mass migration from countries with ideals, morals and laws that run nearly 100% counter to those of your country would be a good start? While that may be considered racist, xenophobic and nationalistic by many “progressives” around the world, one simply can’t deny that such no-go zones are the result of forced cultural assimilation. Of course, the assimilation requirement appears to only involve the natural citizens of the countries in question, because apparently migrants can engage in any sort of activities they wish without consequence.
Migrant crisis: Italy threatens to shut ports - Italy has threatened to stop vessels of other countries from bringing migrants to its ports. The warning came as Italy's EU representative, Maurizio Massari, warned in a letter to the bloc the situation had become "unsustainable". Prime Minister Paolo Gentiloni has accused other European nations of "looking the other way". An estimated 10,000 people are believed to have attempted the journey from North Africa in the past four days. More than 73,000 migrants have landed in Italy this year, an increase of 14% on the same period last year. Aboard the Mediterranean's migrant rescue boats Pope Francis: Europe migrant centres are 'concentration camps' Some 2,000 have died or are missing feared drowned, the UN's refugee agency says, the vast majority attempting the crossing from Libya. Libya is a gateway to Europe for migrants from across sub-Saharan Africa and also from the Arabian peninsula, Egypt, Syria and Bangladesh. Many are fleeing war, poverty or persecution. The Italian coastguard takes the lead in co-ordinating rescue operations but many of the vessels run by non-profit groups sail under the flags of other nations including EU countries like Germany and Malta.An Italian government source told Reuters: "The idea of blocking humanitarian ships flying foreign flags from returning to Italian ports has been discussed. Italy has reached saturation point." Former Prime Minister Matteo Renzi said the Italian public were "exasperated" with the issue and a new long-term strategy was needed.
BWU Makes Its Latest Lemon Award to the UK – Bill Black - Bank Whistleblowers United (BWU) makes its non-coveted Lemon award to the United Kingdom (UK) for actions harming whistleblowers and the world. BWU’s three principals are highly experienced financial experts with combined practical and academic experience of over 120 years. We are each unemployable in finance because we warned internally at are places of work and then externally about grave misconduct by the most senior financial and regulatory leaders that would (and did) produce terrible losses. Liam Vaughan of Bloomberg wrote the article that prompted this award. The UK’s City of London is one of the world’s two largest financial centers. The City “won” the financial regulatory race to the bottom – barely nosing out Wall Street at the wire. This explains why the City is the epicenter of so many of the largest scandals in the recent crisis, even those at large Wall Street banks (e.g., JPMorgan’s London “whale”). The UK financial regulators failed routinely, consistently, and abjectly. The only bright spot was whistleblowers, including the workers at many of the UK banks whose managers coerced them to sell obscenely abusive products such as Payment Protection Insurance (PPI) to their customers. The UK parliamentary inquiry into their crisis found that it was common for UK banks to retaliate against whistleblowers – and that there was no case in which the banking regulators even tried to prevent that retaliation. BWU members know from personal experience and academic studies that it senior financial whistleblowers will lose their jobs and will be unemployable in the industry – even after it is inescapable that their warnings were correct and that they represented the banks’ most exemplary officers. None of us received compensation from the government for blowing the whistle, but we strongly favor such compensation given the horrific financial price whistleblowers pay. The UK banking regulators’ claims are entirely dishonest pretexts. It is vastly cheaper to get warnings from whistleblowers and act on those warnings to prevent the elite frauds, cartels, and unconscionable predation on customers that have characterized the City for nearly three decades. Financial frauds are fiendishly complex, so if complexity daunts UK financial regulators their only hope of avoiding disaster is to do everything possible to encourage whistleblowers. As to “moral hazard,” the City’s financial institutions routinely and massively craft “incentives” for their officers and employees to commit crimes and predate on their customers. The UK has refused to cut off compensation for bank officers and employees on that basis. The UK’s compensation reforms for senior bank executives are slightly stronger to the pathetic U.S. non-reforms, but they are still exceptionally weak. “Rogue employees” played no meaningful role in causing the financial crisis and the epidemics of fraud, cartels, and predation that dominated the City. Senior bank leaders created the perverse incentives. Rank-and-file officers that did what (almost) everyone else did in response to those perverse incentives were the problem.
Britain’s Financial Power Is Already Seeping Away - Britain’s financial power began ebbing away just days into the Brexit negotiations as the European Central Bank sought authority over a key market and banks from Morgan Stanley to Nomura Holdings Inc. fleshed out plans to move operations from London to Frankfurt.The shifts underscore the threat posed to the U.K.’s financial industry by the decision to quit the European Union, made in a referendum a year ago. They will intensify pressure on Prime Minister Theresa May to safeguard the City of London in any trade deal she strikes with her EU counterparts, who may resist if they see an economic advantage for themselves.Among the matters at stake in those talks, which began in Brussels on Monday, is whether London can maintain its status as a global hub for finance after Brexit or be forced to watch as business flows to the continent or New York. Such an exodus would jeopardize an industry responsible for nearly a tenth of the economy and some 1.1 million jobs.“There will be a lot of political pressure to get as much of the finance industry moved to the EU as possible,” “The big question will be what the final role of the City will be in Europe.”The latest shot across Britain’s bow came early Friday when President Mario Draghi’s ECB said it will try to revise the statute governing its powers to gain “clear legal competence” over the clearing of euro-denominated financial instruments. The Frankfurt-based institution said the change would secure “a significantly enhanced role” for the ECB and euro-area central banks in supervising clearinghouses, particularly systemically important ones located outside of the EU. The move would also help to clarify how oversight would be shared between the ECB and other bodies, such as the Paris-based European Securities and Markets Authority. The proposed amendment was sent to the European Parliament and to EU governments for approval.
Brexit In Reverse? - George Soros - Economic reality is beginning to catch up with the false hopes of many Britons. One year ago, when a slim majority voted for the United Kingdom’s withdrawal from the European Union, they believed the promises of the popular press, and of the politicians who backed the Leave campaign, that Brexit would not reduce their living standards. Indeed, in the year since, they have managed to maintain those standards by running up household debt. This worked for a while, because the increase in household consumption stimulated the economy. But the moment of truth for the UK economy is fast approaching. As the latest figures published by the Bank of England show, wage growth in Britain is not keeping up with inflation, so real incomes have begun to fall. As this trend continues in the coming months, households will soon realize that their living standards are falling, and they will have to adjust their spending habits. To make matters worse, they will also realize that they have become over-indebted and will have to deleverage, thus further reducing the household consumption that has sustained the economy. Moreover, the BoE has made the same mistake as the average household: it underestimated the impact of inflation and will now be catching up by raising interest rates in a pro-cyclical manner. These higher rates will make household debt even harder to pay off. The British are fast approaching the tipping point that characterizes all unsustainable economic trends. I refer to such a tipping point as “reflexivity” – when both cause and effect shape each other. Economic reality is reinforced by political reality. The fact is that Brexit is a lose-lose proposition, harmful both to Britain and the EU. The Brexit referendum cannot be undone, but people can change their minds.
Theresa May Strikes $1 Billion Governing Deal With Northern Irish Party --UK Prime Minister Theresa May has struck a so-called confidence and supply deal with Northern Ireland’s Democratic Unionist Party, one which will give the Conservatives sufficient votes to pass the Queen’s Speech and the budget, while Northern Ireland will get an extra €1 billion over two years as a result of the deal. Together, the Conservatives and the DUP will have 327 MPs, representing a tiny but sufficient working majority in the 650-member House of Commons. The two parties however do not have a majority in the House of Lords the upper chamber, which plays a revising role on legislation. The deal was preannounced on Monday morning, and was finalized at Downing 10 around noon on Monday, just over two weeks after talks began following the June 8 election. Arlene Foster, the DUP leader, held talks with Theresa May from 10.30am. Photos showed Gavin Williamson, the Conservative chief whip, and Sir Jeffrey Donaldson, the DUP chief whip, signing copies of the agreement.
The Conservative-DUP deal is great news for the DUP, but bad news for Theresa May: Well, that’s that then. Theresa May has reached an accord with the Democratic Unionist Party to keep herself in office. Among the items: the triple lock on pensions will remain in place, and the winter fuel allowance will not be means-tested across the United Kingdom. In addition, the DUP have bagged an extra £1bn of spending for Northern Ireland, which will go on schools, hospitals and roads. That’s more than a five per cent increase in Northern Ireland’s budget, which in 2016-7 was just £9.8bn. The most politically significant item will be the extension of the military covenant – the government’s agreement to look after veterans of war and their families – to Northern Ireland. Although the price tag is small, extending priority access to healthcare to veterans is particularly contentious in Northern Ireland, where they have served not just overseas but in Northern Ireland itself. Sensitivities about the role of the Armed Forces in the Troubles were why the Labour government of Tony Blair did not include Northern Ireland in the covenant in 2000, when elements of it were first codified. It gives an opportunity for the SNP… Gina Miller, whose court judgement successfully forced the government into holding a vote on triggering Article 50, has claimed that an increase in spending in Northern Ireland will automatically entail spending increases in Wales and Scotland thanks to the Barnett formula. This allocates funding for Wales, Scotland and Northern Ireland based on spending in England or on GB-wide schemes. However, this is incorrect. The Barnett formula has no legal force, and, in any case, is calculated using England as a baseline. However, that won’t stop the SNP MPs making political hay with the issue, particularly as “the Vow” – the last minute promise by the three Unionist party leaders during the 2014 independence referendum – promised to codify the formula. They will argue this breaks the spirit, if not the letter of the vow.
Tory divisions emerge over Brexit as Cabinet Ministers openly row over plans to leave the EU - Brexit Secretary David Davis contradicted PM Theresa May on whether Britain should keep a form of customs union with the EU, while Chancellor Philip Hammond savaged Boris Johnson. Bitter Tory divisions have erupted over Brexit, with senior Cabinet Ministers openly rowing about Britain’s plans to leave the EU . Brexit Secretary David Davis contradicted PM Theresa May on whether we should keep a form of customs union with the EU. Asked if the UK should pull straight out of the customs union on “ Brexit Day” in March, 2019, Mr Davis replied: “I would have thought so.” He was slapped down by the PM, who said Britain must avoid a “cliff-edge” for business if customs barriers are suddenly erected.Then Chancellor Philip Hammond mocked Foreign Secretary Boris Johnson as he warned against le tting “petty politics” leave Britain worse off. Mr Hammond was in turn savaged by Mr Davis, who said the Chancellor was “not quite consistent” on how long Britain should maintain formal ties with the EU.Mr Davis also criticised Mrs May’s election campaign, saying: “Some very significant mistakes were made.”
Theresa May offers EU citizens right to live and work in the UK - Theresa May has set out out her plans to allow EU citizens to continue living in the UK after Brexit, telling EU citizens living in the UK that "we want you to stay." The prime minister told the House of Commons that all European citizens living in the UK before the date that Britain leaves will be able to apply for "settled status" to remain living and working here, as long as British citizens living in the EU are granted the same rights. Under the plans, EU citizens must have been living continuously in the UK for at least five years before an as-yet-to-be specified cut-0ff date in order to qualify. This date will be subject to negotiation, however the prime minister said it "shouldn’t be earlier than 29 March 2017 or later than the date the UK leaves the EU." EU citizens will be offered rights "almost equivalent to British citizens," in terms of employment and pensions, ministers have said. However this will not include voting rights and will not necessarily extend to those convicted of crimes in the UK. Under the plans all European arriving in the UK before March 29, 2019, will:
- Retain the right to live and work in the UK.
- Be able to apply for "settled status" in the UK.
- Bring in family members from outside the UK.
- EU citizens allowed "grace period" to settle residency after Brexit.
- Retain access to healthcare and pension rights for both EU and UK citizens.
- Continue to offer British citizens access to the European Health Insurance Card.
- EU citizens will not be able to vote in British elections.
- EU citizens will face deportation for minor crimes.
EU citizens remaining in the UK after Brexit will need to apply for a "residence document" before settled status can be granted. May's opponents said the offer failed to go far enought.
Brexit concerns shrinking UK's lead as Europe's top financial services destination, new research shows | The Independent: Brexit concerns have bitten into the UK’s lead as Europe’s top financial services location for investors, new research shows. The UK’s financial services industry has retained its title as Europe’s most attractive location for international investment, but its lead has narrowed due to fears over the impact of Brexit, according to a report by professional services firm EY. The sector attracted 99 foreign direct investment (FDI) projects in 2016, the highest level since 2006 and an increase of 5 per cent on the previous year, the study shows. Germany, in second place, recorded 39 financial services projects, up 18 per cent year-on-year, and third-placed France registered 25 projects, up by a quarter. London kept its place as the European capital for overseas financial services investment, recording 69 projects in 2016. Paris and Frankfurt recorded 19 and 12 respectively.The largest source of foreign investment in UK financial services in 2016 came from the US, which provided a third of total investment. The second largest was China with 9 per cent. As part of the report, EY surveyed 80 foreign investors across 20 countries worldwide. The UK’s quality of life, culture and technology were each cited by 83 per cent of respondents as key factors behind the country’s continued appeal. Britain’s thriving fintech sector was also a major pull, with 72 per cent of investors saying the industry had made the UK more attractive as an FDI destination.
Ireland says dozen City firms and banks to set up in Dublin over Brexit -- Irish authorities have said they have clinched deals with more than a dozen London-based banks and finance houses to move some of their operations to Dublin in preparation for Brexit. As Dublin continues to battle with Frankfurt, Luxembourg and Paris for the Brexit spoils, the head of international financial services at Ireland’s Industrial Development Authority said definitive decisions had now been taken on an Irish location by these firms. Kieran Donoghue told the Guardian these included “one American bank” with each firm looking at offices ranging in size from 10 to 500 staff. All banks and financial services operations are obliged by regulators to be “day one ready” for Brexit at the end of March 2019. But with the time needed for banking licence applications, securing real estate, trading floors and having credit ratings in place by then, contingency plans need to be complete in the next few weeks. The Bank of England has told financial firms to provide it with details of their Brexit plans by 14 July and to be ready for all possible outcomes, including a hard Brexit. Donoghue said the IDA had fielded more than 80 inquiries since the referendum last June. “More than a dozen across the spectrum including more than one American bank have decided on Dublin,” Donoghue said. “A number of these groups have privately decided they have selected Dublin but won’t announce until they conclude discussions with the regulatory regimes in Britain, Ireland, the European Central Bank and regulatory authorities in the US. Given the scale of these groups, this is very sensitive.” He said one of the firms was potentially moving 1,000 staff to Dublin.
ECJ President: UK firms will be ‘begging’ for court’s jurisdiction after Brexit -- British companies operating in the EU will be “begging on their knees” for the jurisdiction of the European Court of Justice (ECJ) after Brexit, the Court’s president has warned. The primacy of the ECJ – the EU’s highest court – has been one of the principal bugbears of British eurosceptics, and its removal a chief negotiating demand of the UK government. But, speaking to EURACTIV.com at the ECJ headquarters in Luxembourg, Koen Lenaerts said British companies would still insist on the jurisdiction and protection of the court in order to have their commercial rights upheld. Lenaerts – who is a professor of comparative constitutional Law at Leuven University as well as president of the ECJ – also pointed out that the UK government would still be bound by the ECJ if it manages to negotiate a full Free Trade Agreement with the EU27 after departure. That is because the ECJ would uphold the rights of EU companies under their half of any deal negotiated as part of the Brexit deal. Asked precisely which agreements the ECJ would have jurisdiction over after Brexit, Lenaerts said: “After Brexit, there will be British firms begging our court to get ‘locus standi’ [the right to hear a case]. “Of course they will. “If they create a subsidiary on the European continent, or a company on the European continent – just like we have Chinese companies which are incorporated and having their seat of operation, that is, all Chinese capital, here in the European Union.
Carney expects British households may not be able to service consumer loans -- In a press conference on Tuesday, the Bank Governor Mark Carney explained that the Bank of England was worried about consumer credit expansion and announced measures to shield the UK’s economy.“Borrowers should consider adverse scenarios as well as positive scenarios,” he told the BBC, warning that changing circumstance could mean consumers would be unable to service their loans.With consumer confidence in tatters, inflation at 2,9%, and the slowest growth in the EU (0,2%), the Bank of England is preparing to unwind its stimulus programme.The Bank of England moved on Tuesday to ask lenders to bolster their assets by approximately €13bn (£11,4bn), to protect themselves against non-performing loans. Roughly half this capital will need to be found over the next six months.Since April, the Bank of England has warned against consumer credit expansion, with an ongoing investigation launched by the Prudential Regulation Authority on credit card, personal loans, and dealership car finance standards. Across the board, consumer credit has been expanding by 10,9% over 2015-2016. This loan category has a much higher rate of default than mortgages. One in four households in the UK has an outstanding debt of approximately €2,000, which corresponds to €80bn. The unwinding of credit expansion will soon be extended to mortgage lenders, as the UK market is one of the most heated in the EU. In December 2016, a Times survey predicted the bursting of the bubble with economists projecting prices could fall by 7-10% within a year, not least because securing a mortgage is set to become harder.
Government 'faces £600m cladding safety bill after Grenfell Tower disaster': The Government faces an estimated bill of more than £600m for replacing flammable cladding on housing blocks after the Grenfell Tower disaster. Sixty blocks have so far failed cladding fire safety checks - every one tested so far - with another 540 still to be looked at. Industry experts told the Telegraph the cost of replacing the cladding on each block would top £1m and costs would spiral far higher if residents had to be evacuated during building work.Camden Council on Sunday said around one-in-five households it was trying to evacuate from four blocks in north London were refusing to leave. The council said around 200 people were staying put despite being advised “in the strongest possible terms” to move into alternative accommodation because of safety concerns. The London borough said it had already put aside £500,000 to pay for hotel bills for residents while safety work is carried out on the blocks.Meanwhile, plans to test every hospital for fire safety in the wake of the fire that is presumed to have killed at least 79 were in chaos after fire chiefs told hospital leaders they did not have the resources to carry out the inspections. NHS watchdogs had instructed every hospital to arrange safety checks by local fire services by the end of the weekend, but senior officers from the country's nine fire services said they were not consulted and could not meet the request. One NHS trust chief executive told Health Service Journal there was “chaos” in the capital, with London Fire Brigade refusing to carry out checks because of the volume of work it was already undertaking in the wake of the Grenfell disaster.
Grenfell tower: The beginning of the end for the Tory austerity regime | The Independent: Nothing can prepare you for the first sight. You may have seen images on television or pictures in the newspaper but the grim reality is of another order of magnitude. As you approach the area, Grenfell Tower is obscured by other buildings. I had been in the middle of a heated conversation with a friend when suddenly, as we turned a corner, it became visible. We both fell silent. I have never seen anything like it in my life. The infernal scene is beyond words. The burnt-out shell of a building is a vision of hell. A recently released video of firefighters rushing to the scene documents their disbelief at the extent of the fire. It spread rapidly along the exterior flammable cladding from the fourth floor right to the top of the 24-storey tower. Grenfell Tower, in effect, became a massive incinerator and a funeral pyre. It now stands as an eerie, haunting mausoleum.Walking around the streets of the neighbourhood, the shellshock and anger are palpable. The memorials are stacked with flowers and messages of condolence. One message decries ‘'corporate manslaughter'’, which has been echoed by David Lammy MP for Tottenham.I come across another chilling message stating that there could be more than 300 missing. I hear residents talking about the riots to come when the final death toll, likely to be in triple figures, is announced. I overhear a television reporter stating that it could become the largest loss of life on British soil since the Second World War. There is a feeling in some quarters that the Tory council and government have blood on their hands. Lily Allen expressed her disgust to Jon Snow on Channel 4 news at the down-playing of the death toll by the government and mainstream media.
Bill Black: Those to Blame for the Grenfell Fire Victims Include Tony Blair -- There are many people culpable for the mass loss of life in the Grenfell fire in London. At this time, we know enough about the fire and its causes to be able to discuss these matters with sufficient confidence to draw preliminary conclusions. As always, we should also keep in mind that we do not have all the facts so some of our conclusions must be tentative. I do not focus on Tony Blair and Gordon Brown because they are uniquely culpable for the mass deaths in the fire. Their failures are important to explaining several points that are often unclear to Americans. First, Blair and Brown, as leaders of the Labor Party, were supposed to protect poorer citizens like those living in the tower blocks through effective health and safety regulation. Historically, that would have been a top priority of the Labor Party. Second, the reality is that Blair and Brown were aggressively hostile to health and safety regulation and that hostility exemplifies the radical transformation that “New Labor’s” leaders made to the party. Third, Blair and Brown modeled New Labor on Bill and Hillary Clinton and Al Gore’s transformative policies when they led the New Democrats. The New Democrats’ most radical political change was their hostility to the white working class, but their most radical policy change was their unholy war against effective health and safety regulation through the infamous “Reinventing Government” campaign. Fourth, the revulsion of much of the Labor Party’s base and the New Democrats’ base to these twin radical changes in political identification and policy in which the historical parties of the workers turned against the workers led to initial electoral success followed by severe defeats. Corbyn’s sharp break with Blair and Brown’s unholy war against regulation explains why so much of his Party’s leadership is eager to remove him from leadership. It also explains why his policies have led large numbers of younger voters to join the Labor Party and support Corbyn. Similarly, Sanders and Senator Elizabeth Warren’s popularity, particularly with younger voters, has repeatedly stunned the New Democrats’ leaders. The easily avoidable loss of so many in the Grenfell fire illustrates why Corbyn’s supporters have rallied passionately to what they see as the antithesis of New Labor leaders like Blair and Brown.
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